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Lisnave doubles profit…

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Aerial view of Lisnave. Photo Syncview.

Aerial view of Lisnave. Photo Syncview.

Lisnave doubles profit, announcing payout to shareholders and bonuses for workers

By James Brewer

Europe’s largest shiprepair yard, Lisnave, met the challenge of a tough shipping market to make 2015 one of its best years to date. The Portuguese enterprise turned in a profit of €13.6m, just over twice the figure of €6.5m achieved the previous year, the company has announced.

The huge facility achieved the surplus on revenue of €113.2m from the repair of 107 ships (15 more than in 2014), comfortably up from the €85.6m income of the previous 12 months.

Euronav's Cap Jean at Lisnave.  Photo Vitor Gordo.

Euronav’s Cap Jean at Lisnave. Photo Vitor Gordo.

With each job bringing in on average just over €1m, the accomplishment brought cheer for shareholders, who will receive €13.5m in dividends, and to the workforce, who share a bonus pot of €1.5m (there was a distribution of €1.2m in April 2014).

At the annual shareholders’ meeting on March 29 2016, the accounts for 2015 were approved, as chairman José António Leite Mendes Rodrigues and his fellow directors reported “a good overall performance” from Estaleiros Navais Lisnave SA, to give the venture its full title.

The directors said that this was worthy of emphasis, “taking into consideration that, despite the positive evolution seen during the year, the business continues to be quite conditioned by the effects of the crisis of the international economy that has been experienced since 2009.”

MSC Gemma at Lisnave.  Photo Vitor Gordo.

MSC Gemma at Lisnave. Photo Vitor Gordo.

Demand measured as number of enquiries received by Lisnave stood at 549, the highest since 2011, though far short of the 617 received that year. “On the other hand, ” said the directors, “the commercial success rate measured as orders secured, rose by three percentage points compared with the previous year, to stand at 21%. Taken together these factors have made this year one of the best years in the history of the company.

“Besides the intense commercial activity undertaken, the effects of customer loyalty, which has tended to rise since 2013, also contributed to this performance, as did the customer satisfaction level. This allows the company to attract a significant volume of repeat business, and Lisnave has achieved remarkable success in the negotiation of major opportunities to secure a significant volume of very large jobs in the course of the year.”

Total operating income stood at €116.2m, about €27m more than in 2014, while operating costs increased by around €17m. This produced a significantly improved net profit of €13.6m.

Tokyo Spirit in drydock.  Photo Vitor Gordo.

Flagship Willow and Harmen Oldendorff. Photo Vitor Gordo.

The average billing per ship, €1.06m, increased by 27.3% compared to last time, meaning a greater content of work in routine repairs, combined with the large scale of three repair projects undertaken during the period, which generated an average billing of some €10m.

The Lisnave chiefs noted that despite a marked improvement in demand, business continued to be constrained by the effects of the slow recovery of world trade, particularly the ongoing imbalance between supply and demand in the shipping market.

Equity continued to perform well, rising to €42.3m, a figure 8.45 times greater than the company’s share capital, and the year came to an end without debt overhang. The financial structure of the balance sheet “continues at a very comfortable level suited to its core business, which is noted for its unpredictability, ” said the directors in their report.

Lisnave carried out repairs to its own infrastructure and equipment to the tune of €1.18m, bringing the total since 2009 to €11.48m. The concessionaire, Lisnave Infraestruturas Navais, rehabilitated Pier 3, replaced the lighting towers and almost all the outdoor lighting, in which about €3m was invested. Such structural repairs, which began in 2008, now total €18.8m.

An agreement with workers’ representatives, among other things, granted a wage increase of 1.98% to the employees as a whole. New training courses involve more than 40 young trainees. As at December 31 2015, Lisnave’s total personnel amounted to 269, their average age 55.

It was the 11th year of reward for the more than 200 shareholders. At the end of 2015, the equity structure was Navivessel Estudios Projectos Navais SA 72.83 %; ThyssenKrupp Industrial Solutions 20%; Parpública (state holding) 2.97%; and other equity holders 4.2%.

Lisnave maintained its ISO 9001:2008 certification and International Ship & Port Facility Security (ISPS) certification. It gained Environmental Certification in 2013.

On the outlook for 2016, the directors said that although the World Bank expected a slight increase in the global economic growth rate and a slight rise in trade growth, “the prospects for the business are not very favourable, given the risks associated with the imbalance between supply and demand for shipping, among many others the downward trend of consumption of fossil fuels and of the need for imports, particularly in the oil-exporting countries as a result of their shortage of funds.

“In this context, it is expected that shipowners, especially those engaged in the transport of dry bulk cargoes, will be bound to be restrained with regard to their ship maintenance budgets.” Nevertheless, it was expected that the threats could be mitigated “and that Lisnave will therefore secure in 2016 a level of business similar to that achieved during the year under review.”

The report listed several risks, including the ongoing appreciation of the dollar that could lead investors to divert their capital from developing economies; falling prices of fuel and non-energy raw materials, which could mean exporting countries would have to adapt to a sharp decline of their revenue; environmental pressures, allied to greater energy efficiency generated by advances in new technologies, which would reduce the growth rate of fossil-fuel consumption and its transport.

As in previous years, Lisnave’s business was centred on its traditional market segments – tankers and dry bulk carriers. By number, they account for some 70% of the business. Attention was drawn to the move into other market segments, such as containerships, accounting for 13% of the ships repaired, and gas carriers, which account for 6%. Given the global nature of Lisnave’s market, ships repaired in 2015 belonged to 56 customers located in 19 countries. In terms of quantity, the most significant were Greece with 33 ships, Singapore with 20 and Germany with 11.

Since the beginning of its restructuring plan in the second half of 1997, Lisnave has undertaken the repair or maintenance of 2, 246 ships from more than 50 countries resulting in sales of €1.98bn, most for export.

A key part of the report to shareholders states that “in 2015 all the company’s performance indicators and ratios performed very well when compared to the previous year, which allows us to state that the year’s economic performance strengthened the company’s ability to continue to address a market characterised by great unpredictability.”

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