Problems at Fosen mean red ink at Bergen Shipbuilding

AUGUST 14, 2012 — Norway’s Bergen Group says that “very weak performance” by its Fosen shipyard in the second quarter of 2012 means its Shipbuilding Division won’t reach its previously announced earnings expectation. The division is now expecting an operating loss (EBITDA) of NOK 70-80 million this quarter.

This is mainly due to overruns regarding the estimated time usage, which is a result of problems with the hull deliveries and challenges related to project management during the outfitting process at the shipyard in Fosen.

Terje Arnesen, CEO of Bergen Group ASA says several measures are in progress in order to secure control of the remaining outfitting scope of the two hulls currently under construction at Fosen, as well as to regain the shipyard’s profitability.

Terje Sjumarken, CEO of Bergen Group BMV has been appointed Executive Vice President of Bergen Group Shipbuilding. Mr. Sjumarken has long and solid experience within shipbuilding and will give priority to the targeted strengthening of planning resources and project management at the shipyard in Fosen.

“Bergen Group Fosen has not succeeded in replacing the production of hulls at their own shipyard in Sweden with the purchasing of hulls from external suppliers,” says Mr. Arnesen. “In this area, Bergen Group BMV has extensive experience and expertise that will contribute to restoring a healthy profit in the implementation of future projects at Fosen. As previously announced, closer collaboration or partnership with external hull yards is top priority for Bergen Group Shipbuilding in order to secure quality in hull deliveries at the right time with the right quality.”

Mr. Arnesen notes out that the recently awarded contract for LNG conversion on the two cruise ferries currently under construction for Fjord Line (see earlier story) will contribute to an improved situation at the Fosen yard.

“The contract has granted us an extended delivery deadline, which gives us more time to plan and implement an effective completion of these two cruise ferries; both for the hull that is already at Fosen and the next hull that will be delivered from Poland,” he says.

As of today, Bergen Group Shipbuilding has an order backlog of in total seven ships due for delivery until the summer of 2014. Two of these ships will be completed and delivered during the second half of 2012; an offshore vessel (Offshore Construction Vessel) from Bergen Group Fosen to Volstad Maritime in Q3, and an offshore vessel (Rescue and Field Support Vessel) from Bergen Group BMV to Atlantic Offshore in the fourth quarter.