VARD swings axe as order book mutes

Vard Holdings Limited, a global designer and shipbuilder of offshore and specialised vessels, has started implementing cost-cutting measures including layoffs due to lack of orders in the last quarter. 

Namely, the company said in its financial results for the second quarter ended June 30, 2015 and first half ended June 30, 2015 that it faced a slowdown in activity at some yards during 2Q2015 as the overall weakness in the oil and gas sector began to impact operations. Order book development remained muted, with one new vessel order secured by the Group during the quarter. New order intake, including variation orders and repair and conversion work, amounted to NOK 956 million ($117.2 million).

Cost-cutting measures

Yard activity levels at VARD’s European shipyards in Romania and Norway have started to taper off due to the shortfall in new orders in recent quarters. Two vessels were delivered during the quarter in Europe, bringing total vessel delivery to six in 1H2015. VARD said that in response to the decreasing workload, cost-cutting measures and capacity adjustments are being implemented in order to mitigate the impact of lower capacity utilization. A program to reduce the workforce has started, its extent depending on the order book development going forward.

Order book value at the end of 2Q2015 stood at NOK 13.92 billion, representing a 10.9% decline from the preceding quarter (1Q2015), and a 35.6% decrease from the same period in the preceding year (2Q2014).

In addition, VARD posted a revenue of NOK 2.49 billion in 2Q2015, representing a 15.3% decline from 2Q2014, whereas 1H2015 revenues came in at NOK 5.55 billion, in line with the previous corresponding period in 2014 (1H2014).

For the consolidated Group, VARD posted a net loss of NOK 51 million and NOK 277 million for 2Q2015 and 1H2015 respectively, against a profit after tax of NOK 105 million and NOK 190 million in the corresponding periods the year before.

Roy Reite, Chief Executive Officer and Executive Director of VARD, commented, “As we work through the necessary adjustments in our organization to address the challenges posed by the market, we continue to focus on R&D and new business development to reinforce VARD’s position. So far, we have received positive industry feedback on our recent initiatives. Testament to our strengths in developing innovative solutions together with our clients, we are proud that Skandi Africa, a vessel delivered to DOF Subsea, has won the Ship of the Year 2015 award in Norway.”

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