IHC Merwede - the technology innovator
IHC Merwede: 2007 another record-breaker Net profit doubles to € 65 million
Headlines
- Markets continue healthy: doubling of order book to approximately € 1.5 billion
- 50% increase in revenue to € 774 million
- EBITDA margin improves from 8% to 11%
- Expansion of national and international capacity
- Market-based concentration of business units: Dredging & Mining, Offshore & Marine and Technology & Services
Revenue and results
Both revenue and the EBITDA margin rose sharply in 2007. In 2007, the turnover amounted to € 774 million (€ 523 million in 2006). The net profit was € 64.6 million, double the figure for 2006, driven by higher sales margins and a further improvement in the results for completed orders. Improvements in project management allowed us to transform the dramatic intensification of business operations into good financial results.
In 2008, IHC Merwede expects to see further growth to above € 1 billion in revenue, with margins comparable to those in 2007.
Markets
IHC Merwede is the global market leader in the construction of customised dredging equipment and it is a well-recognised builder of complex, customised offshore construction vessels and equipment. The offshore market now accounts for 31% of revenue.
Both markets developed well in 2007. This resulted in the sale of 9 customised ships for dredging and offshore, and 22 dredgers from our standard Beaver series. In China, we sold 10 large standard cutter suction dredgers that were built at our local partner shipyards. The Group's Technology & Services companies achieved record numbers of sales.
We expect the healthy development of the IHC Merwede markets to continue in the years to come.
The global economy is driven by a number of factors that are relevant for IHC Merwede: the constant rise in demand for oil and gas, the rapid expansion of transport flows across the world, the increase in demand for infrastructure generated by developing economies, and calls for a new approach to water management.
The global population is expanding and migrating to the coastal areas in which economic activity is concentrating: eighty percent of the world's largest cities are located on the coast or in deltas. Massive dredging operations are needed for the construction of the large-scale economic, logistic and urban facilities needed. Prosperity is on the rise. There is increasing demand for projects in the tourism and leisure branch, often on the water's edge, a development that also requires the creation of large-scale infrastructure facilities. In addition, rising sea levels mean that coastal protection is another area of concern. Our clients, the dredging contractors, are responding with major additions to the global fleet capacity.
Now that the readily available resources of oil and gas are already being exploited and are inadequate to meet rising demand, the search for oil and gas is widening to include less hospitable locations such as the deeper seas and the artics. This requires specialised, high- spec vessels and other offshore equipment. IHC Merwede caters to this market with equipment such as high-spec vessels for drilling operations, wellhead clearance and pipe-laying, as well as for hydraulic pile drivers, lifting equipment and other specialised equipment.
Partnership
Building customised and complex dredging and offshore vessels and equipment is an important component of the activities of IHC Merwede. As well as the necessary knowledge and experience, intensive partnerships with the clients are essential in this respect. The same applies to partnerships with our numerous suppliers.
The ongoing development of these relationships is one of IHC Merwede's priorities. The others are growth and product development.
Growth
The healthy market conditions in the years to come will give the company the opportunity to carry on down the road of major growth. Engineering and production capacity was scaled up considerably in 2007. In order to serve the ever-expanding markets properly, further increases in capacity will be needed. The limited opportunities in the Netherlands mean that this capacity will have to be found in other countries. For example, IHC Merwede has invested in a major expansion of its production site in Guangzhou, China. Further expansion possibilities in China are being explored.
Product and service development
The main basis of IHC Merwede's competitive strength is its products, which are outstanding and innovative in technical terms, leading to relatively low operational costs. In order to build on this position, IHC Merwede is making considerable investments in product development. In 2007, the company spent € 23 million, or 3% of revenue, on product development.
In addition, IHC Merwede is aiming for a further extension of its Technology & Services position in the dredging market, but above all in the offshore market, by means of targeted acquisitions. This was the thinking behind the acquisition in 2007 of VREMAC, a manufacturer of specialist hydraulic cylinders. And in early 2008, we acquired the British firm, The Engineering Business, which is a supplier of specialist equipment for the offshore construction market. IHC Merwede has adequate financial resources available for further acquisitions.
We also continued work on the development of the "life cycle support" concept: IHC Merwede wishes to supply its clients in the field with specific support for the maintenance of the ships. It has therefore extended its global service organisation and added a branch in Nigeria to the network of support offices in Kinderdijk, Dubai, Singapore, Guanzhou and Tianjin. Further additions are planned.
These innovations, in combination with efficient operational management, shorter lead times and increases in capacity, will allow IHC Merwede to keep ahead of the competition.
Profile IHC Merwede
IHC Merwede is focused on the continuous development of its design and construction activities for the specialised shipbuilding sector, in particular the dredging and offshore industries. IHC Merwede is world market leader in the construction of specialist dredging equipment and complex custom-built offshore vessels. The clients of IHC Merwede include major dredging companies, oil and gas exploration groups, offshore contractors and government authorities. IHC Merwede has a staff of approximately 2,200 at its locations in the Netherlands. There are also branches in China, Houston (USA), India, the Middle East, Russia, Singapore and the UK.
49% of the IHC Holland Merwede shares are in the hands of Rabo Capital, the Rabobank venture capital company. 33% of the shares are owned by the management and personnel, and the remaining 18% are owned by Parkland, which is part of the Indofin group.
Note for the editor, not for publication
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