The graph above was missing from this article a couple of day ago due to some tech issue. I have added it in to the original. It’s so good I wanted to highlight it…
A mistake in a paragraph in the last post. Paragraph should have read:
However, nothing excites markets more than forecasts of markets doubling in five years (a magical number in finance which equates to a 15% compaound annual growth rate over five years (1.15^5*[2.01])) forgetting that earnings discounted that far out at a discount rate that reflects the risk could easily absorb any rational return calculations.
I was a bit hasty in drafting some things re: Ocean Installer in trying to make a comparison with Bibby. To be clear Ocean Installer have contracted work further out than a season and some of this is higher value installation work.
My broader point around if contractors of this size can ever earn true economic profits outside of Norway remains as does my point around how much additional funding it is rational to put in. But the drafting was sloppy to the point of inaccuracy which wasn’t the intention.