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Marine Log

March 21, 2007

Offshore expansion pays off for Bourbon

"Bourbon recorded excellent [2006] results, largely influenced by the offshore business, which benefited from favorable conditions as the oil companies resumed investments and worked to boost the production of existing fields," says Chairman and CEO Jacques de Chateauvieux. "Moreover, and in line with our Horizon 2010 strategy, we are continuing our investments to expand our fleet and to offer our most demanding clients worldwide the services of a full range of new generation, innovative and high- performance vessels."

For the first time since its decision to refocus on its marine services business, Paris-basedBourbon recorded 2006 results that exclusively reflect its scope as a "pure player" in marine services.

Bourbon benefited from growth in the offshore oil and gas marine services sector ( up 35.8 percent) in 2006: revenues totaled 717.6 million euros, an increase of 16.8 percent over the previous year.

Gross operating income was 277.6 million euros ( up 33.8 percent) after taking into account the 19 million euros profit on sales of vessels during the year.

Bourbon's operating income rose significantly to 181.4 million euros (up 44.2 percent), driven by the expansion of the fleet and conditions in the oil and gas offshore market, a solid performance for towage and salvage, and the increase in cargo rates that began to produce effects in the second half.

Net income group share excluding a capital gain amounted to 152.9 million euros, up 37.7 percent.

At end 2006 the company had completed its 2003-2007 strategic plan one year ahead of schedule.

Over the last four years, revenues for the Offshore Division have risen 30 percent per year (35 percent at constant exchange rates) and the ambitious program to invest 1.2 billion euros in marine services has been slightly exceeded.

Offshore Division

Revenues for the Offshore Division totaled 376.6 million euros, an increase of 35.8 percent over 2005. The contracts renewed and the contracts for the 31 new vessels commissioned benefited from a very strong market. In the North Sea as well, prices reached very high levels.

Gross operating income amounted to 185.1 million euros ( up 60.1 percent) and includes the income from the sale of old vessels for 19 million euros. Excluding vessel disposals, the gross margin for the business was 44.1 percent compared with 41.8 percent in 2005.

Operating income rose significantly to 112.8 million euros (up 92.9 percent).

In line with its strategy, Bourbon says it is is positioning itself as "the international leader in modern offshore oil and gas marine services."

Towage & Salvage Division

The Towage & Salvage Division generated revenues of 129.7 million euros in 2006, up 12.9 percent.

Gross operating income was 40.9 million euros in 2006, an increase of 46.7 percent over the previous year, driven by:

  • a full year of operations taken into account for the Abeille Bourbon and the Abeille Liberte in their salvage and coastal protection missions;
  • port activity which remained strong in French ports, particularly in Marseilles-Fos and Nantes Saint-Nazaire;
  • strong activity in African ports generated by the positive conditions for offshore oil and gas marine services in the region.

Bulk Division

Revenues for the Bulk Division amounted to 169.2 million euros, down 7.5 percent from an exceptional year in 2005. Volumes shipped totaled 15.7 million tons in a context of mixed trends in cargo rates: down 37 percent compared with 2005 during the first half of the year, but up 44 percent during the second half of 2006 compared to the second half of the previous year.

Gross operating income amounted to 38.9 million euros in 2006, compared with 53.1 million in 2005, a difference of 26.7 percent. Fluctuations in cargo rates in the market explain the changes in gross margin, which primarily impact owned vessels and vessels under long-term charter agreements. Setaf Saget customer contract policy, based on long-term relations, generates a "delayed effect" of about 6 months.

After an exceptional year in 2005, the division recorded a "very satisfactory" operating income in 2006 (operating margin on sales of more than 20.7 percent).

OUTLOOK

Bourbon says the year 2007 will be simultaneously influenced by the end of the 2003-2007 strategic plan and the launch of the Horizon 2010 plan. As a result, Bourbon will benefit over a full year from the vessels delivered under the 2003-2007 investment plan, particularly in the Offshore Division, while continuing its investments under the new plan in addition to the many new orders already placed in 2006.

The company says 2007 will benefit from a favorable context in offshore oil and gas marine services, solid assistance and towage services experienced early in the year in the ports, and high cargo rates.

Bourbon's results will continue to be influenced by changes in the euro/dollar parity.

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