Blohm + Voss gears up again

Dr Aly states: “The current company structure of Blohm + Voss was established in mid 2009. We had decided to split the former company into two parts, namely the military business and the civil business. Two of the businesses, Blohm + Voss Industries and Blohm + Voss Repair, had effectively already been sold, and they had been split apart from the shipyard very early, in 1995, and 1996, so there was no need for another split to be done, which many were afraid of when it was announced that a British financial investor is to take control of our shipyard.

On 31 January this year UK based investment company Star Capital Partners acquired the civilian part of Blohm + Voss. The companies today consist of the shipyards division, ship repair division, the oil tool division, manufacturing a wide range of pipe handling equipment for the oil and gas industry, and the Barthels + Lüder services division, trading spare parts and doing engine repairs and harbour services. In addition ,the group includes Blohm + Voss Industries, manufacturing Simplex brand stern tube seals, but also products like tunnel and thrust bearings, separators, fin stabilisers and steering gear. “Today Blohm +Voss Industries is really a pearl in the portfolio, serving all other shipbuilding markets with very special products,” Dr. Aly describes.

FOCUS ON REPAIRS AND YACHT NEWBUILDING

“Whoever can afford it, docks in Asia,” Dr Aly notes, concerning regular repairs and class dockings. “What we still can do is specific projects in specific market niches, where time and quality is of essence.”

On 1 January 2005 ThyssenKrupp Shipyards and HDW Shipyards were merged into ThyssenKrupp Marine Systems. He described how the military business is on a downturn in Europe, and that business thus must rely more or less on exports, whereas on the other hand these types of ships are preferably built in the customers’ countries.

“There is no way in the long term to sustainably occupy construction capacity in Hamburg, or Germany, by the naval business, so they re-entered the megayacht business in 2005.” In this segment Blohm + Voss has had a long lasting history. Dr Aly had just happened to seen the first yacht the yard built, the Savarona. “She was built in 1931. Still outstanding in quality. A more recent delivery of Blohm + Voss, Lady Moura in the early 1990s, is an icon on the megayacht market.”

He notes, though, that the company lost money with these projects, which is why the owners left that market back then. Now Blohm + Voss has re-entered the market.

“It is a good market and a growing market. There is an increasing number of very rich people willing to pay for a brand like Blohm + Voss for such a yacht.” Mr Aly points out the need for a good organisation to deal with the projects which otherwise would fail. He describes how the investors were convinced that there is potential in the megayacht market, and that lessons had been learned from the past.

“The response we now have is a request from the market that we should stay in the competition. In this range of business (luxury yachts over 100m) there are two or a maximum three competitors. There is Lürssen and we could count Fincantieri, but that is it.”

Describing the market, seeing an increasing number of yachts which are also getting bigger, he pointed out that despite the financial crisis, the market has grown. “50% of all vessels exceeding 80m have been ordered since year 2000. At this time we are following three projects, 120m, 150m and 160m (in length). I expect at least one of them to come,” Dr Aly reveals. The company has still another project, pre-contracted, a 130m yacht, “which I am pretty sure should come in the next few weeks.”

Dr Aly also mentions the oil tool division, outperforming the market for many years, and minimising the risk taken by the new owner. “By a follow-up sale of these businesses, you can cash in again and compensate for the risk you have in the newbuilding business. In the end of the day, if we fail in megayachts, I would say, finance-wise, there is no risk for private equity. We have the prospects of selling Blohm + Voss Industries now, and Blohm + Voss Oil Tools will follow in a year, but this was known prior to this (announcement), so no one was nervous about it,” says Dr Aly. Indicative offers to an auction recently announced were expected by the end of June.

Dr Aly notes that group is now profitable, but does not want to give any details. Blohm + Voss Repair is to focus on the market segments of cruise shipping, superyachts and offshore, particularly for the oil and gas industry. Centrally placed in the Port of Hamburg, the large yard area includes up to eight drydocks, six of which are floating, and two of which are covered. On the offshore vessel side, the yard is currently working on a 18-month life extension, “if not more”, of the 250m special-purpose FPSO Enquest Producer, preparing for a 15-year stay on a new North Sea oil field. According to Dr Aly, there are three or four FPSOs in the pipeline to be converted. Research Survey Vessel Ramform Vanguard received comprehensive repairs and maintenance work in May.

Dr Aly discusses the offshore wind business: “This sector is not to grow with a pace foreseen by some. That will take much more time. German shipyards are in the pole position at least for these North Sea and Baltic wind parks, but it does not help if you break your neck in these projects. I mentioned that I am not in for offshore wind (now), but I would not exclude it, two or three years ahead.” Having done refurbishments on several cruise ships during the last 12 months, the yard will see Crystal Symphony arrive for a 15-day stopover in June. There are 450 of our own employees, half blue collar, but there are projects with more than 1,000 people working at the yard.”

As stated by Dr Aly, Blohm + Voss Shipyards is to focus on the megayacht, or superyacht, market, with a length of 80m or more. On 18 May, an 80m-plus yacht hull arrived at the yard, to be completed in Dock 6. The hull of the project ‘Graceful’, for a Russian client, was built at Stahlbau Nord in Bremen (after a history also at a yard in Russia). This will be the first superyacht project to be completed by the ‘new’ Blohm + Voss.

“We do not need more than three yachts in five years to say that the business plan is possible and stable,” adds Dr Aly. “A newbuilding order of a big superyacht takes some five years to complete.”