Norway: Good Result and Exciting Prospects for Havyard

Havyard Group achieved its best-ever financial year with record profits for 2012. EBITDA were NOK 247 million for 2012 compared to NOK 217 million in 2011. Profit before tax were NOK 234 million for 2012, giving a margin of 14.3 % based on a turnover of NOK 1.6 billion.

CEO Geir Johan Bakke of Havyard Group is very pleased with the financial result and is highly focused on continuing Havyard`s solid development of increasing competitiveness, in order to meet the challenging market situation in the time ahead.

“Last year`s result is directly linked to the great effort from our employees and because we have good processes for continuous improvements and efficiency within all segments of our operations. Our projects have been carried out with good project control and supervision of the production both at home and abroad,” says Bakke.

CONTROLLING THE VALUE CHAIN

“Another essential factor for our success is that we have more control of our value chain than ever before. In 2005 we provided around 7% added value whenever we constructed a PSV vessel, whereas today we provide more than 40% added value for the same type of vessel. We control and deliver equipment and services within most of the segments of our value chain, from design to testing and the starting-up of vessels,” says Bakke.

Last year, Havyard`s own shipyard in Leirvik in Sogn, Norway, delivered 5 advanced offshore vessels. All the vessels were of a Havyard designTM and had much of Havyard`s own equipment onboard. Atlantic Offshore, Vestland Offshore and Havila Shipping were amongst the Norwegian shipping companies that last year took delivery of a vessel from HST in Leirvik. Skansi Offshore from the Faroe Islands took delivery of two vessels in 2012 as well. There was a generally high level of activity in all of Havyard`s segments last year and vessels of a Havyard designTM were also delivered from shipyards in China and India.

STERN COMPETITION

Even though earnings have been good over the last few years and with the order book at Havyard and other Norwegian shipyards remaining strong, there are plenty of challenges ahead. Order reserves at shipyards abroad are at an all-time low and the capacity for taking on new orders is great. New shipyards are trying to break into the market where Norwegian shipyards normally operate in, and in an already competitive environment, the stern competition will only get tougher. The levels of wages in Norwegian shipyards have increased dramatically compared to competing shipyards abroad.

Despite this fact, Havyard`s CEO is not pessimistic in relation to continuing to develop and deliver shipbuilding technology in Norway.

“There are threats and opportunities in every situation. We have seen for quite a while that the only sustainable long-term situation is to work on development and to increase efficiency. I believe we are better equipped than most other to meet a higher level of competition and to continue to increase our own competitiveness. We are embarking on an era of increasing price pressure and we wish to use this opportunity to further improve efficiency and to reduce costs,” says Bakke.

FOCUS ON PRODUCT AND INTERNATIONALISATION

In addition to constructing vessels at their own shipyard in Norway, Havyard has also had major success at delivering designs, equipment and system packages to shipowners and shipyards abroad. Today, more than 60 vessels of a Havyard designTM have either been delivered or are under construction for customers in Norway, the Faroe Islands, Russia, Turkey, India, China and Singapore.

“In Norway we cannot compete by the hourly rate. We have to deliver products that add value to our customers. In Havyard we use great resources in developing new and improved products both within ship design, ship equipment and services to customers who have taken on our products. Our vision is «Improving life at sea» and this inspires us to continuously improving our customers` everyday life. Our customers are international and we will be present where they are so that we can offer the products that they need. Our strength is to develop and deliver innovative products adapted to our customers` needs, products that will give them the edge in tough competition with others. For us to succeed we must contribute towards our customers becoming successful and that is something our entire organization is focused on doing,” says CEO Geir Johan Bakke of Havyard Group.

INCREASED FOCUS ON FISHERY

With its base in Herøy in the county of Møre & Romsdal, it is natural for Havyard to focus on fishery in addition to offshore. Herøy is the municipality in Norway with the highest density of fisheries- and offshore related ship owners, and most people in this society are more or less involved in one or both of these industries directly or indirectly.

Havyard also focuses on designing and constructing fishing vessels and vessels for transport of farmed fish. This was the reason that Havyard acquired the majority of shares in MMC AS in November last year.

MMC AS delivers technology and systems for fish handling. MMC is a market leader within its segments and delivers equipment for wellboats transporting live fish, in addition to equipment for most other types of fishing vessels.

“By joining MMC`s and Havyard`s forces within fishing, and by bringing out the synergies created between the companies, we will be able to offer the best possible products and also be very competitive. The customers can choose to buy single products and systems for their vessels and they can choose the total package of having a complete vessel of a Havyard design constructed with complete MMC equipment on board. We always deliver what the customer wants and needs. Through the acquisition of and the cooperation with MMC, we believe the customer will both get an improved and more competitive product,” says CEO Geir Johan Bakke of Havyard Group AS.

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Havyard, March 19, 2013