Vard Holdings Ltd (SGX:MS7) is one of the global shipbuilders of offshore and specialized vessels used in the offshore oil & gas exploration, production and oil services industries.
The Group was listed on the SGX in Nov 2010 under the of STX OSV. In 2013, majority shareholder Fincantieri Oil & Gas SpA, a wholly owned subsidiary of FINCANTIERI SpA, acquired a 55.6% stake in the Group; FINCANTIERI is one of the world’s largest shipbuilders with over 200 years of maritime history. The Group’s name was also changed to Vard Holdings during that year. With a relatively large global operation, Vard Holdings has total of 10 shipyards with 5 based in Norway and the rest located in Romania, Vietnam and Brazil. The types of vessels which Vard Holdings build include the Platform Supply Vessel (PSV), Anchor Handling Supply Vessel (AHTS) and Offshore Subsea Construction Vessel (OSCV).
Despite concerns of an oversupply in offshore vessels in recent years, Vard Holdings has maintained a consistent order book of NOK15 billion to NOK17 billion between FY2009 and FY2012, with the largest order book in FY2013 at NOK19.4 billion. Revenue averaged NOK11.7 billion during FY2009 to FY2013 while its EBITDA margin has remained volatile, ranging between 5.4% to 19% over the same period.
The Group recently issued a profit guidance for the result of 3Q2014 announcing that its new Brazilian shipyard was facing a slowdown in throughput and productivity which might impact profitability. Cost overruns were expected to be incurred in some of its projects, including 2 vessels in its Promar yard in Brazil. As such, the Group expected marginally negative EBITDA for 3Q2014.
Value In Action
The recent profit warning has led the market to feel jittery in the stock. However, this is not the first time Vard Holdings have issues with its operations. The Group brought shareholders for a roller coaster ride in mid-2013 when its Niteroi yard in Brazil has also experienced cost overrun which resulted in additional cost in outsourcing.
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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above
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