Racking up 2015 loss, Vard unveils new strategy

FEBRUARY 29, 2016 — Reporting a net loss of NOK 1.29 billion ($148 million) for FY2015, the heavily offshore focused Vard Holdings today announced a diversification strategy aimed at preserving its core expertise and skilled employee base and utilizing its existing shipyard capacity until an eventual recovery in its core market.

Vard saw a revenue drop in FY2015, and expects a further drop to NOK 8-9 billion for 2016, but foresees a recovery to NOK 12-13 billion in revenues, reaching previous highs by 2020, "on the back of an expected recovery of the offshore market from 2018."

Vard says it aims to penetrate markets for specialized vessels in the offshore wind and aquaculture markets, and develop a broader product offering to the aquaculture industry. Geographically, it will increase its focus on the Middle East region, where it expects comparatively strong demand from the offshore industry for OSCVs and other specialized vessels.

Working with its majority shareholder, Fincantieri, Vard sees opportunities in the area of small and specialty cruise vessels such as exploration cruise ships, as well as in the market for Offshore Patrol Vessels (OPV), where Vard already has a presence through subsidiary Vard Marine.

To further strengthen ties between Vard and Fincantieri, both companies intend to cooperate in the construction of cruise ships, with sections of cruise ship hulls to be produced at Vard's Tulcea, Romania, shipyard, securing a base load for the group's Romanian shipyards, which will both also strengthen their capabilities to deliver complete vessels of lower complexity.

he Norwegian yards will be primarily used for outfitting of highly specialized vessels in the core market and new focus segments, whilst "developing adjacent businesses to fill excess capacity." Vard Aukra will be dedicated to the aquaculture market segment.

Vard Vung Tau in Vietnam will continue to be positioned as an alternative to the European yards, combining Vard quality with a lower-cost production set-up, which is particularly well suited for projects in the Asia-Pacific region.

Vard says it will maintain its presence in Brazil will be maintained, though operations "will be adapted to expected local market demand in a more stable environment going forward."

Newbuilding activity will be phased out at Vard Niterói after the completion of the current order book.Despite the challenges experienced in the start-up phase of the new shipyard Vard Promar, VARD has long-term ambitions to remain a key player in Brazilian shipbuilding, supporting the local oil and gas industry.

Vard says its concept development, design, sales and marketing organizations are being strengthened with resources dedicated to the new target vessel and product segments.

Read the 2015 financial statement  and related documents HERE


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