Maersk impaired Ardent investment after tough year

Maersk Group took an impairment on its investment in Ardent due to a significant decline in the market in 2016. But this year is going much better for the salvor, which has won its biggest job this year with vessel Kea Trader, CEO tells ShippingWatch.

Ardent er ejet 50-50 af Maersk-gruppen og amerikanske Crowley. Foto: Ardent.

A significant dip in the market prompted Maersk to impair the value of its stake in salvor Ardent.

The impairment was announced when Maersk published its interim report in September, in which it was noted that the group booked a loss on its stake in Ardent, a company that was created through the merger of Svitzer's salvage unit and US-based Titan Salvage back in 2015.

There has been a downward trend for years. I don't think anyone doubts that"

Peter Pietka, CEO, Ardent
According to Ardent CEO Peter Pietka, the decision came after the market for salvage and the emergency response market plunged in 2016.

"There has been a downward trend for years. I don't think anyone doubts that. And last year just brought a massive dive," he tells ShippingWatch, adding that the market dropped 40-50 percent, depending on the how one does the math.

This development is attributed to a convergence of several factors, which spurred Maersk to impair its stake in the venture by USD 6 million.

CEO Pietka notes that even though there were more jobs in 2016, the accidents were smaller. Meanwhile, security has improved, and carriers and insurance companies are also assuming more responsibility when accidents happen.

Ardent does not publish its results, but the CEO explains that the weak market weighed the company down last year.

"2016 was hardly positive, seeing as Maersk booked an impairment. But 2017 looks significantly better. I can say that much. It's not a small difference – it's considerable," he says.

Bagged the year's biggest job

Several positive trends have helped Ardent in 2017. There have been more major projects available, plus the offshore market is up and running, a segment Ardent has been looking to enter for a long time now.

Another reason for the improvement is that Ardent won the biggest job so far this year, the grounding of container vessel Kea Trader.

In July, the Lomar Shipping vessel was traveling at high speed and sailed onto a coral reef in New Caledonia, a special collectivity of France. Since then, Ardent has been busy cleaning up after the accident.

"We're still working on it. The wave conditions make it very difficult to have ships lie along the vessel. For instance, we've removed oil and containers with helicopters, and this is of course expensive," says Pietka, who describes the project as the biggest in two years.

Kea Trader sailed onto a coral reef in New Caledonia in July. The ship will be scrapped once the clean-up is done. Kea Trader sejlede på et korralrev i Ny Kaledonien i juli. Det skal ophugges, når oprydningen er slut. Photo: FANC

There is also a large-scale cleanup process left after Hurricane Irma, which thrashed the Caribbean in September. Numerous yachts are still waiting to be removed after the powerful hurricane.

"There aren't rigs or larger vessels left distressed, but there are many yachts scattered around the marinas. 98 percent of this work has not been distributed yet, and there's no doubt that this will boost the market. We of course hope to be awarded some of this work," says Pietka.

Hurricane Irma hit the Caribbiean in mid-September, leaving huge destruction in its wake. Orkanen Irma ramte Caribien i midten af september og efterlod store ødelæggelser Photo: /ritzau/AP

Savings to contribute

While bigger contracts and a burgeoning market for decommissioning rigs have boosted Ardent in 2017, the company has also benefited from initiatives that were launched last year.

The tough times made it necessary to accelerate the streamlining processes, and this has resulted in lower costs.

A total of 50 employees have now left the company since the merger with Titan Salvage two and a half years ago, while several administrative tasks have been out-sourced to El Salvador in Central America.

"We experienced a huge slide last year, which meant that we had to cut costs even quicker than planned. This was mainly done in terms of administrative activities. We put great emphasis on maintaining our operational capacity. Instead, we've looked at what we call our back office," Pietka tells ShippingWatch.

English Edit: Daniel Logan Berg-Munch

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