Royal Boskalis Westminster N.V. (KKWFF) CEO Peter Berdowski on Q4 2020 Results - Earnings Call Transcript
Royal Boskalis Westminster N.V. (OTC:KKWFF) Q4 2020 Earnings Conference Call March 4, 2021 5:00 AM ET
Peter Berdowski - Chief Executive Officer
Carlo van Noort - Chief Financial Officer
Martijn Schuttevaer - Head of Investor Relations & Corporate Communications
Conference Call Participants
Luuk Van Beek - Degroof Petercam
Tijs Hollestelle - ING
Thijs Berkelder - ABN AMRO
Andre Mulder - Kepler Cheuvreux
Christoph Greulich - Berenberg
Maarten Verbeek - The IDEA!
Yes, good morning to all of you. Special good morning, first of all, to the analysts, we have the presentation to analysts on the full year results of 2020. I think it's the 21st time I am sharing this meeting with you. First time out of your presence. And Carlo and I just said to each other, feels a bit like the opening of the 8 o'clock news. The only thing we see is a black room with cameras. But we know that you are watching and are listening. So we're very welcome to the analysts. But secondly, and maybe even more importantly, very welcome to a lot of the employees of Boskalis, who are also tuned in great that you will join us. And normally, we have a presentation in the contain of our head office. I tell you a bit about what has happened last year. Unfortunately, because of COVID, I'm not in a position to do so, but it's great that you can join us here directly live of maybe later when you watch it back.
So to all of you, very welcome. We will lead you through the full year results as said. I will give a brief introduction to start with some of the highlights of last year. And then Carlo will take over to lead you through the details of the numbers.
Well, you've all have seen the press release this morning. And I must say looking backwards in the year that is behind us now and looking at the results, revenue, EBITDA, net profit, et cetera, that we have realized, I must say that give and take 11 months ago, both Carlo and I would even have dared to hope to reach these numbers because we've been through quite a roller coaster in the last year because of COVID, I think you all are aware of that.
And now to present these numbers, yes, it really fills us with pride to be able to do so. And let's not forget that's above all, an achievement of the whole team of Boskalis because I think everybody at Boskalis has worked extremely hard to reach these results. So big thanks to all of you.
Results 2020. EUR 2.5 billion approximately, a bit less than 2019. A lot of that was because of COVID-19. EBITDA even better than 2019, EUR 404 million. We generated a lot of cash also last year and also managed cash on the balance sheet very well, as Carlo will tell you later. Net operating profit, EUR 90 million also had an improvement with respect to 2019. There were some exceptional charges already first half year. We took approximately EUR 150 million, and took an additional EUR 45 million in the second half of the year. Again, Carlo will lead you through the details of that later. And then order book, very proud of that, EUR 5.3 billion, the highest order book that in the 22 years that I am at Boskalis, am able to present. But it goes further even in the 110 years existence history of Boskalis. This is the highest order book ever. And obviously, we are helped here by the huge order we were capable of bringing in December, Bulacan airport. We'll tell a little bit about that later.
Financial position, more than EUR 800 million cash on the bank end of the year, and the net cash position is even over EUR 400 million, which is a huge improvement, obviously, in comparison with the end of 2019. We skipped dividend over 2019 and 2020. As you all will recall, one of the measures we took to improve cash in COVID times. But this year, dividend is back. And as far as I'm concerned here to stay. EUR 0.50 dividend is the proposal.
Just to reflect a little bit back again on COVID. We've seen financial impact on both the revenue side but also on the earnings side. And if you would ask me what is the general effect overall of COVID-19 on the revenue, I would say it's approximately around EUR 200 million, meaning that I think revenue 2020 would be close to 2019, would have been close with 2019 if we wouldn't have had COVID in '20.
Earnings, again, difficult to say exactly, but I think a rough estimate teaches us that it's somewhere between EUR 40 million to EUR 50 million margin as far as the financial impact of COVID.
We took our measures quickly in March already 2020, where cash and cash generation preservation was high on the agenda. So we reduced all nonproject related out-of-pocket expenses as soon as possible. Started working on the optimization of working capital. That was very high in the agenda. We decided that we already had passed 1/4 of the year, but in the last 3 quarters of the year, we reduced the CapEx program 2020 as much as possible. That was more a matter of shifting investments from 2020, in 2021 because we didn't skip a lot of investment in that respect. As I already said, we had no dividend over 2019, and we temporarily suspended the share back -- buyback program, but we picked it up after summer again.
We took a critical valuation of all the assets and activities on the balance sheet. That already led to, as I said, impairments in the first half of the year. A lot of that was related to 2 associated companies. The majority was and is with those companies. We took a close watch with the closing of the books over 2020 and took a really sharp look as far as debt is concerned and impaired an additional EUR 40 million to EUR 50 million mostly related to very old assets and some old goodwill that was still on the balance sheet.
That, as far as a first introduction, and I now pass over to Carlo.
Carlo van Noort
Great, thank you, Peter. Moving on to Slide 6, I will start with the revenue by segment and region. And directly on the first line, you see the biggest impact of COVID-19 on our business. We're dredging, especially outside of Europe, we were impacted by lockdowns also like in Singapore. So decline in revenues over there. Offshore energy up, especially due to the consolidation of first-time of Horizon, our marine survey company in the Middle East. Next to also a strong year for contracting within offshore energy.
Towage & Salvage, very excellent year. Do not forget that 2019 was already a good year. But 2020, especially emerged to be -- response jobs were big and evenly spread throughout the year. And that ends up with the total revenue of EUR 2.5 billion compared to 2019, EUR 2.6 billion.
Then going to the revenue by region. More or less, you see here what I just stated is that especially outside of Europe, we had a decline in revenues. If you look at the Middle East, you would do a like-for-like comparison, you have to exclude Horizon with most of the activities in the Middle East, and you see a sharp decline. We expected in the beginning of the year, that would be compensated in -- for the big projects in Asia and especially in Singapore. But as said, we were hit with lockdowns over there. So that increased, yes, that more or less delayed, is postponed to later years that you see back in those figures. For the Middle East, last year, we still had Duqm in full swing, the port development in Oman. Americas up. That was especially the Stellar Banner project of salvage in Brazil.
Turning to Slide 7, operating results by segment. You see a very strong operating result, altogether of EUR 140 million compared to 2019, 28. And if you then look at the composition of that, you see that the decline, as already mentioned by Peter, was especially within dredging, down to 53. But the strong turnaround is here, of course, in offshore energy, a very strong year over there.
Of course, last year, we took the provisions with the decommissioning and the cable project. But this year, we had a strong execution for those projects, but also all the other activities, but especially the contract activities were added to this result.
As already said, excellent year for especially salvage, stable year for towage, resulting into this operating result of EUR 46 million.
Non-allocated income expenses, which is mostly the overhead cost for our central offices, yes, that -- due to a lot of cost-saving measures, we see a decline here in cost which resulted in a far lower number than 2019. Altogether, a strong 2020. Exceptional items, as already shortly mentioned by Peter. In the first half year, we already explained the impairments for around EUR 148 million. And in the second half year, we took a critical review for all assets and really cleaning up our balance sheet. And altogether, we have as it does mostly impairments, we have exceptional items of EUR 195 million.
Then turning to the next slide, EBITDA by segment, more or less the same picture here, of course. Again, you see, of course, Offshore Energy, almost 50% of the total EBITDA of 404 delivered by Offshore Energy, still quite a stable Dredging & Inland Infra.
Quite a strong dredging in Infra result, also contributing to that result of [indiscernible]. [Technical Difficulty] Then going to the next slide. Yes. Hopefully, you could follow me in the last couple of minutes. But let's see how it goes. Order book, yes, as already said by Peter, order book, a record year again with EUR 5.3 billion, and especially, of course, within Dredging & Inland Infra, with an order book of EUR 4 billion, of course, due to the award of the Manila Airport that later on, Peter will tell you a bit more about it.
Next slide, the phasing of the order book. Here, you see that already for 2021, we already have EUR 2 billion in the order book. If you would reference that to last year or 2020 revenue you could say we already have 80% of revenue in the books. If you also look at the phasing of the separate divisions, you see that especially with Offshore Energy, most of the order book is executed or planned to be executed in 2021. And for Dredging & Inland Infra, you see a bit more phased execution also later on in 2020 and 2023. What is important to state here is that next to the size of the order book, also the quality of the order book increased. Because with this order book, we already covered a lot of utilization for our own vessels also for 2021, but especially beyond 2021.
Then going to a somewhat deeper dive in Dredging & Inland Infra. As already said, COVID-19 impact outside of Europe with the resulting cost for travel restrictions, quarantine measures, but especially also inefficiency due to that in the vessel planning, execution of projects. One of our bigger projects in Singapore, the Pulau Tekong polder development due to the lockdown was suspended for the biggest part of the year. And also starting up such a project under those circumstances is also a challenge of its own. So there is the biggest impact for us with COVID-19. On the other hand, a very solid contribution from our Dutch Inland Infra business, I would say, above average, if you compare it to previous years. So especially, of course, in a year like this, very important for the bottom line result.
Order book, as already mentioned, of course, due to Manila airport, but also in for the Inland Infra activities, we received quite some awards, especially the dike reinforcement projects are important also for our Dutch activities. So also well filled, if you take into account also the award of the Belgium Oosterweel project then for Inland Infra, we already have around EUR 1 billion in order portfolio for the coming years.
Utilization of the vessels for the dredging, quite a busy second half year for the hoppers, 35 weeks. If you would compare that with the industry average, what is about 25 weeks, this utilization, of course, quite high. Cutters, a somewhat different story, a slow second half year. So the yearly utilization end of the year of 17 weeks.
Offshore energy, I believe, a nice picture. This is our first floating wind farm project, where we were awarded the transportation of those yellow floaters from Spain to Rotterdam, where the turbines were mounted on those floaters. And we towed those assets to its final destination off the coast of Aberdeen and anchored them on the bottom, water depths of 60 to 80 meters. And I believe a real showcase also for Boskalis that we can provide all the assets and activities for those floating wind farms.
And we believe there are more to come because, yes, with floating wind farms, you are not limited by water depths. So also for us, important business for the future.
If you look at the breakdown in contracting and services, services being, of course, transportation. Like you see here the Vanguard transporting a fish farm measuring 385 meters by 60 meters, another record for our Vanguard. But also services like diving and marine surveying. Contracting, accounting for 56%, all kind of activities like the cable laying activities, installation activities by our crane vessels, et cetera. Renewables still accounting for 41%, more or less the same percentage as last year.
As already mentioned a couple of times, a very strong year for the contracting side of Offshore Energy. Very strong results, a lot of pipe laying related activities. Protecting those pipelines, et cetera, very strong contribution. Offshore wind, very busy year. Good project execution also, for instance, the cable projects. And with heavy lifting, we had the decommissioning projects successfully completed in the first half year, leading to the already mentioned strong result, strong EBITDA for this division also adding it to our bottom line.
Then the services part of offshore energy showed a somewhat more mixed picture also in relation to COVID. If you look at our marine transportation services, quite a busy year, but also with a lot of challenges, a lot of shipyards where we should have picked up our assets, the transport. There were a lot of delays there, a lot of discussions there. So also some delays, postponements to 2021.
Surveying, also a mixed picture, slow start in the North Sea because of obvious reasons there. First, the winter season in Q1, but then hit in March, the high season in North Sea by COVID, also due to the low oil price. But a busy second half year, especially with a lot of wind related projects that we're taking on. With Horizon, mostly active in the Middle East, we had a very busy first half year and a somewhat slower second half year, again, also for obvious reason in the Middle East with the oil price.
Subsea, also mainly active on the North Sea, with the high season starting somewhere in March, and March which was the month COVID-19 impacted us. Yes, a slow start of the year, some recovery in the second half of the year, but a lot of jobs also delayed to this year. And together with the acquisition we've done in December
of Rever, we believe we have now a strong position in the North Sea, and we expect also a very busy 2021 with quite some jobs also from 2020.
Order book still at a decent level EUR 1.2 billion, 57% of that is renewables like the Changfang Xidao project in Taiwan which we will execute in 2022.
Towage & Salvage. Here, one of our last emergency response jobs in 2020, the New Diamond that caught fire of the coast of Sri Lanka, we successfully controlled that fire and safely returned this vessel to the harbor. As I said, the emergency response jobs in 2020 were quite important also for our results, which is shown here as already mentioned, with a strong EBITDA number, where also the towage, remaining towage activities contributed with a stable result despite COVID.
And as already mentioned, do not forget that for Salvage, 2019 was already a strong year, if you compare that with the last couple of years. But 2020 was really an excellent year, very important for us, of course, also in relation to the other results with relation to COVID.
We always present you the overall Towage numbers, which are the 100% numbers. Here you see, if you would eliminate also the FX impact on these numbers because these are nominated in U.S. dollars and then translated to euros. You see a quite stable EBITDA for those activities and still with a sizable order book of more than 1 billion.
Holding & Eliminations. As already mentioned, a lot of cost-saving measures, of course, this year, especially on the head office, postponing IT projects, restrictions on traveling, of course, facilities, et cetera, no external hires. So we really try to limit our cost here which resulted in this lower cost level at Holding & Eliminations.
Exceptional items. The first half year, predominantly, these were the impairments on the 2 joint ventures, Smit Lamnalco and Asian Lift, especially related, of course, to oil and gas developments in the first half year. The second half year, we took a critical review on all our activities and assets, which resulted in some smaller investments, but altogether, smaller impairments. But altogether, it accounted for EUR 48 million of impairments. So for the full year, we now have an impairment of EUR 195 million or mostly these were impairments.
Then going to the balance sheet, a strong balance sheet, solvency of more than 50%. If I just swiftly go through this balance sheet, you see that property, plant and equipment is stable. More or less, the CapEx was balanced with the depreciation level. However, due to some impairments, a somewhat lower level. The intangibles increased due to the consolidation of Horizon. We had to account for the goodwill for Horizon, which explains this increase in the intangibles. This also resulted in a lower level of associated companies. The number there is also impacted by the fact that Horizon was first bought in 2019, part of that number, but is now fully consolidated. And then, of course, including the impairments just mentioned on 2 big joint ventures resulted in decline in this number.
If you then look at working capital, a great improvement. But if you sum up current assets with the current liabilities for the 2 years, you see that altogether, we improved more than EUR 400 million our working capital position. Of course, due to all kinds of measures we took with regards to working capital management also in relation with, of course, COVID-19.
This also positively impacted our net financial position. As already mentioned by Peter, cash position end of the year of more than EUR 800 million. And if you then add the debt, we have the net cash position of more than EUR 400 million at the end of the year compared to EUR 25 million at the end of 2019. So a very strong cash position with good liquidity. Also, if you take into account, of course, our headroom, we still have an unused revolving credit facility of EUR 500 million not used at this moment.
CapEx, beginning of the year with a 3-year plan, we announced that we would have quite some CapEx in 2020, more than EUR 400 million. But due to delays with shipyards, but also due to postponements of CapEx with regards to the measures we took with COVID-19, we resulted in a far lower level of CapEx of 241, with, as said, delays to 2021, of course.
With a good EBITDA also comes good cash flow. So also here, a steady increase to a level of EUR 355 million compared to the EUR 340 million last year. Also the contribution from cash flow was very good this year. Then also the cash flow explained in somewhat more detail here. You see the mutation in the net cash position here. And again, you see the movement in working capital of almost EUR 400 million, of course, contributed greatly to the final number at the end of the year. So -- and next to, of course, the operational results that are already explained.
And of course, also, the things that are not mentioned here. We did not pay out any dividends because of COVID-19. We suspended our share buyback program. All the cost measures we took also, yes, have to be included if you look at this strong improvement in cash flow in the end of the year.
That was my final slide, and I will give the floor to Peter.
Okay, I can still use this mic, just checking. Yes, I see 2 thumbs, so that must be yes. Okay, outlook. Well, it's clear with the order backlog that we have a well-filled order book, that we have a solid foundation for 2021, but even beyond. For Dredging, we see a gradual improvement during the year. We expect that the first half year will still be very much influenced by COVID, obviously. But we foresee more recovery in the second half of the year. That's also when the Bulacan project will take off. That will help us there.
Offshore Energy, we've seen a pretty strong 2020. And we expect 2021 to be of the same quality. Yes and to which will be stable, as Carlo already mentioned. It's remarkable how stable the EBITDA levels have been. And regardless of COVID-19 over there. And Salvage we all know, it's impossible to predict. Must state that we've seen an extremely successful 2020, and it's not very likely that we will see the same level in 2021. But having said so, we have strengthened our marked position in general, so expectations also there are good for the longer run. EBITDA guidance.
Normally we're quite reluctant but given the quality of the order book as we have it today, and particularly with volume, we see a solid base to match 2020 level of EBITDA in 2021. CapEx, as I already explained, we had a 3-year business plan with approximately EUR 700 million in investments forecasted then. But that was pretty front loaded in 2020. It was almost EUR 400 million. We have shifted a great chunk of debt into 2021 and, because of debt, we expect investments in 2021 to be higher, in excess of EUR 300 million. But again, that's also a spillover effect of 2020. Important items there are obviously the investment in the Bokalift 2. Despite COVID-19, we are still making good progress with the whole refurbishment and rebuilding exercise in Dubai, Dubai dry docks. And on top of that, we plan to lengthen the Prins and the Oranje, not both of them in 2021. One will, hopefully, be finalized this year, and the second one will then follow in 2022. Important vessels also to put us into position to execute Bulacan airport. Yes, midterm outlook in comparison, which 6 months ago, has clearly improved. First of all, obviously, because of order book, but also looking at the market, we see some more activities. We have seen more activities, clearly, also with larger projects in the dredging market.
Wind market is still strong. We have to be very careful here, obviously. And we want to be quite selective in the projects that we pick and choose. A reflection of that is that we have not been successful in any of the cable projects tenders that were running last year because we have been extremely careful there, so we are selective. But even being selective, we see opportunities with wind. Certainly developments in the East Coast of America will take off further.
Yes, and last but not least, we've seen a very, very poor year on the oil and gas of energy offshore site. But we do expect some rebouncing of that market in due course, let's say, from second half of '21 further. And if I look at a tender pipeline for -- and particularly also gas, we see more activities now than we saw 12 -- 6 to 12 months ago. So also there, we are more positive than we were 6 months ago.
So that is far as outlook is concerned. Maybe it's nice to share 2 projects with you, starting with the evident one, obviously, the pride of 2020. Bulacan-Manila International Airport. The current international airport in Manila is very congested, cannot cope with the traffic volumes that they have today, let alone what they project for the coming years. That's the reason why the government has come out with a concession for an international airport. Well, that concession has been won by San Miguel Corporation. Everybody who travels or has been traveling in Asia knows San Miguel, famous from the beer. I call it the Heineken of Asia, very successful company of the Philippines. They are by far the largest company. The revenue is EUR 17.5 million in 2019, and just for your comparison, they generate almost 6% of the country's GDP. So it's really a very big player. And they operate in beverages, beer, traditionally, food packaging, fuel and oil power, but also in infrastructure. They are and have been a very successful infrastructure player, although we don't know them that much from that.
The project is the new Manila International Airport, Bulacan airport. Bulacan is the area where it will be realized. It's a public concession for tens of years, and the initial stage will contain 2 runways, terminal buildings, access railroad and highways and marine access also for supply. The total projected budget for the airport is approximately EUR 13 billion, and the land development, where we are working -- we'll be working on is approximately EUR 1.5 billion, which is quite a part of the whole investment, as you can see. And obviously, we are the starting contractor there, the launching contractor.
What will be our activities? Well, first of all, we start obviously with design and engineering, and we are in the middle of that as we speak. We will have to dredge an access channel also to make it possible for our jumbo trailers to access, close enough to the coast to pump the sand that we will need ashore. We will also see some river dredging. Bulacan is more or less an island between the sea and 2 rivers, but the rivers need to be deepened also. There's a lot of sand to be supplied comparable with almost with the mass factor and also a lot of soil improvement, taking into account that we will be placing the sand not in the sea, but at the current swampy area, and that means that the soil in that area is soft and needs to be improved in order to create a stable platform for runways and buildings. We will also have to create coastal protection, also to the highest levels that are needed, looking into the future, also taking into account climate change. And we will construct a key hole at the end of the access channel because that will also be used for supply of following contractors.
Well, it's a huge utilization of equipment that is involved, over 500 large to mega hopper weeks, and I want to talk about large. I specifically talk about the lengthened Oranje and Prins, but also the Queen and the Fairway, so let's say, the top 4 of our hoppers will be heavily involved in this project. But on top of that, you also talk about 40 cutter weeks, most of them mega cutter weeks. And we foresee that the Helios will move there in the second half of this year, and she will be involved with the creation of the access channel.
But there's also a lot of work to be done onshore. We pump the sand onshore, but a lot of the sand needs to be rehandled also to make sure that at the end of the day, we create that stable platform, as I said. So it's over 10,000 weeks of bulldozers, excavators, dump trucks and wheel loaders. It's really a heavily placed in the future for people who love [ yellow ] plant.
Timing, we will start second half of 2021 as said, and it will run into 2024, and it will provide it with a lot of utilization of hoppers, as I said.
Well, the second nice project, not because it's in the order backlog yet, we are working hard on that, but it's still on the tender. So it's too premature to speculate on that, to be honest. But it's -- I think it's a nice project to share with you because it's a relatively new development. Interestingly, enough Tennet in the Netherlands have been talking about a comparable solution in the North Sea for years already. But that's the difference, I must say, between the Danish and the Dutch. The Dutch talk about it and the Danish just do it. So in February 2021, the Danish Folketing, which is the parliament, approved the construction of VindÃ¸. And VindÃ¸ is an artificial island, an energy island, approximately 80 kilometers offshore of Denmark in the North Sea. And the name already says it. VindÃ¸ is from wind because it's there to connect and distribute power from surrounding offshore wind farms. It's a huge connector, so to speak, for wind farms that will be created in that area.
Current design talks of a minimum capacity of 3 gigawatts, but potentially an expansion up to 10 gigawatt offshore wind, which is really huge, as you understand. And the island, interestingly enough, will be developed under PPP, public private partnership.
Indicative budget for the 2 phased development is approximately EUR 8 billion to EUR 28 billion. That's a huge bandwidth, you would say, but that depends on whether they opt for the 3 gigawatts at 12 hectares or 10 gigawatts, 46-hectare solution.
The investment in the island, and that's the part obviously where Boskalis will be involved in if successful, will be at the 3 gigawatt option, approximately EUR 750 million. But in the 10 gigawatt, you talk about EUR 1.5 billion. And again, these are numbers comparable to the size of second mass [indiscernible]. So it's really a huge development, which is good for the dredging industry and would be even better for -- if it would be at the end of the day, acquired by Boskalis, obviously.
A lot of additional investments also needed both in wind farms and transmission systems as you can see. There are different concepts still under study, either a full sand solution with revetment or a solution with sand and caissons or a combination of 2. That's all still under study. And we are working together with the client to -- on a pre-feed study to look at the possibilities in that respect and what the optimum at the end of the day should be.
Well, as I said, it's a PPP. So financing is a consortium comprising important pension funds in Denmark, Pension Denmark, PFA and SEAS-NVA. Copenhagen Infrastructure Partners is the developer, so to speak. They are to provide assistance to this consortium. And we know CIP from several wind farm developments that we were involved in, one of them being Veja Mate but also Changfang Xidao, a project in Taiwan that is currently under execution, is also for Copenhagen Infrastructure Partners as a developer client.
We are part of an international consortium. We're bidding for the full EPC contract of the island. And for us, potential services would include land reclamation, obviously, a lot of sand, breakwater, revetment, soil compaction, civil works. And if there is a caisson solution, transportation, installing and ballasting of the caissons.
So I think it's a very nice example of a new segment in the dredging market but also the wind market to be developed. And if this turns out to be a successful solution, we foresee that more of these islands could follow in the midterm future. So I think a very relevant development for the industry. And obviously, a very important development for us as Boskalis. And our tender department is fully focused on it, as you can imagine.
Okay, that was my last slide. And I'd now like to give over the floor to Martijn because Martijn will direct the input, incoming input from analysts who are on Teams in the same session where we are. Martijn, I give you the floor. I can hear you but I won't see you.
Thank you, Peter and Carlo, thanks for the presentation. We will now go over to the Q&A part of the call. [Operator Instructions] And the first question comes from Luuk Van Beek from Degroof Petercam.
Q - Luuk Van Beek
Yes, first, a question on offshore wind where the market is changing, moving basically from Europe to also a large part in America and Asia and also increasing interest, as you mentioned, in floating wind. Can you discuss what -- how you're positioned for that change? And how you think it will change your competitive position?
Yes, we've been working on the East Coast of America for a long time already, both on the tender side, but also take into account, as Carlo just said, when you talk about last year with survey, and particularly, the activities of Horizon that for the Atlantic are now merged with the activities of Gardline, they were focused very much on the East Coast of America. And the second half of the year has been relatively good for Gardline because of the projects that we had far into the winter in the East Coast of America. So we've been working there for Erstad. We've been working there for others. So we are already involved there with survey. That's number one.
Secondly, we have been bidding since early last year already, both on the cable projects there, but also on the insulation projects. Now what's interesting on the East Coast of America, is that you have to import most of the material that you need there, both on the foundation side cables but also turbines, you name it. And that has to do with the fact that the offshore wind industry in the U.S. is -- has not been developed up until now. And a lot of -- both the piling, but certainly turbines, will be imported from Europe.
Now one of the advantages that we have is that we have the heavy marine transportation vessels, and we are in a position to offer a full scope solution, meaning we can transport piles for instance, say, from the port of Rotterdam or wherever, transport them into the U.S, pick them up with one of the crane vessels and directly place them. One of the advantages you have then is that you don't have to sail first into a local port in the U.S. because, if you then transport from that port into the wind farm field, it is by definition under the Jones Act, meaning that you would have to use American-built and flag barges but also towing boats, and you name it. And that has a massive effect on your cost price. So we think we are in a positive position in that respect. And from the feedback that we got from a few of the projects that we are tendering on, that is also being recognized by the clients.
Luuk Van Beek
And my second question is on your balance sheet. On the one hand, there was a huge improvement in your working capital partly because of prepayments and partly because of the measures you took. Can you give a broad breakdown between those 2 elements and indicate to what extent the improvement is sustainable? And further to that, the -- can you tell a bit about how you look at capital allocation? You have, obviously, an extremely strong balance sheet. You mentioned that the potential for M&A next year, but still, there should be more room to do some shareholder remuneration, for example, you did not choose to catch up on the dividend that you passed last year or increase the share buyback. So can you look at a bit more about how you look at that?
Yes, you cover the first part, Carlo.
Carlo van Noort
Working capital, as said, record high working capital level. But here, you have to recognize that next to the fact that we, of course, took a lot of measures to optimize that number, that also we still have a mix of projects. And depending on the stage of certain projects, you have a certain working capital position.
And if you just look at certain bigger projects like Changfang Xidao, et cetera, there you have some advanced payments, which are contracted. And now you go into execution. So it's -- if you then look to 2021, we see a normalization of that level of working capital, not going back to the level end of 2019, but it will surely go down for a serious amount. Next to -- but Peter will go into the details of capital allocation in a minute. But also, please recognize that we took a lot of measures like suspending the share buyback and paying no dividends, taking measures on cost which, of course, also impact that, of course, limiting the CapEx with delaying it to this year and later. So all those things end up in that number. But specifically on working capital, please see this is really at a record level. We are still a project company.
Also a project like Manila Airport, where we have quite a good position. If you look at the work of capital consumption, also with the prompt payments, et cetera. But if it is in full swing, it will consume a part of our working capital in a normal way, but it will consume a part of the working capital.
You will see a couple of hundred decrease by definition towards normalization, I dare to say. Yes, capital allocation, it's almost ironic after the year that we've had where our main worry was cash and how did we make sure that we wouldn't burn too much cash and at the end of the day, burn ourselves through the eye, so to speak. And it's also the big success and the big achievement of last year that we are here today in a position that you can ask the question what do you think about capital allocation instead of do you feel sure enough that you have enough capital and you're not considering an issue, rights issue or something like that.
So now we've never been close to that. And as far as I'm concerned, we won't be in the coming 50 years. But I think where we stand today, looking forward, you're right, capital allocation is back on the agenda. That's the reason why we restarted the sale -- the stock sale buyback program. We still have EUR 20 million there to go. It was a total of EUR 100 million, and we still have EUR 20 million to go, and we will conclude that.
We will then also, we will ask the General Meeting for, again, the possibility to buy back shares. So the option is there on the table. And obviously, we will take a close look at that. Having said so, looking at liquidity of the stock, looking also at a day trade of the stock, there is a growing number of shareholders who are also worried about the liquidity of the stock as we buy back too much. So we have to find the right balance there. But for sure, capital allocation is on the agenda. We will pay dividends, we will buy back, but moving further in the year, we will take also a closer look at other opportunities if an alternative, if that is the case.
Then moving on to ING, Tijs Hollestelle, if you can unmute yourself and go ahead.
Basically I have a follow-up question on the one of Luuk because the trade working capital position is so extreme that we probably need a bit more guidance on basically a 6-month basis because it has a tremendous impact on the stated net debt. Hence, I think, on the valuation of Boskalis. And also in relation to that, the guidance you gave on CapEx, it seems that you were faced with delays of about EUR 175 million last year. So yes, that comes back now. But that means that the other EUR 300 million implies let's say, the lowest level ever based on your normal budgeting. So the -- in my view, the excess could mean EUR 100 million. I mean would EUR 400 million CapEx not be more likely to happen?
Yes, starting with the last one, part of that, Tijs, is also that a lot of shipyards still have difficulty in performing because of COVID. They go in lockdown and then they get out of lockdown. So let's say, the speed of building is still far less than it was 24 months ago. So as I said, first of all, it's the Bokalift 2. And hopefully, that will be concluded this year. There are other newbuilds, rebuilds also on the agenda that were on the agenda then. We are currently engineering the 2 shallow draft hoppers, we presented in the corporate business plan, as you will recall, around 20,000 cubic meters. But also, that will take us to, let's say, the fourth quarter before we have a final design and before we can go to a shipyard for a realistic tender.
So I think we are working full throttle at the highest speed we can. Having said so, we also see that, number one, there is some room for additional investment. And we are currently also looking at some assets that -- and particularly depressed assets that you still can find in the offshore energy environment to see if we can do some investments there. We invested in a vessel for Gardline survey that we turned it to a survey vessel last year successfully. We are currently doing the same, again, a vessel for Gardline.
The first one is on the geotechnical side. And we are considering a third vessel. And we are looking at construction support vessels because as Carlo showed, the Kincardine floating wind farm is a very nice example of a new development, where we can also play a role in -- with installation making use of the transportation vessels and the wet transportation vessels in our fleet. And also there, we see a new market rising, where with some additional investment, we think we can strengthen our position.
So I think on the newbuild side, we are doing what we can do, giving still the restrictions of COVID with shipyards and with engineering. But we have a very open view on opportunities to strengthen the fleet, particularly on the offshore energy side. So that's number one.
Number two, you think you need more exact guidance of working capital through the year. I've been praying for that for the last 22 years with Boskalis. But up until now, somewhere I haven't been heard. The only thing I know, it has been exceptionally high and to manage debt. I would say you could easily see a fallback in EUR 300 million to EUR 400 million in working capital in the normal fluctuations that we make. But knowing exactly how that will develop in the run of the year is extremely difficult to predict. You can make your long-term analysis of working capital with Boskalis, and it shows that we are hundreds of millions above what is normal.
And also, let's say, in that number, Tijs, is also part, let's say, of our carefulness of taking results, taking losses, cash versus result, et cetera. Also you would like to put me a number on that, but also that is not easy to do.
I mean, I fully understand that you see it with contractors industry-wide that there is, of course, the negative interest rates that clients are willing to pay early or give you very favorable prepayment terms, but is the Manila project already included in the year-end -- you probably received prepayments on that as well, which can be huge.
No, no, no, not then. That was early this year. So let's say, Bulacan has no effect on the high working capital level of the end of the year. That's not the effect you see. The effect is from -- and it's also not so that we see in general that clients are almost waiting to pay. There are clients that you still have to beat before they are willing to pay, so it's still a mixed basket. But -- and we have been chasing it very hard and very successful also.
Then I also have a question on the outlook for the dredging business. I understand that the COVID-19 still plays a role in the current environment in the first half. So you were clear about the fact that you expect activity levels to move up in the second half after the summer. But how should we look at the comparison? Because the revenues were down, I believe, 18% year-on-year in the second half of last year, but the first immediate impact from COVID-19 was in the first half. Is there a kind of a delay -- delaying impact on your business? Should we calculate with such a revenue decline than also in the first half? Or any help on what you expect on revenues would be helpful, even more because the hopper utilization rate were 22 weeks, first half last year and now much higher. So it's difficult to understand what is actually going on there.
Yes, you have to realize, Tijs, in the utilization of the fleet, a hopper is also utilized if it lays idle on that project. So the project has to pay for the hopper because it has been mobilized for that project. That's different if you have idle periods between projects, those are not calculated in utilization. But if you have suboptimization of production and idle time on the project, that is still in utilization of fleet, So you have to be careful there, that you don't calculate every week in utilization as an effective project week.
Looking forward in this year, we said we still expect some effect in the first half. I would say, looking in the year with the knowledge that we have today, and it's -- you still have to be careful, obviously. It's all assumption. But I would say that the same EUR 200 million that we've seen last year could easily occur also in this year.
Now 1 final question. On the energy protect in Denmark, the consortium, you're in, is that also including another Benelux dredging company?
And the next question is, does it start with a letter.
I'll not ask that. But I mean, are they all separate or are you teaming up? Because if you win such another monster project, then you don't have enough hoppers, I would say.
Well the execution of this project is years away. So it has a huge initial stage. We don't worry about capacity. [indiscernible] and that's not uncommon. We do have contact with other dredging companies on capacity if we are in need of that capacity. So I don't foresee that winning of this project would lead us into capacity issues. Having said so, we are teaming up and it's not just because of hopper capacity, but also for, let's say, technical, commercial, technical reasons with another.
Let's move on to the other Tijs, Thijs Berkelder, ABN AMRO.
Question, a bit of a follow-up on what the other Tijs already asked. I'm looking at second half 2020 results dredging. There, I see that the hoppers are fully utilized. The hoppers typically are your key EBITDA engine, but the EBITDA margins in the second half last year were more or less a record low. So what happened? Even if you're paid when the hopper is idle, you would expect an even higher margin, not a lower margin. Is it maybe that you booked, let's say, a charge for the other Malaysian contract. And then indeed, encouraging where you discussed the outlook more in general. Do you expect that in the coming 2, 3 years, the dredging market or Royal Boskalis in dredging will return to more normal margin outlook?
Yes, well, as far as EBITDA development is concerned with dredging, it's not so that we receive EBITDA if at the end of the day, you produce ineffective weeks just to take away that misunderstanding maybe. Those weeks you burn at your own costs, so you could say the negative EBITDA instead of positive EBITDA. But it's -- I think it's -- there are 3 elements, Thijs. The first element we mentioned is COVID. And COVID has impacted the dredging division more, far more than the offshore division.
We've seen -- we've had troubles everywhere, but with dredging, it has been extreme up to the level where, for instance, projects in Singapore even came to a full lockdown and costs still running. And then you can have discussions about coverage of personnel costs that clients are willing to pay. But again, our real costs are also with the vessels, et cetera.
So we've seen the biggest impact there. Also inefficiencies in getting people there, bringing people home, making sure you can keep the vessels sailing and that the vessels could be utilized efficiently at projects. So that's -- I think that's a very important one in that respect.
Secondly, of course, the second half is very much a reflection of, let's say, the order intake of 18 months ahead of that, 12 to 18 months ahead of that. And it's a reflection of the poor market circumstances that we had then. And I must say, also had for most of 2020. So it's a combination of COVID reflections in that respect. And looking forward, we also took into account, as I just said, we are still considering COVID effects in the 2021 year. But if that leads to potential losses, the way we book it, we will take those losses. So as you are -- as we usually do, we've done the same this year, and we went through the balance sheet carefully with all the impairments, but we did the same with the whole project portfolio. So we have been pretty conservative, careful, prudent, however you want to call it, but also in expected project results. And there, where we foresee COVID troubles leading to potential loss of margin or even loss, we have taken it as well.
So in that respect, we have cleaned up both the balance sheet, but also the order backlog. So it's a triple effect, so to speak.
And the long-term margin outlook.
Yes, if you then look at long-term margin outlook, it's -- I think we are pretty well covered for the coming 3 years with our backlog. I think DEME is also getting close. That's different for the De Nul, but certainly for Van Oord. So I think you will still see some nervosity over there. Good news is that there are other jobs in the pipeline. I think a very important development is the Al Fao channel in Iraq that has now come to the market. And we are tendering on the channel as we speak. That's also a very substantial project with hundreds of hopper weeks involved. And all things being equal, I would say that this will -- this project will take off somewhere in the second half of this year and will generate a lot of hopper utilization in the industry regardless for whom.
I already mentioned the Danish Islands. There are some further developments in Manila, where I see that you will also see further projects coming to the market. We lost a project there, as you mentioned, but the fact that we lost it doesn't mean that it's lost for the industry because it's on the retender as we speak. But at the price level that we don't feel compelling enough.
So I think by the end of this year, we know more about the backlog of the rest of the industry and also more about how margins will develop. I do expect improvement of margin in that respect, and obviously, looking at our own position, we can be more selective and pick and choose in the opportunities that we do see within the dredging market, given, yes, the huge volume that we already have in portfolio.
Next question on Asia Energy. The order backlog in offshore wind is down 10% year-on-year and in oil and gas, it's down 30% year-on-year. In the second half or in last year, you made very good margins on seabed intervention. What kind of seabed intervention work do we have in that order backlog for 2021? My impression is there's not so much seabed intervention work for 2021. And the same question, you already indicated for cable laying, you did not win new orders there. So how should we then look at the offshore wind outlook for 2021 and the margin outlook for 2021?
Yes, the nice part of our portfolio of activities is that in 1 year, you are very successful in 1 part of the business. And in the next year, it could be another part. For instance, the big surprise for us was obviously Salvage last year, which was huge in that respect in their margin's total volume.
Looking at 2021, we still have the Ostwind project for cables, and most of that volume is in 2021. So cables in itself is not looking bad. That's one. Secondly with wind, we also have Changfang Xidao starting up after [indiscernible]. So I'm not negative on wind for this year in that respect. Looking at Seabed intervention, Nord Stream was quite a unique project from many prospects. But also this year, the portfolio for seabed intervention is relatively well filled, again, with projects in Russia, but also some projects in the Middle East, an import terminal in El Salvador, more terminals coming to the market, interesting new niche. So I'm not too pessimistic on seabed intervention.
That's the reason why we also said that as a whole, we are positive for Offshore Energy for 2021. And then there are some interesting projects, also good projects for Heavy Marine Transport that were postponed in 2020 and shifted in 2021, but that will be executed this year. So I think there's plenty of good potential this year 2021 with Offshore.
Then maybe further question for -- some questions for Carlo. You booked some EUR 16 million book gains on asset sales, I think, some EUR 11 million in the second half. Were they included in the reported normal EUR 404 million of EBITDA?
Carlo van Noort
Thijs, you said that how many? I did not get your question precisely.
You booked gains on the sale of assets of around EUR 16 million in 2020, and I think around EUR 11 million in the second half of the year. That EUR 11 million, was that in the normal result of EUR 404 million? And if so, in what segment?
Carlo van Noort
That was included in the EUR 404 million. And that is mostly Offshore Energy related.
Then a follow-on question. Last year, Boskalis took huge impairments on cable laying projects. Have you seen already any, let's say, recovery from those provisions from clients? And if not, do you foresee a recovery maybe in 2021? And a more similar question also on Salvage, I assume they are still 0 in the P&L, for instance, the Maersk Honam. Can we have an update when we maybe can expect some revenues coming in from that project?
Starting with Salvage, Thijs, you do take some recovery into account on the Honam. That's what we do every year. But you make, let's say, a best guess on what it could be. And you take a conservative percentage of debt, that's how we do it every year. But that means that there is still some upside potential, you're right. And we are currently in the process of determining by arbitration as is normal. This is not an abnormal procedure within Lloyd's Open Forum. So an arbiter will come with a judgment on, let's say, the complexity of the job because at the end of the day, that determines the percentage of the value that you have solved. And the solved value is partly the vessel, but in this case, mostly cargo.
So we are waiting the verdict of the arbiter, and we expect that first half of this year to know. And there is some upside, but it's not so that none of that result has been taken into account. The largest part has been taken into account in our view. That's how we do it every time.
And with cable, so you talked about an impairment. It was not an impairment. It was more or less doing what we normally do is that, if we foresee a loss arising for a certain project, we take that loss, and that's what we did for projects in the offshore environment. Part of that were cable projects, part of that were also demolition projects in the North Sea.
And if you look at those losses that we foresaw, most of these losses did occur up until now. On some projects, yes, we saw some improvement in comparison with debt, but then you talk about a couple of millions and not tens of millions. A completely different story is we foresee, given the circumstances, given the costs as we can predict them, that we will make a loss. Another part of the discussion, obviously, is that fully attributable to us or is that also partly to be reckoned to the client. And that's the discussion of variation orders, the discussion of claims and some of these discussions still take place. And you've seen for some of the projects, a positive outcome of debt. But again, these are not numbers of tens of millions. I think the total number you calculated, Carlo, was...
Carlo van Noort
Was around EUR 15 million to EUR 20 million.
EUR 15 million to EUR 20 million as an effect.
Then moving on to Andre Mulder from Kepler Cheuvreux.
On the split of the Offshore Energy division, you said that contracting is 56% of sales. Can you give a breakdown of EBITDA as well?
Carlo van Noort
Not in my sheet at the moment. But yes, as said, I can only just give you some guidance here. A strong contracting part. So the majority is really added, that will be more than the 56% is also EBITDA related, already mentioned the seabed intervention and already mentioned is there Nord Stream. These kind of projects contributed greatly to the result. And as already said also in my presentation, with the services part, especially in the North Sea, we were, of course, hit by COVID-19 with also the measures, the oil operators took on the North Sea in this year in 2020. So I would say that will be higher than the 56% revenue mentioned. But the specific guidance...
We take into account surveys also with services here, yes, and if you look at the EBITDA of Heavy Marine Transportation and the rest of transportation, we'll be somewhat higher than the 56%. But I would say 50/50 if you take EBITDA, I think you have to make a distinction between EBIT and EBITDA. With EBIT, it's far more on the contracting side. With EBITDA, I think it's more on the service side. That's the distinction between the 2.
Carlo van Noort
As the heavy assets of course, Andre, also are on that service side of the [indiscernible] vessel, et cetera, yes. So the depreciation there, of course, so Peter is correct, yes. So we will have a distinction between looking at EBIT and EBITDA, indeed.
A bit of the same question for Dredging and Infra, you said that the margin is at much above normal levels. Any indication of what that margin could be?
8% to 10%, 8% to 10% Infra, which is not bad.
No, I would say that's quite high. Next question would, of course, be with a backlog of EUR 1 billion, do you feel it's sustainable?
Yes, we feel it's sustainable. And it's also very much an effort of selective contracting.
Do you have a lot of data on the Manila project. Can you translate that into what would it do to utilization of hoppers? And mention what additional points you would see there?
Well, all things being equal, I would expect that we would move into the utilization rate we saw in the old Singapore days, meaning that with hoppers, I would expect that you would end somewhere around 45 weeks per annum.
And that would be for, let's say, the next 2, 3 years?
Starting late this year, but let's say, for 2022 to 2023, I would expect that to be the case.
On Offshore Energy, you said that the old portion is around half. What is it in Dredging? Is there still some oil and gas work left there?
Very, very little.
Then moving on to Berenberg, Christoph Greulich, please go ahead and ask your question.
If I look at -- I think it was Slide 8 with the overview of the EBITDA, I was just wondering, looking now into 2021, based on your outlook, do you think it's reasonable to assume that the Dredging and Infra division will become again the largest contributor to group EBITDA? Or do you think it's more likely that we see a continuation of the trends we've seen this year?
Well, it's an interesting competition between the 2 divisions. And I leave it to them to fight that battle. But Towage & Salvage was highly influenced, obviously, by Salvage, and I would expect that to come down a bit because that has really been an exceptional year. And all things being equal, I would expect Dredging to come up a bit more and Offshore Energy to stay comparable in ballpark numbers.
Makes sense. The other thing on the slide, I think, that was quite interesting, and you also mentioned the strong progress with regards to the unallocated expenses. Could you just give us an idea how much of those improvements were structural in nature? And how much is -- yes, I would say, yes, rather to be seen as positive one offs?
Most of them are positive one offs. For instance, travel is -- plays an important role here. And clearly, the only travel we have seen is travel on the basis of necessity, crew being transported to and fro vessels, for instance. So that's purely project related. Most of the commercially related travel has been postponed. And it will bounce back, not fully, because I think we've all discovered the strength of Teams and Zoom and you name it. But you will have to see, certainly in Asia, face-to-face your clients. So for the first half of the year, we again expect that you will see less costs, but it will pick up for travel.
Another example, we have closed down most of the ICT projects because it was very difficult to work with key users, find consultants and all focus was on the quality of your infrastructure because that was key. But also there, you will have seen the normal maintenance, but also additional developments and what have you.
So it is -- most of it will be one-off. But on the other hand, we have cut down in the number of contractors at various offices. And we are very keen, obviously, also with the bridge for 2021. It doesn't slip in, let's say, too easily. So we are more critical than we were the years before. But you will see a strong effect again first half of this year. That's what we expect.
Maybe lastly from my side, regarding your M&A strategy, if you could just give us some color what segments are you prioritizing, maybe some idea of how the pipeline is looking now.
Yes, we don't actually have a pipeline of M&A in that respect. And the focus is very much on strengthening the Offshore Energy division. Partly by making use of some opportunities that you still see in the market because of distressed companies and assets. But also through autonomous growth, for instance, with survey, we are now the number 2 in survey in the world in market share. But we strongly feel that there is still opportunity to grow there. That could be partly by acquisition, but also autonomously. And as I just said, we see further developments with floating wind. So also there, we are looking at opportunities, both on the asset side, maybe on the engineering side as far as developing capabilities are concerned. So it's very specific. It's bolt-on, but very much directed towards offshore energy.
[Operator Instructions] Then over to you, Maarten, Maarten Verbeek, from The IDEA!
A couple of questions from my end, if I may. First of all, could you provide a little bit more color on the reclamation land project, which you have removed from your backlog?
Yes, I think commercially, we're not in a position to be too explicit, but as Thijs Berkelder already said, he assumed it was a project in Manila Bay, and it is. And we've been in tough negotiations with this client on certain contractual conditions where we didn't feel comfortable with and, obviously, we were also helped by the fact that we were awarded Bulacan which gives you some more comfort in these negotiations. But we very strongly felt the conditions presented to us were onerous and included a huge risk, and particularly, a soil risk, and a sand supply risk where we draw a line. And the client said, okay, we will test the market again to see if other dredging companies do have the appetite to absorb these risks. And that's where we stand today. It's not sure whether or not one of the other dredging companies will accept that, but it's -- that's up to them, but it has brought us to the conclusion that the likelihood of this project going along is too small to keep it in the order backlog, and that's why we took it out.
Again, it's not a loss for the industry, but chance is at the end of the day, we will get it awarded or it has shrunk drastically.
In your cash flow statement, you mentioned a gain on acquisitions of EUR 7.5 million. Is that perhaps better on the Rever acquisition?
Getting back to the VindÃ¸ Island project in Denmark. Do I understand you well that you are in exclusive negotiations or...
No, no, no, we are in competition, together with 1 or 2. The client hasn't decided whether he will follow a track with 2 or 3 parties, but we're 1 of 2 or 3. And somewhere around the summer, he will make a further decision on that.
Again, before 2018 you signed a contract with Saudi Aramco for the same cooperation with Lamprell. And now Lamprell recently announced they were appointed by Saudi Aramco for an LTA project. However, your name was not mentioned. So what's the status within that project? What's your status with Lamprell?
Yes, and thank God it was not included, our name. Now what we've seen is -- and certainly, last year that has worsened a lot. But the developments in Saudi, in general, have been brought down drastically because of cash issues with Aramco, well known, I think. And we've seen competitors being very aggressive in that field at price levels in combination with risk profile where we didn't feel the appetite to participate. That led to discussions between us and Lamprell, also because, let's say, the work of Lamprell is far more straightforward in the construction part and in the insulation part on our side. And that's the reason we came, let's say, to some kind of a graceful divorce, where we both have the right to go our own way, and that being approved by Aramco. And that's the reason why this was one of the projects where 85% of the total turnover was related to construction, only 15% was insulation. And Lamprell decided to bid on this project, and they turned out to be successful, but again, without any of our involvement.
And then lastly, apparently there is getting more activity and more plans for decommissioning of oil and gas wells and other infrastructure on the North Sea. What do you mention -- do you see already some requests for work for you?
Well, there are continuous requests in that respect. But what we also see is that there are quite some adventurers on the North Sea who completely underestimate the complexity of these projects. And we look at it.
The best assets that we have to do so are obviously the Bokalift 1, and in a couple of years, the Bokalift 2. But having said so, there are ample opportunities for these vessels, number 1 in wind. But secondly, also in some interesting oil developments. So -- and then you come back to what is the ideal season for these type of activities, being the summer in the North Sea, yes, but the summer is a popular season for these vessels everywhere, be it America, be it Taiwan and be it the North Sea. So yes, we look at it, but in particular, the North Sea, given also the seasonal pattern, I don't see it being too attractive for us in the coming years, giving you better alternatives that we see in the market.
That doesn't mean that we are not looking at comparable projects in places where we could work in the winter because then it's the ideal fit, obviously. Work on wind in the summer and work on these projects in the winter.
I think Andre has a follow-on question.
Okay, some follow-up, indeed. You mentioned this diverse development between margins and utilization rates in H2. Following your statement that we could go back to the days of Singapore or Dubai in terms of utilization, would you expect that the same could happen with margins?
Well, the margins are very much obviously included in the project as it is today. And that would mean that I would start speculating about the margins in 1 project, and you know that we don't do that normally. But the only thing I can say is it's a healthy project at healthy conditions. So there is potential in the project, but it's far too early to speculate on that. But our margins will be -- of these hopper weeks, these hopper weeks will be driven by Bulacan, and the margin in the same respect will be driven by Bulacan as well. Hopper-related, there's a lot of other works we are doing, but purely hopper-related, 1 to 1.
On the strategic review, we're slowly returning to normal. Any big changes that you expect for the strategic review? Or would it be just small here and there?
No. If I look at the corporate business plan, certainly, let's say, the midterm, long-term developments, they are still there. And we very strongly believe in our position there. So it's along the same lines, but strengthening where we feel that we can strengthen.
We have a very solid balance sheet. And we could make that work. On 1 hand, on the other hand, I don't want to spill it in all kind of fancy adventures. So we want to stay disciplined. Make sure that we are successful in acquiring what we now see in the market and build it out from there. But I don't see game-changing steps in that respect, Andre.
So nothing really new outside the current portfolio.
No, but it's quite a portfolio.
On Tennet? And any further developments there? We got -- it looks like that island is much cheaper being situated on the Dogger Bank rather than just out in the open.
Yes. I find it difficult to speculate on costs if you don't know the exact circumstances. But as I said, the Danes showed that it can be done. They very strongly believe in it also from an economical point of view. It's not -- that's also the reason why pension funds do step in. So they see it as vital infrastructure towards the future development of the North Sea. And I think the same could hold for Holland and so for Tennet. And don't get me wrong, Tennet is a big believer in the concept. But it's also convincing governments of the same, obviously. And the Dutch government, yes, does not excel in being very visionary in this respect. They have proven in the last should I say decades.
But the economic concept also is there for Tennet, for sure.
Then moving back to Thijs Berkelder from ABN AMRO.
Small question on accounting, how you're doing dredging work for offshore wind farms as well. And I presume you book those dredging revenues and margins in the Dredging segment. Is that right?
Can you then tell me what kind of -- what kind of size that roughly has?
It's not so sizable, Thijs. That's not very sizable. It's very limited.
Then maybe can you shortly describe -- you described that your big dredging vessels were where as of mid this year, let's say, in Philippines? Can you maybe indicate what kind of projects they're working on in the first half? And maybe especially for the Helios and the Krios, where do they work in the first half? And a similar question maybe for 2021, what roughly the time frame is for a vessel like the Vanguard.
And you're not forgetting vessels here. Are you have it all? Yes. It's not my ambition to take you through the full fleet planning here, Thijs. I've never done it, and I'm a bit reluctant to start a precedent here. But no, but for the larger vessels, also as we speak, the hoppers, Southeast Asia is important. And they are utilized there. Same holds for Europe for midsized trailers. And the general picture also looking ahead is that there are 3 important hotspots in -- on the globe for us. First, Europe; secondly, Southeast Asia; and third, Russia, also important in that development. And you will typically see our hoppers working in these 3 hotspots in the first half year. And then gradually more concentration with -- of the larger hoppers in Southeast Asia than you've seen in the last couple of years already because that has been an important area in that respect.
But cutter utilization was poor in the second half. Take that into account, Thijs, that cutters within our company, certainly, the larger cutters have always been for 70% or 80% of their time have been working in the Middle East. And that's where we've seen the biggest drop in the market, 1:1 related to the drop in the oil price, obviously. There are or there haven't been any new projects in the Middle East, sizable projects. And also there, it will take time before new projects will take off. And that means that -- and you see the same for the cutter utilization of our colleagues. You saw the numbers of DEME last week, but the same holds for De Nul and Van Oord. Very, very few cutter capacity is being utilized because the very poor market in the Middle East. Obviously, DEME acquired the Egypt job. That's also with larger cutters. That's an important one. One of our cutters will be working in Singapore on Tuas, first half of the year and second half of the year, we'll move then to the access channel in Manila. So I foresee let's say, from the second quarter, good utilization for one of the cutters. The second one will have to wait for market developments in the Middle East. And again, it's still too early to foresee that for this year.
The Vanguard is well utilized for this year. And certainly in the mid of the year, with some attractive oil projects that were delayed last year. So I foresee relatively healthy utilization of the Vanguard this year.
Further pipeline also for the Heavy Marine Transport vessels, I already mentioned opportunities that we see on wind, but also with oil and gas, some interesting developments in Qatar, interesting developments in Saudi. And you even talk about 2024 to 2025. That sounds like a long way away, but take into account that lead times for these projects typically are 3 to 4 years. So we are getting more positive both on the wind side, but certainly also on the oil and gas side for Heavy Marine Transport in the coming years.
Looking at the Teams call, I see no new hands being raised, so maybe giving us a few more seconds. And with that, Peter, I'd like to hand it back to you to wrap up the call.
Okay. Well, it's been a bit of an improvisation looking into the dark and then seeing faces again, but it was good to be able to meet you in person through the screen and the camera. It was great that you're all here, much appreciated. And I very much hope that the next time in August that we will be capable to see you again real-life because at the end of the day, that works better. But I think given the circumstances, all went well. So thanks for your presence here.
Special thanks also to our personnel at home or at Papendrecht or wherever you are watching, great to have you with us. And for you, the same, I hope to see you back again at the office on the normal circumstances as soon as possible. For that time, for all of you, take care, stay safe, and stay healthy. And I hope to see you all soon. Take care.
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