Vard's Q2 net loss widens but order book improves

Vard Holdings' shipbuilding facilities around the world include the Brattvaag yard in Norway.
Vard Holdings' shipbuilding facilities around the world include the Brattvaag yard in Norway.PHOTO: VARD HOLDINGS

SINGAPORE - Vard Holdings, a Norwegian specialist shipbuilder and designer, reported a loss of 69 million Norwegian kroner (S$11.7 million) for the second quarter, 30 per cent deeper than the year-ago quarterly loss of NOK 53 million after taking restructuring and other costs and incurring foreign exchange losses.

Revenue for the three months to June 30 dipped 4 per cent to NOK 2.13 billion and was 20 per cent higher compared with revenue for the first quarter of 2017.

But the group recognised restructuring cost of NOK 4 million during the quarter and NOK 10 million in the first half-year, related to termination benefits and statutory payments for temporary redundancies, mainly in Europe and Brazil.

Depreciation, impairment and amortisation costs for the quarter were NOK 60 million for the second quarter and NOK 113 million for the first half-year.

For the first half-year, Vard's net loss widened to NOK 94 million from NOK 16 million a year ago.

But operating loss of NOK 4 million in the second quarter and NOK 23 million in the first half-year improved from a loss of NOK 78 million in the year-ago quarter and NOK 83 million in the first half of 2016.

Vard also showed improvement in its order book. At the end of June 30, 2017, the order book value amounted to NOK 12.88 billion, up from NOK 12.65 billion at the end of 2016 and NOK 11.93 billion at the end of June, 2016. Aggregate order value at the end of the quarter was NOK 22.75 billion, comprising 44 vessels, of which 37 will be of Vard's own design.

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

Despite the letter of intent for one exploration cruise vessel signed in January 2017 having expired without resulting in a firm contract, Vard said it still sees opportunities in this market. The fisheries and aquaculture markets continue to see high activity, but competition is also strong, it added.

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

Risk inherent in the offshore project portfolio persists, and high attention is being devoted to mitigating actions, said Vard.