Promar Shipyard Hits VARD Profit

Singapore listed shipbuilder Vard Holdings, subsidiary of Fincantieri, has informed that slower-than-expected improvements in throughput and productivity at the new Promar shipyard in Brazil are impacting profitability during the ramp-up phase.

Additionally, the cost was also incurred for the two vessels in the Promar order book that were built at a third-party yard and are currently undergoing outfitting at Vard Niterói.

“Following the completion of yard construction at Vard Promar, the new Brazilian yard’s organization is growing rapidly, adding more than 500 employees to its headcount in recent months. Additional resources from Europe are being mobilized to strengthen the organization and implement productivity improvement measures, critical to reaching production targets at Vard Promar during the high- complexity ramp-up phase,” VARD stated earlier in Q2 report.

The two pipe laying vessels (PLSVs) are to be built at the brand new Vard Promar yard in Recife, in the North East of Brazil. The order is part of 4 OSVs by DOF/Norskan and Technip, important customers for Vard. The other two of these vessels are to be built in Norway, also to DNV class.

During the third quarter, the overall performance of the 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, the Company expects a marginally negative EBITDA result for the third quarter ending 30 September 2014 (3Q 2014)