Shipbuilder Vard swings to loss in 3Q

Shipbuilder Vard Holdings reported on Tuesday a net loss of 37 million Norwegian kroner (S$7.01 million) for its third quarter ended 30 September this year compared to a net profit of 76 million kroner for the same period in 2013 amid higher operating costs.

The mainboard-listed company also said that it has made no provisions for a Brazil tax claim as it deems a favorable ruling likely. Vard previously announced that it received a tax claim from tax authorities in Brazil amounting to approximately 200 million kroner, in a matter relating to transfer pricing of goods and services delivered from Vard's Norwegian entities to Vard Niterói in 2010.

Vard said that after a thorough review of its legal position, it believes the Brazilian tax authorities' assessment leading to the claim is incorrect and unlawful, and it is confident that its tax filings will prevail in the appeals process.

On its third quarter performance, Vard said it had top-line growth, a solid cash position and a strong order book despite a challenging operating environment and softer market outlook.

Its revenue for the third quarter increased 18.5 per cent to 2.8 billion kroner from the corresponding period in 2013, and revenue for the first nine months of the year rose 4.5 per cent to 8.4 billion kroner from the year-ago period.

Vard said EBITDA (earnings before interest, taxes, depreciation, and amortization) fell for the first time in five quarters amidst higher operational expenses but it positive EBITDA margins again in the next quarter, with further improvements in 2015.

At the end of the first nine months of this year, cash and cash equivalents stood at 1.7 billion kroner, and the balance sheet remains healthy, said the company.

Vard said that the global oil services industry is adjusting to a decline in oil prices and expectations of lower exploration & production spending by oil majors, which places cost pressure on the offshore supplier industry.

It said it is well positioned to withstand a softer market in the near to medium term, with an order book of 40 vessels stretching into 2017 and valued at 20.1 billion kroner at the end of the third quarter.

New order intake for the first nine months of 2014 amounted to 8.9 billion kroner, and 714 million kroner for the third quarter, reflecting seasonal factors as well as uncertainty concerning the market outlook. During the quarter, contracts for two platform supply vessels were secured, and five vessels were delivered from yards in Norway, Romania and Vietnam. Vard said its order book consists only of firm contracts, many of which are for major industry players with an exposure to diverse oil and gas markets.

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