Vard eyes new business as loss deepens

Vard executive vice-president Holger Dilling noted that it had been a "tough quarter".
Vard executive vice-president Holger Dilling noted that it had been a "tough quarter".

Shipbuilder posts $80m Q3 loss, to diversify amid prolonged oil and gas industry slump

Specialist shipbuilder Vard Holdings plans to diversify into new business areas to tackle the prolonged oil and gas industry downturn.

It is part of Vard's "comprehensive strategy overhaul" to reduce dependency on the cyclical oil and gas business, said executive vice-president Holger Dilling in a briefing.

Potential areas for growth include building niche vessels for the fisheries and aquaculture sector, as well as ice-breakers and research vessels, he said yesterday. "We are doing a review to look at which segments are the most promising ones," he told The Straits Times, adding that offshore support vessels will stay as its core business.

  • AT A GLANCE

  • REVENUE: 2.27 billion Norwegian kroner (-19%)

    NET LOSSES: 486 million kroner

    DIVIDEND: N.A.

The group also intends to tap synergies with parent Fincantieri.

"One of the ideas is that our Romanian shipyard can contribute to these cruise ship projects that (Fincantieri) has, meaning we can sell our capacity or expertise both in engineering and construction to units of our parent group," he said, noting that the Italian shipbuilding giant has been seeing a "strong market" in cruise ship building.

Vard's new business plan - to be announced in detail with its full-year results - came as the group yesterday reported dismal earnings for yet another quarter.

Net losses for the third quarter to Sept 30 deepened to 486 million Norwegian kroner (S$80 million), far worse than the net loss of 37 million kroner in the same period a year ago. Revenue sank 19 per cent to 2.27 billion kroner in the face of slower activity at its European yards amid continued weakness in the offshore market, and operational issues at its Brazilian facilities, it said.

Earnings per share came in at 0.41 kroner, up on the 0.03 kroner previously, while net asset value per share slipped 5 per cent to 3.34 kroner as at Sept 30, lower than the 3.50 kroner as at Dec 31 last year.

Mr Dilling noted that it had been a "tough quarter" as the group faces the "dual challenge of a very severe downturn in our core market" in addition to operational issues at its Brazilian facilities.

Vard had 31 vessels in its orderbook as at Sept 30. It announced yesterday it has secured a new contract for the design and construction of an offshore vessel for an international customer, although it did not disclose the project's value.

OCBC Investment Research analyst Low Pei Han said in a note that 2015 will likely mark Vard's first year of losses since the 2008 financial crisis. She maintains a "sell" rating on the stock, but has put the fair value estimate of 41 cents under review.

The stock fell 4.5 cents or 12.5 per cent to 31.5 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on November 12, 2015, with the headline 'Vard eyes new business as loss deepens'. Print Edition | Subscribe