IHC Caland re-structuring; to close Van der Giessen-de NoordNews // September 1, 2003
Announcing post tax provisions for the closure estimated at US$45 million, the company said it proposed to exit shipbuilding by splitting off the remaining healthy Dutch shipbuilding activities (IHC Holland and Merwede Shipyard) into a newly listed company to be owned by the existing shareholders.
The company also announced half year profits below 2002 at US$34.2 million (2002 - US$ 42.4 million), mainly due to timing of project deliveries.
IHC Caland said new orders totaled US$921 million, including one major new FPSO lease and operate contract, and sand the offshore market had been "slower than expected," but still very promising in the medium to long term.
With the exception of the provision in respect of van der Giessen-de Noord, the Group is on target to meet its profit forecast of US$110 million.
In a statement, the company said the decision to close down van der Giessen-de Noord will be implemented "gradually," and will be fully effective after delivery of the last vessel in its order book, which is expected to be in the first quarter of 2004.
"It has become increasingly clear that the yard cannot survive in the current very weak market place, due to the uncompetitive price levels at which it is obliged to operate. Furthermore, the market for jumbo hopper dredgers - the reason for which the Group purchased the yard - appears to be dead for the foreseeable future," noted the company.
A post tax provision of US$ 45 million (€ 40 million) will be made against the results of IHC Caland in 2003 in respect of the closure, partly to cover the cost of laying off the remaining workforce, partly in respect of anticipated inefficiencies duringclosure, and partly to provide for the risk of losses on disposal of the yard's assets. Depending on the eventual sales proceeds of these assets, the net expense could be somewhat lower.