Promar problems hit Vard profit

Vard Promar Vard Promar

OCTOBER 14, 2014 — Singapore listed shipbuilder Vard Holdings, which is a 55.63% owned subsidiary of Fincantieri, said today that slower-than-expected improvements in throughput and productivity at the new Vard Promar shipyard in Brazil are impacting profitability during the ramp-up phase. Additional cost was also incurred for two vessels in the Promar order book that were built at a third-party yard and are currently undergoing outfitting at Vard Niterói, Brazil.

During the third quarter, the overall performance of Vard's European shipyards was stable and the Group benefits from the close cooperation between its Romanian and Norwegian yards. Nevertheless, the Group has revised its estimates for a limited number of projects in its European order book where cost overruns were incurred. As a result of mitigating actions taken, no impact on the delivery schedule is expected.

"Resulting from the above," said Vard, "the company expects a marginally negative EBITDA result for the third quarter ending 30 September 2014 ("3Q 2014").

Vard also said that that following further assessment of its legal position, the company intends not to make any provisions in its financial accounts for a tax claim by the Brazilian authorites that it reported in August.

Fincantieri S.p.A. says that following the Vard Profit Guidance, "as of today Fincantieri expects its consolidated EBITDA margin for the first nine months of 2014 results, to be released on 10 November 2014, not to be materially affected when compared to the reported EBITDA margin for the first six months of 2014, also taking into account the remaining capacity in the purchase price allocation fund."

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