French offshore vessel contractor Bourbon Corporation announced that it will sell 41 supply vessels from the 65 traditional vessel fleet owned by Bourbon Marine & Logistics as they cannot be connected within the group’s smart shipping program.
The program will connect the Bourbon Marine & Logistics’ fleet of 132 supply vessels, known as the “smart fleet”.
The move will see some EUR 75 million (USD 92 million) being invested over three years, the final objective being to cut vessel operating costs.
As the vessels will be sold at the current market price, the company expects the planned disposal of vessels to result in an impairment loss of about EUR 170 million (USD 209.3 million) in the 2017 financial statements.
The smart shipping project is part of Bourbon Corporation’s action plan dubbed #BOURBONINMOTION.
“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,” Gaël Bodénès, Bourbon’s Chief Executive Officer, said.
The action plan also includes reorganization of the corporation’s structure into three affiliates: Bourbon Marine & Logistics, Bourbon Subsea Services and Bourbon Mobility.
These three entities will be able to implement their own strategies and will have their own management teams whose CEO will report to a Board of Directors.
Bourbon said that the 2017 financial statements are currently being finalized and have not been audited yet. That being said, the company expects that due to the challenging market conditions it will report a consolidated net loss for 2017 of around EUR 600 million, compared to a net loss of EUR 279.6 million in 2016.
With a positive free cash flow 2017 expected over EUR 100 million, showing a strong growth over the previous year (EUR 64.7 million in 2016), BOURBON expects to benefit from the forecast recovery of the OSV sector.