Unlocking Damen’s full potential
Damen is steadily gaining ground as the group strives to provide its customers with the best products and services in all its niche markets. But, as the organisation continues to grow, can it maintain the necessary process and production efficiencies to remain competitive? This has been the main task of the four members of the newly strengthened Executive Board – Chief Executive Officer René Berkvens, Chief Commercial Officer Arnout Damen, Chief Financial Officer Frank Eggink and Chief Products Officer Jan-Wim Dekker. Here, they share their views about Damen’s performance and its future.
Q. Many will remember 2014 as the year Damen delivered high profile ships like the three-masted steel clipper RNOV Shabab Oman II and HNLMS Karel Doorman, the largest ship in the Royal Netherlands Navy. How does Damen’s Executive Board look back on 2014?
René: We’re certainly proud of those vessels and the many others that we’ve delivered to satisfied customers. Damen is getting stronger and we’re performing well… crucially also in the built-forstock series production that Damen is known for, and where we’ve faced the greatest challenges in terms of capacity and logistics. Our improving performance is the result of keeping a very strong focus on our customers while we consolidate the rapid growth in the last few years. However, we still have a lot more work ahead of us to unlock the full potential in our organisation.
Arnout: Last year was also significant for the opening of our new joint venture yards Damen Shipyards Sharjah and Damen Song Cam Shipyard. The latter is set to become the largest series producer in the Damen Shipyards Group. Seeing these yards move from development into production is very rewarding. Also, we saw a strong growth in Offshore Wind and the Americas.
Q.In last year’s issue of Damen Magazine, the Executive Board highlighted booming business in Offshore, Defence & Security and Yachting. A year later, all three market segments are facing a slowdown in investment. Is this affecting Damen’s performance and strategy?
René: Well, that’s a reminder of how highly cyclical shipbuilding can be. We take a long-term view and I think if you look at all the niche markets that our customers operate in, you get quite a diverse picture. For example, Offshore Wind continues to develop positively while Offshore Oil & Gas is indeed feeling the effects of less investment in exploration and production. Declining activity in that market and the related reduced demand for our products and services may have an adverse impact on our financials. Our job now is to be creative and push hard to develop the products that our customers need to succeed in these challenging markets.
Jan-Wim: At the same time, we are developing our position in new markets. For example, we see rising potential in Blue Growth sectors like aquaculture, ocean energy and seabed mining.
Damen is getting stronger
and we’re performing well
Q. Did Damen’s performance in 2014 reach your expectations?
Frank: The Group financial results were satisfactory and improved on 2013. Our turnover rose to some EUR 2 billion in 2014. Our profitability was also up, in line with budget. All other financial performance indicators improved compared with 2013–which arguably was a transition year. Last year’s shipbuilding performance was helped by strong demand in the Offshore and Defence & Security markets. Our luxury yacht builder Amels delivered robust results and most other segments performed satisfactorily.
Sales in Seagoing Transport, Inland Shipping and Public Transport markets continued to be slow. Damen Shiprepair & Conversion is developing positively, with progress being made with the turnaround and integration of recently acquired yards in France and the Netherlands. The sales organisation successfully secured a number of interesting and challenging repair and conversion contracts. Regrettably, the repair yard in Gothenburg was no longer viable due primarily to competition, particularly from Polish yards, and was closed. The components business turned in another robust result.
Q. Can you also share Damen’s outlook for 2015 and beyond?
Frank: Global shipbuilding is extremely competitive and we expect that to only intensify in the years to come as a result of, amongst other things, the declining oil prices and sanctions against Russia. Although the weakening of the euro helps, we’re taking additional measures to shore up Damen’s competitiveness. These should contribute to cost reduction, quality improvement and an increasingly agile organisation. We aim to continue our growth, but at a sustainable pace that puts the interests of our customers first. We’ve improved our controls framework and management of working capital, which should contribute to controlled growth. Over the last year, our order intake was strong, finishing with a record orderbook. We expect a satisfactory result for 2015, both in terms of production value as well as profitability, improving on 2014. We’ll continue to work hard to sustain that performance in 2016 and beyond.
Q.What are customers asking for to help succeed in their markets?
Arnout: Reliable and proven technology that reduces downtime, with high safety standards. And reducing the Total Cost of Ownership is still the core focus for many of our customers. We will continue our research into ship motion and fuel efficiency, which reduces operating costs as well as helping the environment. Seeing our first hybrid ASD tug at work proves the benefits of our R&D programme, and this year we’re delivering the first Damen air lubrication system on a new Damen vessel.
Jan-Wim: The fact remains that many sustainability solutions are still on the edge of economically viable operation, largely depending on the exact operational profile. You can develop great fuel-saving technologies, but if they cost more than you can ever save on fuel, then you’re not really reducing the Total Cost of Ownership. This is the biggest challenge we face in these types of innovation projects.
René: We still need to make improvements and investigate other new technologies. We also believe that standardisation is one of the answers to keeping investment costs low, which is why we are investing considerable time and money to get the standard right.
Frank: Damen’s capacity to help customers with vessel financing sets us apart from the competition, and we continue to invest in Customer Finance as a key contributor to our customers’ success. We will put our accumulated experience and knowhow to work to make sure we can offer the right technical solution and are also able to finance it.
Customers can also reach
Damen 24/7 by phone
and from this year
onwards we will start
providing 24/7 service.
Q. What are your main priorities as you develop the Damen organisation?
Jan-Wim: One of Damen’s major ambitions for 2015 is the further industrialisation of the shipbuilding process to shorten lead times, reduce costs and improve quality. There is still potential for more efficiency at both the operational as well as the organisational level and in our chain. We’ll be further optimising production in existing building yards and new production locations including Damen Shipyards Sharjah and Damen Song Cam Shipyard.
René: We’re also very aware that Damen’s people make the difference. In fact, the values that make us one Damen family are an essential ingredient in our success and cannot be easily duplicated by our competition. Even though we have been working on smoothly integrating all Damen entities into one group, it remains our biggest challenge in the years to come.
Q. The Executive Board now oversees 9,000 employees at 48 different companies around the world. Given this expansion, how do you keep close to the customer?
Arnout: We do want to stay close to the customer. In fact, we have to if we want to stay successful. Listening to our customers is a core part of Damen’s approach. Plus, last year we conducted our first customer survey, which helps us get a better understanding of the needs of our customers and where we can improve our products and services. Overall, the response was very positive, and I also appreciate our customers’ straightforward feedback. I like our customers to remain critical and share their opinions with us. Based on that feedback, we’ve improved our after-sales services and worldwide network, we opened four Damen service hubs – Brisbane, Sharjah, Cape Town, and Curaçao – and we are investigating further locations. Customers can also reach Damen 24/7 by phone and from this year onwards we will start providing 24/7 service.