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Vard sees no new orders in Q1, plans to cut workforce

Vard sees no new orders in Q1, plans to cut workforce
Offshore vessel builder Vard saw no new orders in the first quarter of the year and is set to cut its workforce as part of a “strict cost-cutting programme”.

The Singapore-listed firm owned by Fincantieri said it had received no new orders in Q1 2015 and its orderbook was NOK15.9bn ($2.09bn) at the end of March, 28% lower than it was at the same time a year earlier.

“We expect weak order flows to be a prevalent theme in 2015. To mitigate the effects of lower yard activity, we aim to streamline the cost structure of our business over the next few months,” said Roy Reite, ceo and executive director of Vard. The company described the competition as “fierce” for the limited number of projects under development in the market.

The group’s Brazilian yard operations continued to be a drain on Vard unrealized foreign exchange losses on a 15-year construction loan saw the company posting a NOK226m net loss in Q1.

While Vard said its yards had good utilisation at present the workload was set to decrease. Looking at its European yards it said they had delivered four vessels in the first quarter, but activity levels were expected to drop in Q2 despite a positive impact on workload of delivery delays.

“A strict cost-cutting programme is being implemented, including reduction of overheads, reduced use of outsourced and subcontracted labour, and temporary and permanent reductions in the work force,” Vard stated.

In Brazil at its new yard Vard Promar progress is being made towards the delivery of its first LPG vessels although they have been hit by cost overruns. “Stabilisation of the Brazilian operations remains a top priority for Vard,” the company said.

At its yard in Vung Tau, Vietnam work continues on two vessels cancelled in March with an intention to resell the newbuildings.