Norwegian-headquartered shipbuilding giant Aker has admitted “several” newbuildings in its Finnish yards will be significantly delayed, knocking about 4% off the group's profits. At the same time the company says it is considering spinning off its offshore and specialised ship construction activities.
In a statement that does not mention recent strikes in the yards Aker says: “As a result of the continued very heated situation in the shipbuilding industry, and continued high loading in the Finnish operations, the delivery programme for ferries in Finland has been further revised. Several of the projects will be delivered some weeks or months later than planned. As when the delivery plan is been shifted, the project estimates have been revised accordingly, and results for 2007 and 2008 will be impacted.”
Aker says: “The Finnish operations of Aker Yards have taken losses in 4Q on its order book by Nkr400m (US$72m), lowering the expected result for Aker Yards in 2007 to approximately NKr500m EBITDA. The net profit is estimated at about NKr350m. The losses in Finland will have a diluting effect on margins in 2008. The margin level on cruise vessels in Finland has also been revised downwards. The combined effect gives an estimated EBITDA margin for the Group for 2008 at around 4%.”
According to Aker, the main reason for the revised estimates lies in the previously communicated heavy load in the Finnish operations. The very high level of growth in activity level at the same time as the market is booming has lead to a lack of resources giving a knock-on effect on the total backlog in Finland. For this reason, the deliveries had to be adjusted to a more significant degree than previously anticipated. Towards summer 2008 loading will gradually be coming down. Referring to the possibility of spinning off the smaller vessel activities Aker says: “In order to enhance shareholder values, the Board of Directors has decided to evaluate a possible spin-off of the business area Offshore & Specialized Vessels. Several alternative routes will be evaluated, including spinning the business area off to existing shareholders, by a separate stock listing, or other alternatives that will be attractive to all shareholders. This measure should contribute to identifying the underlying values of the Group.”
In a statement that does not mention recent strikes in the yards Aker says: “As a result of the continued very heated situation in the shipbuilding industry, and continued high loading in the Finnish operations, the delivery programme for ferries in Finland has been further revised. Several of the projects will be delivered some weeks or months later than planned. As when the delivery plan is been shifted, the project estimates have been revised accordingly, and results for 2007 and 2008 will be impacted.”
Aker says: “The Finnish operations of Aker Yards have taken losses in 4Q on its order book by Nkr400m (US$72m), lowering the expected result for Aker Yards in 2007 to approximately NKr500m EBITDA. The net profit is estimated at about NKr350m. The losses in Finland will have a diluting effect on margins in 2008. The margin level on cruise vessels in Finland has also been revised downwards. The combined effect gives an estimated EBITDA margin for the Group for 2008 at around 4%.”
According to Aker, the main reason for the revised estimates lies in the previously communicated heavy load in the Finnish operations. The very high level of growth in activity level at the same time as the market is booming has lead to a lack of resources giving a knock-on effect on the total backlog in Finland. For this reason, the deliveries had to be adjusted to a more significant degree than previously anticipated. Towards summer 2008 loading will gradually be coming down. Referring to the possibility of spinning off the smaller vessel activities Aker says: “In order to enhance shareholder values, the Board of Directors has decided to evaluate a possible spin-off of the business area Offshore & Specialized Vessels. Several alternative routes will be evaluated, including spinning the business area off to existing shareholders, by a separate stock listing, or other alternatives that will be attractive to all shareholders. This measure should contribute to identifying the underlying values of the Group.”