Cash rich Boskalis faces €840m impairment charge

Royal Boskalis Westminster, the global dredging, maritime infrastructure and maritime services company, will report a non-cash impairment charge of €840 million in its annual results 2016.

This is said to be because of deteriorating market conditions in the offshore energy sector.

This charge is almost entirely related to the services part of Netherlands-headquartered Boskalis’ offshore oil and gas activities, with more than €365 million related to an impairment of vessels, more than €380 million relating to goodwill and approximately €90 million to Smit Lamnalco.

In some of the company’s service-related offshore energy market segments there is a structural imbalance between supply and demand, particularly in the heavy marine transport segment. This has put utilisation rates and margins under pressure, resulting in a non-cash impairment of both the value of the vessels that operate at the lower end of the market and the goodwill.

A large part of the impairment relates to the Dockwise activities and vessels acquired in 2013. However, the company said in a statement, “Since the acquisition, Dockwise has contributed exceptionally well to Boskalis' results. Up to and including 2016 Dockwise generated around €900 million in cash from its operating activities. The impairment of goodwill and the fleet amount to €550 million.

“Taking into account the initial acquisition cost, the result already achieved, the investments made since the acquisition and the impairment charge, the return on this acquisition has been healthy.”

At the end of 2016 Boskalis was net debt-free with more than €900 million in cash on its balance sheet. The solvency ratio at the end of last year exceeded 55%.