Subsea vessels fuel Vard order intake

reite royMAY 14, 2013 — "We anticipate that the subsea construction vessel segment will continue to drive our growth this year, and we are confident about the group's prospects for new orders for the rest of 2013," says Vard CEO and Executive Director, Roy Reite. "Vard's strengths in leading-edge technology and our unique ability to partner with clients in developing customized vessels will continue to differentiate us in the market."

Vard Holdings Limited, which is 55.63 percent owned by Italian shipbuilding giant Fincantieri, today reported first quarter FY 2013 results that saw revenues generated of NOK 2.75, a 2 percent dip from the same period in 2012, reflecting , says Vard, "overall stable operations in spite of challenging circumstances in some markets."

EBITDA margin (EBITDA to total revenue) for the quarter 2013 were down from 14 percent in the 2012 quarter to 11.1 percent, as the group seeks to stabilize operations at its Niterói shipyard in Brazil and rebuild the order book at its Vietnam yard.

Vard says its cash position remains solid, with cash and cash equivalents at NOK 2.0 billion as at March 31, 2013.

Order intake for the quarter was, at NOK 2.8 billion, more than double that of the preceding quarter, contributing to a net increase in total order book value,which reached NOK 15.5 billion, slightly up from year-end 2012.

Continued strong demand for high-end subsea construction vessels saw Vard win contracts for three large and highly complex offshore subsea construction vessels from key clients Solstad Offshore, Farstad Shipping and DOF Subsea in the quarter.

Taking into account the five vessels delivered during the quarter, Vard's order book stood at 46 vessels as of March 31, 2013. More than half, or 26 of these vessels will be built to Vard's own design. Total order book value stood at NOK 15.5 billion, slightly up from year-end 2012.

Vard says its shipyards in Romania and Norway are operating at full gear. The Norwegian yards have surpassed the brief period of temporarily lower utilization recorded during the previous quarter.

Four vessels were successfully delivered from Norway during the quarter.

Investments in new facilities and advanced technology are currently being implemented in Romania, aimed at securing Vard's long-term competitiveness in Europe. Enhanced automation, new blasting and painting facilities, and a state-of-the art piping prefabrication facility are projected to increase productivity, quality and throughput.

While the yard in Vietnam is currently seeing lower utilization, it is implementing investments — such as an extension of the floating dock — aimed at improving its long-term capabilities to take on larger and more complex vessels.

The group's new shipyard in Brazil, Vard Promar, is more than 85 percent completed. Dredging of the harbor basin was completed in April and the yard is reported to be "well on its way to commence shipbuilding operations at the end of June this year, in line with previous estimates."

Recruitment and training are ongoing, with approximately 190 staff employed so far.

Vard says it is witnessing a healthy level of project inquiries for OSCVs across a broad range of sizes, specifications and geographies. Global demand for OSCVs remains high, largely due to increased use of subsea installations in oil and gas exploration, and demand for modern tonnage to deploy and maintain such installations.

Although promising spot rates for anchor handlers (AHTS) were recorded in the North Sea market recently, it is currently still too early for this to translate into newbuilding activity.

Overall platform supply vessel (PSV) demand remains sluggish, says Vard. However, there is still demand for individual highly specialized vessels with innovative features such as the advanced rescue features in the most recent PSV order secured by the group (an LNG fueled vessel for Simon Møkster Shipping that became a confirmed order yesterday).

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