Shipbuilding Damen Shipyards is not doing well. Three new yards have too little work. The company does not exclude the divestment of parts.
GORINCHEM, WILLEMSTAD - Three shipyards that Damen Shipyards took over in 2017 are struggling with too little work. Partly because of this, the company expects a substantial loss in 2019. That confirms a spokesperson for the largest shipbuilder in the Netherlands after questions from NRC about an article in Het Financieele Dagblad Thursday, in which the new CEO Arnout Damen talks about the difficult financial position of the company.
In addition to a shortage of work, Damen is struggling with a number of contracts that have been accepted too cheaply. The company must make substantial provisions for this in 2019, which can amount to tens of millions of euros. The loss threatens to turn out even greater than in 2018, when Damen lost 17 million euros. The precise annual figures will follow later in 2020.
The most difficult is the situation at three yards that Damen purchased three years ago: one in Curaçao, one in Rotterdam and one in Romania. "They have to get going a bit," says the spokesperson. A great deal has been invested in this, but the amount of work is still lagging. "And if such a yard is vacant, there will be real costs involved." According to him, the situation on the other yards is less susceptible. Damen does not disclose the precise size of the order portfolio.
Damen (10,000 employees, 3,500 of whom in the Netherlands) is now discussing the future with banks. Due to the problems of the past year, the company is also working on a new strategy that does not exclude the divestment of business units. The shipbuilder also introduces six new divisions. Components that are not profitable will come under special supervision from the company top. Damen also wants to pay more attention to innovation and digitization.
Furthermore, a criminal investigation into Damen has been running since 2017. The Public Prosecution Service and the FIOD tax investigation department are investigating whether Damen 'paid bribes to foreign government officials' through intermediaries.
Damen's problems are not unique to shipbuilding, which is struggling with too few orders. This is partly because the offshore sector is reluctant to order and refurbish ships: the low oil price means that people are now economical.
Other shipbuilders are also struggling with contracts that have been accepted too cheaply. The difficult market forces many companies to charge low prices, so that setbacks quickly lead to problems. Partly because of this, shipbuilder IHC also has a very difficult time. Two competing dredging companies, Deme in Belgium and Van Oord in the Netherlands, would discuss a takeover of the Dutch company together with investment company HAL. This is to prevent a possible Chinese purchase.
Mid-January Damen was in the news because it had won a new order. The company is involved in the construction of four German navy frigates. Building is not done on their yards, but Damen coordinates the project and designs the ships. In total, Damen is winning around 20 percent of the 4.5 billion euro contract. The group is also in the running with Swedish Saab to build four submarines for the Dutch navy, a job of 3.5 billion euros.
