Vard falls into the red

The first half earnings stood at NOK136m, a 75% drop on 2012's NOK548m. Cashflow has also tumbled in the first half from NOK1bn in 2012 to a negative NOK277m in 2013. Cash and cash equivalents have fallen to NOK2bn on 30 June this year, down from NOK3.3bn on the same date in 2012.

Second quarter revenues at Vard have fallen 11.7% year on year to NOK2.9bn, EBITDA was also down 73% to NOK121m for the quarter from NOK460m in Q2 2012.

While the second quarter saw the delivery of eight vessels, contracts were secured for just three, with no orders signed for the group's Brazilian and Vietnamese yards. The group's orderbook stands at 41 vessels as at 30 June 2013, with a total value of NOK13bn.

Vard's Brazilian yard, Vard Niterói, continues to suffer from high personnel turnover, delays, budget overruns and a dependency on outsourced hull construction. The company expects that the overload situation at the yard will be reduced from the fourth quarter of this year as a result of mitigating actions currently underway.

Vard Promar, the group's other Brazilian yard, has commenced operations on schedule, cutting its first steel in June 2013. Construction of the yard is expected to be completed in the third quarter of this year.

The problems in Brazil are isolated from the rest of the group, with Romania enjoying a high workload and Norway delivering several projects. Utilisation at Vietnam is suffering however, as the yard recently delivered the penultimate vessel in its orderbook.

Looking foward the company is upbeat about new contract potential for the second half of the year, expecting fewer orders for higher value vessels. A focus will be put on securing new orders for the Vietnam yard, as well as managing the high workload in Romania.

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