Singapore-listed Norway-based shipbuilder Vard Holdings has posted a loss of NOK226 million (USD30 million) for the first quarter ended 31 March 2015, compared with a profit of NOK85 million in the same period last year.
The company has incurred a loss despite an increase of 14.6% in its revenue of NOK3.06 billion recorded in the first quarter of 2015 from NOK2.67 billion in the first quarter of 2014. The higher earnings were due to higher activity at the yards and with subcontractors.
However, its high revenue was offset by rising expenses from the company’s materials and subcontracting costs, which increased by 21.7% to NOK2.18 billion in the first quarter of 2015, compared with NOK1.79 billion in the first quarter of 2014. Similarly, Vard’s salaries and related costs hiked up by 20.1% to NOK663 million in the quarter against NOK552 million in last year’s quarter.
As at 31 March 2015, Vard had 32 vessels in its orderbook, 18 of which belong to the company’s own design. In the meantime, the company did not secure any new vessel contract in first-quarter 2015, with two contracts terminated during the quarter due to the weak demand and the depressed industry down cycle.
So far, Vard has delivered five vessels in the first quarter of 2015, and has scheduled to deliver another 12 vessels during the year, 17 vessels for 2016, and three vessels in 2017.
Roy Reite, CEO and executive director of Vard, told IHS Maritime that the prospects of new orders are “weak in the short-to-medium term”. However, he noted that the company’s European shipyards demonstrated good yard utilisation throughout the first quarter of 2015, with four vessels delivered.
Going forward, Vard will place top priority in its Brazilian operations and has since appointed senior finance officer Jan Ivar Nielsen to Brazil to facilitate and fine-tune the yards’ operational and cost efficiency. In the meantime, Geir Ingebrigtsen, former group chief controller and former deputy chief financial officer (CFO), has assumed the role of acting CFO in the place of Nielsen.
Reite believes that the organisational changes reflect the areas of focus by the management and will “strengthen Vard in taking the challenges”.
Meanwhile, Holger Dilling, Vard’s executive vice-president of investor relations, highlighted that the company sees growth in providing equipment and systems services to internal suppliers and strengthening of third-party businesses such as Vard Electro, Seaonics, and Vard Marine.
“We see increasing demand to sell these [equipment and systems] services to third parties. We are also working with our parent group, Fincantieri, in introducing some of the equipment and services for the vessels that they are covering,” said Dilling.