2018 was a special year. Van Oord celebrated its 150th anniversary, we welcomed 500 new employees and new vessels strengthened the fleet. Winning the iconic Afsluitdijk project was noteworthy. It was a busy year in offshore wind. Van Oord executed four major wind projects: Deutsche Bucht in Germany, the Norther project in Belgium, East Anglia ONE in the UK and the Dutch Borssele III & IV project. Within dredging, a number of projects were executed with good results. With the award of various medium-sized projects, the order book remained stable. Offshore activities remained at the same level as 2017.
In 2018, Van Oord recorded EUR 1.88 billion in revenue (2017: EUR 1.53 billion) with a net profit of EUR 92 million (2017: EUR 78 million). The increase in revenue was mainly driven by offshore wind activities, which realised EUR 706 million of revenue (2017: EUR 403 million). Revenue in the Netherlands also increased to EUR 115 million (2017: EUR 82 million). In Dredging the revenue from international activities (EUR 852 million) was similar to 2017 (EUR 841 million) reflecting ongoing difficult market circumstances. The same applied to Offshore with a revenue level of EUR 203 million (2017: EUR 204 million).
Van Oord realised a net profit of EUR 92 million (2017: EUR 78 million). This included one-off items. The sale of the share in Gemini Offshore Wind Farm generated a net book profit of EUR 38 million. We also accounted for a net cost of EUR 20 million in light of refinancing our US Private Placement (EUR 27 million before tax). The EBITDA in 2018 was EUR 306 million (2017: EUR 290 million).
Our order book amounted to EUR 3.68 billion at year-end 2018, compared to EUR 3.39 billion at year-end 2017. The five largest awarded projects were the reinforcement of the Afsluitdijk, the Fryslân nearshore wind farm, the construction of the A16 motorway, the modernisation of the Świnoujście to Szczecin fairway in Poland and the contract for supplying and installing cables at the Hollandse Kust (South) wind farm.
We saw a recovery in revenue and profit level in 2018, after two years of contraction. The increase in revenue was attributable primarily to our offshore wind activities. Our volume of awards was also higher than in 2017. Winning the iconic Afsluitdijk project was particularly noteworthy.
Our financial position remains strong with an equity of EUR 999 million (2017: EUR 943 million) and a solvency ratio of 39.5% (2017: 37.3%). The net debt position amounted to EUR 78 million compared to EUR 43 million at year-end 2017. This debt level is well within our credit facility terms and conditions.
In 2018, the dredging market was still characterised by overcapacity. In addition, marine transport volumes fell due to increased political tension and lower global trade volumes, affecting port developments. Despite these challenging market conditions, we maintained our revenue level and won several medium-sized projects in 2018. Project results were solid.
Amongst others, we started executing the Dubai Harbour project. This prestigious property development project will include a hotel, a cruise liner terminal, a shopping mall and residences. The contract involves dredging the 12-kilometre navigation channel, reclaiming land, extensive rock work and quay wall construction and executing vibro compaction. After the iconic Palm Jumeirah, Van Oord will be contributing to yet another Dubai landmark.
The Netherlands business unit realised a significant increase in its order book, thanks to two major DBFM (Design, Build, Finance, Maintain) projects: the Afsluitdijk and the A16 motorway project. The infrastructure market in the Netherlands is characterised by strong competition and low margins. In the coming years, revenue in the Netherlands will grow as the result of these projects.
We are proud that we won the Afsluitdijk project, awarded to Levvel – a consortium comprising Van Oord, BAM, and Rebel. The Afsluitdijk and the discharge sluices will be modified according to the latest insights on rising sea levels and river drainage. We are also responsible for maintenance for 25 years.
The Offshore Wind business unit had record revenue in 2018. Four major projects commenced simultaneously: Deutsche Bucht in Germany, the Norther project in Belgium, East Anglia ONE in the UK and the Dutch Borssele III & IV project. These offshore wind farms combined represent an important step forward in the energy transition. Together they will supply some 1.6 million homes with sustainable energy.
In September 2018, MPI Offshore was acquired including two offshore installation vessels. Through this acquisition, our UK market position has been strengthened and our equipment position in offshore wind has also been reinforced. We added Operations & Maintenance activities to our service package as part of this deal.
Since 2014, the OFS market (Oil Field Services) has been in a recession. However, it appeared to have bottomed out in 2018. The Offshore business unit’s profits are returning to a satisfactory level. In the end of 2018, all three flexible fallpipe vessels were active, including the brand-new Bravenes that became operational in May 2018.
After working for five years on the tender for the Golfinho project in Mozambique, Van Oord and consortium partner TechnipFMC were selected as preferred tenderer by oil & gas company Anadarko. Being selected for the EPCI contract (engineering, procurement, construction and installation) of the offshore subsea system for its Mozambique LNG project is a great milestone for our company.
Van Oord operates in various markets, each with its own dynamics. These markets are cyclical, and we see that a downturn in one segment and a positive trend in another market can happen simultaneously. Currently, both our offshore and international dredging activities are still affected by the economic downturn. This will not change in 2019. We expect revenue and activity levels to be in line with 2018.
With the growing need for renewable energy, offshore wind is becoming a global activity. We predict that in Northwest Europe, the market remains stable and reliable, with new projects of 3 to 4 GW per year. The UK, the Netherlands and Germany are the biggest markets, while Poland and France are relative newcomers. Beyond Europe, projects have started in Asia and the US, indicating a promising market. All these developments represent new opportunities and risks. In established markets like the Netherlands and Germany, zero-subsidy developments require competitive price levels.
The offshore oil & gas market is expected to recover. Due to the growth of both the global population and energy consumption, the demand for energy is increasing. Analysts agree that too little oil and gas is currently being explored to meet this demand. Therefore, we think a mix of renewable and fossil energy sources is needed to fulfil the demand. Oil & gas companies are expected to increase investments in field exploration.
We are part of a world that is being affected by climate change. The transition to a renewable energy system is taking shape. Also society expects more of us as a company. As Van Oord, we recognise the dependence on natural ecosystems, our responsibilities to communities and the changing expectations of clients. Sustainability, innovation and partnering are the key to successfully facing worldwide challenges.
2018 was a festive year for Van Oord. We celebrated the company’s 150th anniversary. In 1868, Govert van Oord started as an independent entrepreneur trading in brushwood. Throughout 2018, celebrations were held across the world for our employees and other stakeholders. During an international symposium , the company received the ‘Royal’ designation.
Due to higher activity levels by the Offshore Wind and Netherlands business units, the number of employees grew to 4,954 in 2018 (2017: 4,454). Some 100 people from the MPI Offshore organisation, both office staff and crew, joined Van Oord. We continue our recruitment efforts to fill the more than 200 vacancies. As well as recruiting skilled new people, we need to retain the talent we already have. Part of our corporate strategy is to attract, develop and retain the right people.
In 2018, we started several projects that underscore our sustainability ambitions. In cooperation with the North Sea Foundation, the Natuur & Milieu organisation and Eneco Luchterduinen, we installed reef balls and cages containing flat oysters at the Luchterduinen offshore wind farm to investigate how nature conservation and renewable energy generation can reinforce one another. Van Oord is also part of a consortium that is testing a new method for large-scale coral rehabilitation at the Great Barrier Reef in Australia.
Van Oord’s safety culture is at a proactive level. More and more, we are making the transition to a full-service marine contractor. This requires to include our subcontractors and suppliers in our safety policy. In 2019, our Say YES to Safety programme will focus on subcontractors and suppliers.
Global business is undergoing high-paced digitalisation. Based on the data we produce every day, this trend is driving Van Oord to become a frontrunner in the digitalisation of our industry. To lead the digital transformation of the company, the Vox Data programme is one of Van Oord’s strategic themes.
Van Oord has innovative, highly specialised equipment that meets the latest market demands. Our long-term investment plan for the fleet is key. We are renewing the existing capacity in our dredging fleet. The trailing suction hopper dredger Vox Amalia was largely completed at Santander and at the end of the year it was shipped to Rotterdam, where a festive christening ceremony took place in the presence of Her Majesty the Queen. The ship will become operational in 2019.
2018 saw the launch of Van Oord’s first LNG-powered vessel Werkendam. In addition, we ordered two LNG-powered ZSH 7.0 hopper dredgers. We believe that LNG will be an important transition fuel during the next decades and that it will give us a commercial advantage in the long term as clients seek partners with energy-efficient assets. This reflects Van Oord’s active role in the energy transition.
During the year, an extensive modification of the offshore installation vessel Aeolus was completed. After the renovation, which includes a crane with a lifting capacity of 1,600 tonnes, the vessel is ready to install the latest generation of foundations and wind turbines. Two MPI jack-up vessels were also added to the fleet: the MPI Adventure and the MPI Resolution. In 2018, the innovative flexible fallpipe vessel Bravenes was completed.
As well as investing in vessels, we also seek out innovations and new partnerships. These investments are essential to creating value in the future. One initiative is the Slip Joint Offshore Research (SJOR) project. The Slip Joint is an alternative connection between an offshore wind turbine and its foundation. As a partner in the project, Van Oord successfully connected an offshore wind turbine to the monopile using a slip joint connection. It shows that shorter installation time and reduction in the foundation’s weight may lead to further cost reductions in offshore wind.
The volatility in our markets will not decrease in 2019. It is difficult to estimate how Brexit, trade wars and possible political developments will affect the world. We expect revenue to be in line with 2018, tender volumes will once again be high. Van Oord’s corporate strategy focus on the right people, sustainability and digitalisation provides the foundation for future success. We aim to create a better world for future generations by delivering Marine ingenuity. We look forward to accept this challenge.