The Netherlands: IHC Merwede Posts 2010 Net Profit of EUR 99 Million

IHC Merwede develops and builds innovative vessels, advanced equipment and life-cycle support services for the dredging, mining and offshore industries. These markets have remained relatively stable in recent years and are now showing signs of growth. As a result, IHC Merwede has been able to maintain its revenue and increase its profitability. The company is expecting to achieve a further growth of at least five per cent in turnover during 2011.

In 2010, revenue reached € 1.01 billion, which may be attributed to successful sales towards the end of 2009 – a trend which continued in 2010 with sales reaching € 1.02 billion.

There is a clear explanation for the increased net profit figure. The most important factor is that the sales agreements with customers were concluded in a busy market, while the purchases made by IHC Merwede to satisfy these orders were made during the decline of 2009. Furthermore, good margins were achieved on the more standardised product lines. A high level of project management has also been a determining factor in realising the expected margins. In addition, the profit figure in 2009 was hit by a disappointing result on a large custom-built vessel and fortunately such an occurrence has not materialised over the past 12 months.

The results reflect the sale of non-strategic IHC Merwede business units and the acceptance of the company by the Dutch Government for the Innovation Box tax reduction scheme. As the first shipbuilding company to receive this status, IHC Merwede is once again recognised for its strong focus on innovation.

IHC Merwede is in strong financial health and so is able to implement a strategy of future growth.

Highlights

• Revenue of € 1.01 billion (2009: € 1.13 billion)
• Higher EBITDA: € 153 million (2009: € 102 million)
• Profit of € 99 million (2009: € 57 million)
• Sizeable order book of € 1.17 billion

General market developments

Despite the relative uncertainty created by the financial crisis, IHC Merwede remained stable and continued to strengthen its position within the maritime industry. The dredging sector performed better than anticipated which resulted in a worldwide demand for dredging equipment.

The outlook for the offshore sector is also positive. Oil prices have risen again and look set to increase further. The offshore industry is expected to pick up in 2011 and should lead to an increase in capital expenditure. The order intake for IHC Merwede offshore equipment has been strong in the past year and this will continue in 2011. The expectation is that this will also be the case for offshore vessels.

The development of deep-sea dredging and mining continues to gather pace following studies from the Organisation for Economic Co-operation and Development (OECD). The research highlights the potential for this emerging area of the market and IHC Merwede’s expertise in dredge mining and mineral processing will help it to capitalise on these developments.

The two latest areas of development for new ships are: the expansion of life-cycle support to be sold as an integral part of the vessel package; and the introduction of finance arrangements. This will complete IHC Merwede’s offering of innovative vessels, advanced equipment and life-cycle support.

Strategy

IHC Merwede has four strategic priorities: internationalisation; growth; product and process development; and cooperation. These priorities have underlined IHC Merwede’s business development programme during the past financial year and will continue into 2011.

IHC Merwede is already a large international company. Of the 3,000 employees, more than 400 are based outside The Netherlands. It also has operating companies, service stations and offices in 13 countries. It has been producing the majority of parts and components in low-cost countries for years and this trend towards internationalisation will only continue. This not only allows the company to produce guaranteed top quality products at an acceptable cost, but also gives it access to markets protected by local governments. IHC Merwede’s policy is to build complex custom-built vessels in The Netherlands, where the engineering for the complete range of products will also take place.

Internal cooperation between all of the group’s business units and the various technologies they employ is vital. The importance of this will increase as IHC Merwede continues to grow. The company looks at growth as an expression of ambition and a desire to move forward. Apart from autonomous growth, IHC Merwede is also active in the field of acquisitions and partnerships. It will aim to tap into new markets, such as deep-sea mining and sustainable energy, and achieve growth by expanding the portfolio.

IHC Merwede has a unique portfolio of dedicated people, innovative products and specialist knowledge and skills. It will invest € 35 million in product and process development in 2011. This is becoming increasingly important and the group aims to continually improve its processes, particularly with regard to production, engineering and supply chain management.

Consequently, the expectation for 2011, that there will be an increased turnover of at least five per cent – with even better results – will be realised.

Company profile IHC Merwede

IHC Merwede is focussed on the continuous development of design and construction activities for the specialist maritime sector. It is the global market leader for efficient dredging and mining vessels and equipment – with vast experience accumulated over decades – and a reliable supplier of custom-built ships and supplies for offshore construction.

IHC Merwede has in-house expertise for engineering and manufacturing innovative vessels and advanced equipment, as well as providing life-cycle support. Its integrated systematic approach has helped to develop optimum product performance and long-term business partnerships.

The company’s broad customer base includes dredging operators, oil and gas corporations, offshore contractors and government authorities.

IHC Merwede has over 3,000 employees based at various locations in The Netherlands, China, Croatia, France, India, the Middle East, Nigeria, Russia, Serbia, Singapore, Slovakia, South Africa, the United Kingdom and the United States.

Technological innovation will remain the company’s underlying strength through its continuous investment in research and development. Moreover, it helps to safeguard a sustainable environment.

[mappress]

Source: IHC Merwede , April 1, 2011;