Vard sinks further into the red with $12m loss in second quarter

The Vard Aukra shipyard in Norway. The shipbuilder points to restructuring and other costs and a foreign exchange hit for its net loss. But it has also shown an improvement in its order book when compared with last year.
The Vard Aukra shipyard in Norway. The shipbuilder points to restructuring and other costs and a foreign exchange hit for its net loss. But it has also shown an improvement in its order book when compared with last year.PHOTO: VARD HOLDINGS

Vard Holdings, a Norwegian specialist shipbuilder and designer, reported a loss of 69 million Norwegian kroner (S$11.7 million) for the second quarter due to restructuring and other costs and a foreign exchange hit.

This was 30 per cent worse than the loss of 53 million kroner recorded in the same period a year earlier. Revenue for the three months to June 30 dipped 4 per cent to 2.13 billion kroner but was 20 per cent higher compared with the first quarter of this year.

The group recognised a restructuring cost of four million kroner during the quarter and 10 million kroner in the first six months.

These were mainly termination benefits and statutory payments for temporary redundancies, mainly in Europe and Brazil.

Depreciation, impairment and amortisation costs came in at 60 million kroner for the second quarter and 113 million kroner for the half year.

Vard's net loss for the half-year widened to 94 million kroner from 16 million kroner a year earlier.

But operating losses of four million kroner in the second quarter and 23 million kroner in the half-year improved from a loss of 78 million kroner in same quarter a year earlier and the 83 million kroner lost in the first half of last year.

Vard also showed improvement in its order book, which was valued at 12.88 billion kroner as at June 30, up from 12.65 billion kroner at the end of last year and 11.93 billion kroner at the end of last June.

  • AT A GLANCE

  • NET LOSS

    69 million kroner (-30%)

    REVENUE

    2.13 billion kroner (-4%)

    INTERIM DIVIDEND PER SHARE

    Nil (unchanged)

Aggregate order value at the end of the quarter was 22.75 billion kroner, comprising 44 vessels, of which 37 will be of Vard's own design.

Vard said it continues to focus on diversifying its product portfolio with a contract secured during the second quarter for a research expedition vessel. This marked the entry into another new market.

Despite a letter of intent for one exploration cruise vessel signed in January this year having expired without resulting in a firm contract, Vard said it still sees opportunities in this market. The fisheries and aquaculture sectors continue to see high activity, but competition is also strong, it added.

The group's key challenge in the near term is to manage the varying workloads at different yards, namely a very high utilisation in Romania, low and variable loads in Norway and a decreasing workload, especially for the early stages of vessel construction, in Brazil.

A version of this article appeared in the print edition of The Straits Times on July 26, 2017, with the headline 'Vard sinks further into the red with $12m loss in second quarter'. Print Edition | Subscribe