Singapore: Offshore shipbuilder Vard has released its quarterly results today, which were most notable for the company’s announcement that it is implementing a cost-cutting program that includes temporary and permanent reductions in the company’s work force.
Just last month Splash reported that Vard was looking at downsizing, with one source admitting: “We have to start looking at how we can reduce our own costs. We will have to look into downsizing.”
Vard has not received any new vessel orders this year, and was stung by E.R. Offshore’s cancellation of two PSVs being built at the Vung Tau shipyard in Vietnam. E.R. Offshore claimed it wasn’t the owner of the vessels, and was merely supervising the newbuilding for two companies, Nordmoon Schiffahrts GmbH & Co KG and Nordlight Schiffahrts GmbH & Co KG. The two companies, who were registered at the same address as E.R. Offshore, were declared bankrupt. The first ship will deliver in August and Vard will have to contemplate becoming an owner if no one buys the vessel by then.
Vard said in it’s results statement that as well as reducing the size of the company’s workforce, it would reduce the use of outsourced and subcontracted labour. Despite not having any new orders, Vard said that utilisation was good at its European shipyards, and that workload balance has been positively impacted by the extension of delivery dates on several projects.
Vard also announced organizational changes and a reshuffle of the executive management with deputy CFO Geir Ingebrigtsen assuming the role of acting cfo in place of Jan Ivar Nielsen, who has been appointed finance officer for Brazil. Other changes include the strengthening of the management structure in the areas of corporate development, and an increased focus on further developing Vard’s equipment and systems business as well as new business development in the Asia Pacific region.
Roy Reite, ceo and executive director of Vard, commented, “We expect weak order flows to be a prevalent theme in 2015. To mitigate the effects of lower yard activity, we aim to streamline the cost structure of our business over the next few months, as well as foster stronger ties with new and repeat customers to better position ourselves for new orders once the industry makes a turnaround. The changes made in our organization will strengthen Vard in taking on the challenges our industry is facing right now.”
The company clocked up venues of NOK3,063m ($410.5m) for the quarter, up 14.6% on 2014. However with foreign exchange losses of NOK207m ($27.7m) stemming from a loan related to the company’s yard in Brazil, a net loss of NOK226m ($30.3m) was recorded.