VARD Starts Layoffs as Profit Falls
Vard Holdings Limited (VARD) has 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. 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). This corresponds to an order book of 29 vessels, of which 17, or 59%, will be of VARD’s own design.
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.
On the back of weaker performance at some of the yards, EBITDA margin (representing EBITDA before restructuring cost to total operating revenues) fell to 1.8% in 2Q2015, against an EBITDA margin of 6.4% for 2Q2014. Operating profit turned negative, with the Group registering a loss of NOK 21 million for 2Q2015 and a loss of NOK 12 million for 1H2015, down respectively from operating profits of NOK 140 million in 2Q2014 and NOK 263 million in 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.
In response to the decreasing workload, costcutting 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.
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.”