Shipbuilder Vard swings back into the black in Q1 as it breaks through into new markets

Workers pass a vessel being built at Vard's shipyard in Vung Tau, southern Vietnam.
Workers pass a vessel being built at Vard's shipyard in Vung Tau, southern Vietnam.PHOTO: REUTERS

SINGAPORE - Norwegian shipbuilder Vard Holdings saw a return to the black in the first quarter, despite a decline in shipbuilding activity in Europe.

Net profit for the three months ended Mar 31 came in at 37 million Norwegian krone (S$6.21 million), from a loss of NOK 92 million in the corresponding period a year ago.

Revenue for the quarter was NOK 2.02 billion, down from NOK 3.06 billion last year. The 34 per cent decline was caused by reduced activity, especially at European yards, the company said. The group also recognised restructuring costs of NOK 11 million during the quarter, related to reduction of its workforce in Europe and Brazil.

Vard said its Norwegian shipyards saw stable operations in the quarter, with several large and complex project in the final stages of completion. In Romania, work is ongoing for the enlargement of a launching barge, while operations at the yard in Vietnam are stable.

The group also said it has strengthened its expertise and networks in new expedition cruise and aquaculture markets, citing the signing of letters of intent for four expedition cruise vessels for Ponant as a breakthrough.

Its Norwegian yards are being readied for new projects, including the outfitting of cruise vessels, and the new contract for an advanced factory trawler for Norway's largest trawler company, Havfisk. Vard Aukra has delivered its first fish feed barge to aquaculture industry leader, Marine Harvest, while securing further work from the sector.

Vard announced separately that it has secured a major contract, signed on Wednesday (May 11), from Dubai-based Topaz Energy and Marine for the design and construction of 15 module carrier vessels. The vessels are designed to navigate the shallow river systems in order to transport modules through the Russian waterways to oilfields in Kazakhstan.

The contract, worth close to US$300 million, will see nine of the vessels built at Vard Braila and Vard Tulcea in Romania, with six to be built in Vietnam at Vard Vung Tau. Delivery is scheduled from the third quarter of 2017

Said Roy Reite, Vard's chief executive officer and executive director: "2016 is a year of transformation for Vard, and in the first quarter we delivered a strong start. We are encouraged by the customer response to our foray into new markets, especially in the expedition cruise and aquaculture segments.

"With the contract for the design and construction of module carrier vessels for Topaz, we demonstrate that even within the oil and gas sector, there are still attractive opportunities. At the same time, we need to be mindful that our core markets still present formidable challenges, both for our clients and for us."

As at March 31, the group has a total order book comprising 27 vessels, of which 17, or 63 per cent, will be of Vard's own design. New order intake came in at NOK 651 million, and the order book value stood at NOK 8.56 billion. The order intake and order book do not include the value of letters of intent (LoIs) for four cruise ships signed during the quarter, which will be included once the LoIs are converted into firm contracts, said Vard.