Vard’s 1H 2015 results: focus on R&D, innovation amid slower market

The Norwegian Singapore-based company Vard Holdings Limited (VARD), one of the major global designers and shipbuilders of offshore and specialised vessels has announced its financial results for the second quarter ended 30 June 2015 (“2Q2015”) and first half ended 30 June 2015 (“1H2015”).


Challenging industry outlook
VARD 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”).

Softer top-line and margins; earnings per share positive
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”).

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.

Healthy Vietnam operations
In Vietnam, operations remain robust and yard utilization remains healthy with the delivery of one
Platform Supply Vessel (“PSV”) during the quarter, and two vessels in 1H2015.

Focus on R&D and innovation to retain competitive edge
The uncertain oil and gas sector outlook continues to weigh on global offshore vessel demand, and in particular on the North Sea market. Despite the overall weak near-term outlook, VARD sees opportunities in some specialized segments, both within offshore and in other niche markets. In an effort to reach out to new clients, markets and segments, VARD is running in high gear in concept design, and the Group’s focus on research and development (R&D) is undiminished.


Introduced to the market in June, VARD’s latest innovation project, ‘A step forward’, presents new ideas in design, automation and control, as well as accommodation solutions for future vessels, which can increase efficiency and ease of operations and boost returns on investment for ship owners. VARD also continues to expand its Equipment and Solutions portfolio, and develop new business areas.

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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