• 2016 March 1 17:33

    Vard plans to enter new markets to reduce dependency on offshore business

    Net lost for FY2015 Vard Holdings Limited Group (VARD), one of the major global designers and shipbuilders of offshore and specialised vessels reached NOK 1.29 billion, the Group said in its financial statement for the forth quarter ended 31 December 2015 (“4Q2015”), and full year ended 31 December 2015 (“FY2015”).

    With its core market for offshore oil and gas related vessels showing continued signs of weakness in the short term, VARD also announced highlights of its new diversification strategy, aimed at reducing its dependency on the offshore business during the industry downturn. Focusing on other engineeringand technology-intensive parts of the shipbuilding market, VARD aims to preserve its core expertise and skilled employee base during the downturn, and utilize its existing yard capacity until an eventual recovery in its core market. Already in 2015, VARD has successfully expanded its market presence to new geographies and vessel segments, with the majority of new contracts signed outside its core market.

    Slowdown in operations and challenging Brazil situation impact financials Group revenue for FY2015 came in at NOK 11.14 billion, down 14% compared to FY2014, with the decrease due mainly to reduced activity at some of the Group’s European shipyards, as a result of the shortfall in new orders.

    EBITDA before restructuring cost was NOK 35 million for 4Q2015 (4Q2014: NOK 120 million), and NOK 321 million negative for FY2015 (FY2014: NOK 429 million positive). While the rest of the Group delivered a positive EBITDA, margins were impacted by the performance of its Brazilian yards. In Europe, the increasing cost of underutilized capacity contributed to lower margins compared to FY 2014. The slowdown in activity also resulted in a restructuring cost of NOK 21 million in 4Q2015 and NOK 77 million for FY2015, including severance payments for lay-offs as part of ongoing cost reduction efforts. During 2015, the Group’s total headcount in Norway and Romania declined by 8% and 27% respectively.

    Operating profit decreased from NOK 85 million in 4Q2014 to an operating loss of NOK 67 million in 4Q2015, whilst it decreased from a profit of NOK 240 million for FY2014 to an operating loss of NOK 633 million for FY2015. The Group recorded a net loss of NOK 1.29 billion for FY2015, compared to a profit of NOK 50 million for FY2014. The net result for FY2015 was weighed down by NOK 474 million net foreign exchange losses (NOK 734 million FX losses and NOK 260 million FX gain), of which NOK 380 million net unrealized. Of the FY2015 loss, NOK 603 million was attributable to equity holders of the Company, translating to a loss per share of 8.22 SGD cents for the period (FY2014: 5.25 SGD cents earnings per share).

    Cash and cash equivalents were reduced by NOK 1.08 billion during FY2015. This is largely due to large projects requiring high working capital investments that exceeded available construction loan financing, and the materialization of the cash impact of the Group’s losses in Brazil. Due to the extraordinary market situation and increased risk, cash preservation and financing of the operations were accorded a high priority. The Group has taken actions during the first months of 2016 to strengthen the balance sheet and liquidity.

    In 4Q2015, the Group secured one new vessel contract for an OSCV, bringing the total order book for FY2015 to 29 vessels, of which 18, or 62%, will be of VARD’s own design. The total value of VARD’s order book at the end of FY2015 was NOK 10.23 billion, compared to NOK 17.74 billion at the end of FY2014.

    Business plan with solid long-term prospects Addressing the challenges presented by the cyclical downturn in its core market, VARD has developed a new business plan and strategy. Key elements of the new plan are; o Diversification Leveraging the Group’s existing capabilities and relationships, VARD aims to penetrate markets for specialized vessels in the offshore wind and aquaculture markets, and develop a broader product offering to the aquaculture industry. Geographically, the Group will increase its focus on the Middle East region, where it expects comparatively strong demand for OSCVs and other specialized vessels from the offshore industry.

    Combining in-house expertise and synergies with its parent group, FINCANTIERI, VARD sees opportunities in the segment of small and specialty cruise vessels such as exploration cruise ships, as well as in the market for Offshore Patrol Vessels (OPV). FINCANTIERI is the leading builder of cruise vessels globally, and has a strong presence in naval shipbuilding. Through its subsidiary, Vard Marine, VARD is already a leading provider of innovative and cost effective OPVs. To further strengthen ties between VARD and FINCANTIERI, both companies intend to cooperate in the construction of cruise ships, with sections of cruise ship hulls to be produced at Vard Tulcea, also securing a base load for the Group’s Romanian yards for the next years.

    Updated production footprint
    The yard structure will be adapted to the new market strategy, with the Norwegian yards primarily used for outfitting of highly specialized vessels in the core market and new focus segments, whilst developing adjacent businesses to fill excess capacity. Vard Aukra will be dedicated to the new aquaculture market segment, while Vard Tulcea in Romania will further develop capabilities in highly cost-efficient hull production, and the production of cruise ship sections for FINCANTIERI. Both Romanian yards will also strengthen their capabilities to deliver complete vessels of lower complexity. Vard Vung Tau in Vietnam will continue to be positioned as an alternative to the European yards, combining the VARD quality with a lower-cost production set-up, which is particularly well suited for projects in the Asia-Pacific region.

    Continued Brazil presence
    The Group’s presence in Brazil will be maintained, though operations will be adapted to expected local market demand in a more stable environment going forward. Newbuilding activity will be phased out at Vard Niterói after the completion of the current order book. Despite the challenges experienced in the start-up phase of the new shipyard Vard Promar, VARD has long-term ambitions to remain a key player in Brazilian shipbuilding, supporting the local oil and gas industry.

    Improvement initiatives
    To ensure the success of the new business plan, multiple initiatives have been planned, and some are already ongoing. The Group’s cost reduction and efficiency improvement programs are being intensified in order to enhance its competitiveness in core and new markets. Supporting new business development, the concept development, design, sales and marketing organizations are being strengthened with resources dedicated to the new target vessel and product segments.

    Due to the deterioration of the offshore vessel market VARD saw a revenue drop in FY2015, and expects a further drop to NOK 8-9 billion for 2016. With the implementation of the new business plan and strategy, VARD foresees a recovery to NOK 12-13 billion in revenues, reaching previous highs by 2020, also on the back of an expected recovery of the offshore market from 2018. The Group expects a positive EBITDA margin for 2016, despite short-term margins being impacted by restructuring and the market entry into new segments.

    Roy Reite, Chief Executive Officer and Executive Director of VARD, commented, “The Group’s efforts to diversify are well underway, and we believe that we are on the right track to recovery. If we succeed with our plan, VARD will not only be able to emerge from this downturn, but come out stronger and armed with new skills and capabilities.”

    Norway based Vard Holdings Limited (“VARD”), together with its subsidiaries (the “Group”), is one of the major global designers and shipbuilders of offshore and specialized vessels used in the offshore oil and gas exploration and production and oil services industries. VARD employs about 11 people and operates ten shipbuilding facilities, including five in Norway, two in Romania, two in Brazil and one in Vietnam.

2021 May 17

18:43 Port of Houston container volumes up 25% in April 2021
18:29 CMA CGM announces PSS for cargo from/to North Europe to/from the Mediterranean & Black Sea
18:03 Lukoil’s hydrocarbon production in 1Q’2021 was 7.6% lower year-on-year
17:41 Port of Tallinn fortified environmental measures in operating areas
17:16 NCSP Group’s cargo turnover in Q1 2021 fell by 19%
16:52 Average spot market price for Russian M100 product fell to RUB 22,851 pmt
16:28 Okskaya Sudoverf wins competition for construction of multifunctional tugboat of 2.5-3 MW
16:05 Stena RoRo's E-Flexer Côte d'Opale delivered to DFDS
15:53 Novatek set to start year round navigation on the Northern Sea Route in 2023-2024
15:34 Metrans doubles number of container trains on the New Silk Road
14:09 Russia approves its Arctic Council Chairmanship program for 2021–2023
13:35 Shipping industry launch the Gulf of Guinea Declaration on Suppression of Piracy
13:11 The Port of València moves 479,171 containers in April and sets monthly and year-on-year records
12:22 Containership ‘HMM NURI’ makes first call in Hamburg
11:00 Seaboard Energy has chosen Topsoe’s HydroFlex™ technology to produce renewable diesel
10:50 Haldor Topsoe to discuss innovation to combat climate change at high-level meeting with US Secretary of State and Danish Minister for Foreign Affairs
10:11 Oil prices fluctuate amid uncertainty caused by coronavirus
09:40 Port of Helsinki throughput in January-April 2021 rose by 4.5% YoY
09:19 Baltic Dry Index as of May 14

2021 May 16

16:23 Port NOLA issues RFP for Louisiana International Terminal preliminary design contractor
15:18 Port Houston TEUs jump 25% in April
14:18 Investigation of the fires at Tjeldbergodden and Hammerfest now concluded, Equinor says
13:42 Unified Command responds to container ship off coast of Monterey
12:38 Eneti places order with DEME for one next-generation offshore wind turbine installation vessel
11:07 Boskalis AGM of shareholders adopts resolutions
10:31 Port of San Diego inks two more leases, reaches 90% occupancy for Seaport Village

2021 May 15

16:53 Terry Federer joins All American Marine as business development manager
15:09 Sites in the Geeste lowlands safeguard port development
14:38 ABB and Millennium Technology Prize celebrate innovation for a sustainable future
14:21 Hopeful outlook for activity at Lerwick Harbour - Lerwik Port Authority
13:19 USCG repatriates 22 migrants from 2 interdictions to Cuba
13:08 Team Transport & Logistics opens its new facility at the Port of Brisbane
12:31 Fleet of ships serving Vale receives first VLOC in the world equipped with rotor sails
11:09 Keel laying ceremony for second Finnlines’ hybrid ro-ro vessel

2021 May 14

18:46 Pilbara Ports Authority posts results for April 2021
18:23 Onezhsky Shipyard launches Ice Arc5 tug Pomor built for Rosmorport
18:06 Port of Southampton announces second Shore Power connection
17:53 Warships of RF Navy's Pacific Fleet completed visit to Singapore
17:36 ICS releases Vaccination Roadmap to quicken seafarer jab rollout
17:16 Maersk secures daily rail services from Felixstowe to respond to Brexit and COVID-19
16:54 Throughput of Murmansk Sea Fishing Port in 4M’2021 fell by 3.7% YoY
16:31 DNV, the University of Bristol and Percepetual Robotics launch new research project to develop automated verification of offshore wind turbine inspection results
16:11 Port of Los Angeles container volumes up 37% to 946,966 TEUs in April 2021
15:25 Fincantieri and Amazon Web Services team up to power the digitization and competitiveness of Italy with cloud computing
14:56 Rosneft reports its 1Q 2021 net income of RUB 149 bln
14:17 Port of Liepaja throughput in 4M’2021 climbed by 1.6% Y-o-Y
13:34 Nevsky Shipyard delivers cargo-passenger vessel of Project PV22, Pavel Leonov, to the customer
12:25 Throughput of port Kavkaz in 4M’2021 fell by 15% Y-o-Y
12:03 Austal Australia delivers two cape-class patrol boats to Trinidad and Tobago Coast Guard
11:58 Port of Oakland sets all-time cargo record in April 2021
11:49 Daphne Technology seeks financing through crowdfunding platform
11:28 Throughput of Russian seaports in 4M’2021 fell by 4.2% Y-o-Y
11:09 Rosmorport commences dredging at the port of Arkhangelsk
10:46 Rosmorport announces competition on dam strengthening at Kaliningrad Maritime Channel
10:17 HCS and CyberLogitec partner in TOS implementation at finished-car logistics terminal in Yarimca, Turkey
10:13 Acceptance certificate signed for Phase 1 (preparation) of Bagayevsky hydrosystem
09:45 Oil prices decrease on demand concerns
09:28 Höegh Autoliners onboard more vessels to Kongsberg Digital’s Vessel Insight
09:12 Baltic Dry Index as of May 13
08:24 Port of Ayr completes £2.2m investment strategy with new crane delivery