Damen Shipyards Group’s order book reached a company record of 8 billion euro at year-end 2020. The orders acquired included the construction of four F-126 frigates for the German Navy, an order for 40 LNG-powered inland vessels, and the design and construction of the largest superyacht (120 metres) ever made in the Netherlands.
The fact that the order book more than doubled relative to year-end 2019 (3.7 billion euro) means that the prospects for the longer term are good. In the shorter term, developments associated with COVID-19 will continue to generate considerable uncertainty. The company can cope because of its comfortable liquidity position. In 2020, the repair division and the business-to-business newbuild divisions in particular had to contend with worldwide client reluctance to order new ships due to the pandemic. This factor, in addition to the temporary closure of yards in France, Singapore, Curaçao and South Africa imposed by the national governments and the other consequences of the virus (travel restrictions, delivery delays), meant that the operating result excluding non-recurring items declined slightly from a loss of 23.4 million euro in 2019 to 43 million euro last year. On the other hand, EBITDA was positive at the end of the first quarter of 2021.
Impact pandemic
“COVID-19 has had a significant impact on our company”, says Arnout Damen. “Our first priority is, and always has been, the health and safety of our employees. Even so, and despite our best efforts, the pandemic has inflicted health problems and human suffering, and we regret to report the loss of three of our employees to the virus.”
According to the CEO it has not stopped Damen from pursuing its strategy to improve the risk profile, and continuing to focus on standardisation and serial construction, while developing into the world’s leading ‘green’ and ‘connected’ shipbuilder. “Last year’s delivery of, for example, five electrically powered water buses for Arriva in Copenhagen and two hybrid ‘Road Ferries’ for BC Ferries in Canada underline this.” In total, Damen delivered 143 newbuild ships in 2020 and some 1,300 repair and conversion orders were carried out, amounting to a production volume of 2 billion euro.
De-risking
De-risking included the accelerated settlement of two contracts from the past. In 2020, this led to significant one-off losses, but it eliminated uncertainties for the group and precluded possible larger losses in the future. The impact of COVID-19, the one-off costs for contract terminations and other write-downs meant that the net result was 161.5 million euro negative. This is an improvement on 2019 (287 million euro negative) but nevertheless a disappointing result.
However, the group’s financial position is still solid, as evidenced by the facts that no additional financing was required and Damen did not avail itself of financial support measures from government, except for a limited entitlement under the Dutch NOW scheme. In addition, the debt position has been significantly reduced, mainly because of working capital measurements.
