Shipbuilder Vard Holdings' starts job cuts as Q2 profit falls 58.6%

Geir Ingebrigtsen, senior vice-president and group chief accountant of Vard Holdings.
Geir Ingebrigtsen, senior vice-president and group chief accountant of Vard Holdings. PHOTO: BUSINESS TIMES

SINGAPORE - Shipbuilder Vard Holdings said on Wednesday that its second-quarter earnings fell sharply as new orders declined due to the slump in oil and gas prices.

Net profit for the three months ended June 30, 2015, fell 58.6 per cent to 58 million Norwegian kroner from the year-ago quarter.

Translated into Singapore dollars as at June 30, the drop was an even steeper 64.3 per cent over a year-ago.

Earnings per share fell 64.1 per cent from the previous year to 0.85 cents.

This slide came on the back of lower revenue, which slid 15.4 per cent year on year to NOK 2.49 billion.

The designer and shipbuilders of offshore and specialised vessels said that activity at some yards had fallen and this trend was expected to accelerate during the second half of 2015 and in 2016.

In response, Vard said it was cutting costs and had started reducing its headcount, with "its extent depending on the order book development going forward".

Vard said orders continue to decline in a very challenging market, particularly in the shipbuilder's home market in the North Sea. As at June 30, its order book value amounted to NOK 13.92 billion, down from NOK 15.63 billion at March 30 and NOK 21.61 billion at the end of the second quarter of 2014. Aggregate order value at the end of the quarter was NOK 25.22 billion, and the order book comprised 29 vessels, of which 17 will be of VARD's own design.

But it said activity in concept design is high as the group aims to create new projects and reach out to new clients, markets and segments.

Chief executive officer and executive director Roy Reite said the firm would continue to focus on research and developing new business.

"So far, we have received positive industry feedback on our recent initiatives," he said. "Testament to our strengths in developing innovative solutions together with our clients, we are proud that Skandi Africa, a vessel delivered to DOF Subsea, has won the Ship of the Year 2015 award in Norway."

Vard also announced on Tuesday the incorporation of a new subsidiary, Vard Electro Italy Srl, in Italy. Its main business will be to deliver turn-key electrical solutions to other parts of the Fincantieri Group.