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Vard widens Q3 loss, secures new order

Vard widens Q3 loss, secures new order
Vard holdings has posted a wider third quarter loss as it struggled with an industry downturn, and announced a new shipbuilding contract.

In the third quarter ended 30 September 2015, the OSV designer and builder reported a loss attributable to equity holders of the parent of NOK486m ($56.5m), compared to the loss of NOK37m in the same period of 2014.

Third quarter revenue came in at NOK2.27bn, representing a 19% decline from the previous corresponding period. This was mainly due to reduced utilisation at the European shipyards amid a prolonged industry downcycle.

“We will continue to pursue cost improvement initiatives and organisational changes to streamline our business, and make the company competitive to seize new business opportunities,” said Roy Reite, ceo and executive director of Vard, majority owned by Italy’s Fincantieri Oil & Gas.

Announced together with its financial results, Singapore-listed Vard said it has secured a new contract to design and construct one offshore vessel for an undisclosed international customer.

The new offshore vessel will be designed by Vard Design in Alesund, Norway, and the hull will be constructed at Vard Braila in Romania. The outfitting and delivery is scheduled from Vard Langsten in Norway in 2017.

As at 30 September 2015, the group had 31 vessels in its orderbook, 18 of which will be of Vard’s own design.

Amid the sluggish offshore sector, Vard admitted that it continues to face the dual challenge of dealing with slowing activity at its European yards and operational issues at its Brazilian facilities.

The company said it is looking at more diversification of the production, and synergies with the Fincantieri parent group are also expected to play a major role in the development of the Vard portfolio going forward.

Vard will also review its exposure to the Brazilian market in light of the difficult operating conditions and insufficient performance of the shipyards there.

In Vard Tulcea in Romania, a formal restructuring process is ongoing. Over in Norway, temporaray layoffs are used to buffer some of the effects of underutilisation of the yards. Activity levels at the Romania and Norway shipyards continue to decline on the back of a shortfall of sizeable new orders, and postponement of deliveries in the current orderbook.

Elsewhere in Vard Vung Tau in Vietnam, operations and yard utilisation remain robust, with two deliveries scheduled during the first nine months of this year.