Shipbuilder Vard bleeds red in Q4 and for full year

Shipbuilder Vard Holdings has swung into the red as impairments in Brazil and reduced activity at some of its European shipyards dragged down fourth-quarter earnings.

The group yesterday posted a net loss of 83 million Norwegian kroner (S$13.4 million) for the three months to Dec 31 last year, a dramatic reversal from the net profit of 154 million kroner a year earlier.

Revenue fell 26 per cent to 3.32 billion kroner, although it was "higher compared with the recent quarters because of progress and deliveries from subcontractors delivering high-value topside equipment", said Vard, in an announcement before trading opened.

The group logged a net loss of 603 million kroner for the full year, compared with a net profit of 349 million kroner before, while revenue sank 14 per cent to 11.14 billion kroner.

Vard incurred a restructuring cost of 21 million kroner for the quarter and 77 million kroner for the full year, which included severance payments for layoffs as part of its ongoing cost-reduction efforts.

The group said its total headcount in Norway and Romania slid 8 per cent and 27 per cent respectively, last year. Vard also chalked up new impairment charges of 23 million kroner for the quarter and 28 million for the full year relating to its assets in Niteroi, Brazil.

  • AT A GLANCE

  • NET LOSS: 83 million Norwegian kroner (from a net profit of 154 million kroner)

  • REVENUE: 3.32 billion kroner (-26%)

  • DIVIDENDS: NA

Losses per share for the quarter came in at 1.1 cents, compared with earnings per share of 2.29 cents previously. Net asset value per share stood at 52 cents as at Dec 31, down from the 62 cents a year earlier.

To address the challenges that come with the cyclical downturn in its core market, Vard said it will work on diversifying its business to penetrate markets for specialised vessels in the offshore wind and aquaculture markets, and develop a broader product offering to the aquaculture industry.

Geographically, the group will increase its focus in the Middle East, where it expects comparatively strong demand for offshore subsea construction vessels and other specialised vessels from the offshore industry.

Chief executive officer Roy Reite said: "The group's efforts to diversify are well under way, and we believe that we are on the right track to recovery. If we succeed with our plan, Vard will not only be able to emerge from this downturn, but come out stronger and armed with new skills and capabilities."

Vard shares closed 1.6 cents higher at 15.3 cents yesterday. 

A version of this article appeared in the print edition of The Straits Times on March 01, 2016, with the headline 'Shipbuilder Vard bleeds red in Q4 and for full year'. Print Edition | Subscribe