Vard Holdings posts 66.7% drop in Q3 net profit on Brazil losses

Singapore-listed shipbuilder Vard Holdings has recorded a 66.7 per cent drop in its net profit for the third quarter this year to 76 million Norwegian krone (S$15.8 million) on the back of losses in its Brazil operations.

Revenue was down 3.5 per cent over a year ago to 2.4 billion krone, the group said in a filing to the Singapore Exchange on Wednesday.

The weaker performance was due to Vard Niterói in Brazil, which is suffering from an "overload situation", leading to "further delays and cost overruns", said Vard Holdings.

"Lower productivity resulting from, among other factors, a shortage of qualified labour, is resulting in a loss at the yard, and is dragging down margins for the group," it added. While Vard Niterói is now manned by a record 1,250 employees and 750 contractors, "access to qualified personnel continues to be a concern".

Vard Holdings is continuing to reorganise production processes in the Brazil yard, but "results are taking a longer-than-expected time to show".

Still, the group noted that it returned to a net profit from the period, from a loss of 20 million krone in the second quarter, and that its margins also improved over the previous quarter.

The group also managed to secure its largest-ever order in the third quarter, worth a combined 6.5 billion krone for four pipe lay support vessels. Its total order book value stands at a record 19.6 billion krone as at Sept 30.