Dutch gyro deal positive for Veem

VEEM managing director Mark Miocevich is bullish about the impact gyrostabilisers can have on the marine industry.

A gyrostabiliser is a marine device typically located in the engine room that acts to reduce the rolling motion of a vessel in waves.

The device’s roll-stabilising torque is created by the rolling motion itself, meaning there is no response lag.

Canning Vale-based Veem listed on the ASX in October 2016, after raising $25 million at an offer price of 50 cents per share.

“That was done purely to put ourselves in the correct commercial vehicle to take advantage of the gyrostabilisers,” Mr Miocevich told Business News.

“Even as a successful private company, when you are talking about taking on a global market of up to $1 billion a year, then you’ve got to make sure you have access to the funding required to take advantage of that market.”

Veem’s share price has slowly eased from a peak of 68 cents in late 2016, sitting at 40 cents at the time Business News went to print.

Mr Miocevich believes gyrostabilisation will become ubiquitous in the marine sector, much the same way air-conditioning has made its way into the automotive industry.

“Over the next five to 10 years it’s going to become an almost automatic fitting,” Mr Miocevich said.

“Certainly on luxury boats you’ll find it’s almost like air-conditioning in a car, I mean, why would you buy a car without air-conditioning nowadays? It’s that comfort factor.”

Veem recently signed a supply contract with renowned Netherlands-based shipbuilder Damen Shipyards.

The sale is subject to successful sea trials, which are expected to take place next month.

Mr Miocevich said the contract represented a significant milestone for the company within the commercial vessel space.

“With a new product it’s all about the confidence you can supply your potential customers,” he said.

“So when a company like Damen studies it so carefully and says ‘we like this product, we’re buying it’, my work is done.

“It speaks volumes about, and endorses, the technology that we’ve developed.”

Veem, which has been working on its gyro technology since 2011, says the device has a number of advantages over the current retractable-fin stabilising systems used.

Concerns with retractable fins centre on the negative effects caused by the appendage of the fins, including reduced vessel efficiency due to drag, and the risks of grounding or making contact with underwater obstacles.

Mr Miocevich said gyrostabilising technology also provided a number of productivity benefits to commercial vessels.

“For the offshore market, it’s a huge advantage for making more money – you can work more days at sea,” he said.

“So it’s a huge cost advantage for them and there’s also less wear and tear on their equipment.

“In the defence space, you’ve got a piece of machinery that can stabilise the operating platform of a patrol boat.”

Despite his optimistic outlook, Mr Miocevich said the company’s progress to commercialisation was behind where he wanted it.

“We’re probably up to 12 months behind what we envisaged the market might be like,” he said.

“We’ve had the enquiries we expected to have but being a new technology in a new space, there’s a wait-and-see attitude.”

Veem is also targeting the local defence market and is hopeful  its gyrostabilisers will be installed on the 12 offshore patrol vessels being built as part of a $3.6 billion federal government program.

German shipbuilder Luerssen recently unveiled plans to establish a joint venture with local contractor Civmec to build 10 of the OPVs at Henderson.

Mr Miocevich said Veem would begin discussions with Civmec to determine whether there was scope for its technology to be used. 

“We’re working very hard to see if we can make that happen,” he said.

Evolution

Although gyros are a primary focus within the company’s future plans, its current propeller business has delivered steady cash flow for a number of years, with revenue of $38 million last year and $41.3 million in 2016.

The business is celebrating 50 years in 2018, having originally specialised in the motor industry in the early 1970s under Mark’s father, Charlie Miocevich.

Following Charlie’s death in 1976, his wife, Elizabeth Miocevich, oversaw the business until the three brothers, Mark, Gary and Brad, took over in 1982.

Brad Miocevich remains as the company’s non-executive chairman alongside Mark.