BOURBON accelerates its transformation to be ready for the announced recovery
BOURBON Corporation is accelerating its transformation and announces today its action plan, #BOURBONINMOTION, enabling it to meet the need for competitiveness and to respond to customers’ new demands, in the context of a market that has challenged all market players in the Oil & Gas industry. The Board of Directors approved the plan and its implementation on February 12, 2018.
“As the market cycle has bottomed out, BOURBON must focus more than ever on operational excellence, fleet utilization rates, cost reduction program and free cash flow preservation. However, we need to go even further, because market overcapacity is driving prices down sustainably and we believe that tomorrow will look very different from yesterday. The crisis has highlighted the need to change our model and this is what the #BOURBONINMOTION plan is all about,” declared Gaël Bodénès, Chief Executive Officer of BOURBON Corporation.
The #BOURBONINMOTION action plan is based on two priorities:
- Better serving customers by reorganizing the activities of BOURBON Corporation into three distinct affiliates: Bourbon Marine & Logistics, Bourbon Subsea Services and Bourbon Mobility. These three entities will be able to implement their own strategies and will be supported by a dedicated governance structure (management team whose Chief Executive Officer will report to a Board of Directors). They will focus on profitable growth changing their model to develop more integrated services.
- Capitalizing on the digital revolution to better differentiate by connecting the fleet. With the main objective of improving operational excellence at optimum cost, the “Smart shipping” program will connect the fleet of 132 modern Supply vessels (known as the “smart fleet”) of Bourbon Marine & Logistics. This program will represent an investment of €75 million over three years and enable a sustainable reduction in vessel operating costs.
Within Bourbon Marine & Logistics’ traditional fleet of 65 vessels, the 41 oldest vessels, which cannot be connected, (known as the “non-smart fleet”) will be sold at current market price. This planned disposal of 41 owned vessels is expected to generate an impairment loss of about €170 million in the 2017 financial statements.
These three new affiliates will benefit from privileged access to the market, thanks in particular to the many existing partnerships in the main countries where BOURBON currently operates in strict compliance with local regulations, particularly in terms of local content.
The 2017 financial statements are currently being finalized and have not been audited yet. In addition to the impairment loss to be recognized on the disposal of the “non-smart fleet” and with adjusted EBITDAR expected to be around €250 million (compared to an adjusted EBITDAR of €383 million in 2016), still penalized by challenging market conditions, provisions and depreciations recorded in relation to these conditions, and the weakening of the U.S. Dollar against the Euro, the consolidated net loss for 2017 is expected at around €600 million* (compared to a net loss of €279.6 million in 2016).
With a positive free cash flow 2017 expected over €100 million, showing a strong growth over the previous year (€64.7 million in 2016), BOURBON is recognized as one well positioned company of the OSV sector to benefit from the announced recovery.
Jacques de Chateauvieux, Executive Chairman of BOURBON Corporation, commented: “We are ready to meet the challenges of the transformation profoundly impacting the Oil & Gas industry and already driving major changes at our key customers. The #BOURBONINMOTION action plan unveils the new face of BOURBON, which is, as in the past, not afraid to reinvent itself and innovate with the commitment of the women and men who contribute to its development around the world. Indeed, beyond the technological revolution lies a personal revolution for all BOURBON team members.”