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Vard warns of ‘inherent risks’ in its offshore project portfolio

Offshore shipbuilder and designer Vard Holdings has warned of ‘inherent risks’ in its offshore projects as the company continues with its efforts to diversify its product portfolio in view of protracted weakness in the offshore market.

“Efforts to diversify Vard’s suite of product offerings remain ongoing, as the group looks to leverage its innovative culture and extensive experience in higher specialised vessels to bolster its orderbook,” Vard stated.

“This strategy is further underpinned by the management’s focus on mitigating risks still inherent in the offshore project portfolio,” it added.

Vard, majority owned by Italy’s state-owned Fincantieri, singled out the fisheries and aquaculture as markets that are seeing high activity, but competition is also strong.

The Norway-headquartered company did recently achieve an entry into a new market by securing an order for a research expedition vessel (REV).

On the downside, Vard said that a letter of intent that it signed in January 2017 with an international cruise company to design and construct a cruise vessel has expired without resulting in a firm contract. But Vard continues to see opportunities in the cruise shipbuilding market.

“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 workload in Norway, and a decreasing workload, especially for the early stages of vessel construction, in Brazil,” Vard said.

In financial results, Singapore-listed Vard remained in the red for the first half ended 30 June 2017 as it posted a bigger loss of NOK96m ($12m) compared to the deficit of NOK24m in the same period of 2016.

Revenue dipped by 8% year-on-year to NOK3.91bn due to softer activity at its Norwegian yards and the cessation of operations in Vard Niteroi in Brazil during the third quarter 2016.

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