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Disclaimer This presentation should be read in conjunction with Vard Holdings Limiteds results for the period ended 30 June 2013 in the SGXNet announcement. Financial figures are presented according to SFRS. This presentation may contain


  1. Disclaimer This presentation should be read in conjunction with Vard Holdings Limited’s results for the period ended 30 June 2013 in the SGXNet announcement. Financial figures are presented according to SFRS. This presentation may contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements and financial information. Such forward-looking statements and financial information are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. As these statements and financial information reflect our current views concerning future events, these statements and financial information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these forward-looking statements and financial information. Y ou are cautioned not to place undue reliance on these forward looking statements, which are based on the Company’s current view of future events. 11.07.2013 | Page 2

  2. 2Q 2013 Results Presentation Vard Holdings Limited 11 July 2013 European network for Health Technology Assessment | JA2 2012-2015 | www.eunethta.eu

  3. Key messages � Revenue of NOK 2 945 million for 2Q 2013, down from NOK 3 337 million in 2Q 2012 � EBITDA of NOK 121 million for 2Q 2013, down from NOK 460 million in 2Q 2012 � EBITDA margin , representing EBITDA to total operating revenues, of 4.1% for 2Q 2013, down from 13.8% in 2Q 2012 � Order intake of NOK 1 209 million in 2Q 2013. Order intake may vary significantly on a quarter-by-quarter basis � 41 vessels in the order book as at 30 June 2013, of which 22 of own design � New shipyard in Brazil , Vard Promar, started production on schedule in June; yard construction to be completed within 3Q 2013 � Brazil operations significantly affecting group performance � Negative contribution from Vard Niterói during the quarter, and drag on margins until delivery of last vessel in current order book in Niterói � Higher than expected start-up cost in Vard Promar � Positive outlook for new order wins in 2H 2013 11.07.2013 | Page 4

  4. 2Q 2013 Business update 11.07.2013 | Page 5

  5. Vessel deliveries and new contracts – 2Q 2013 New contracts Vessel deliveries 1 AHTS Three new vessel contracts secured in 2Q 2013 � � Far Statesman from Vard Langsten (Norway) to 1 Offshore support vessel for Island Offshore � Farstad Shipping 1 PSV for Simon Møkster Shipping � 1 Offshore Tug for Buksér og Berging 5 PSVs � Far Starling from Vard Vung Tau (Vietnam) to Farstad Shipping � Island Crown from Vard Brevik (Norway) to Island Offshore � Siem Atlas from Vard Niterói (Brazil) to Siem Offshore � Fanning Tide from Vard Søviknes (Norway) to Tidewater � Troms Lyra from Vard Aukra (Norway) to Troms Offshore 1 OSCV � Skandi Bergen from Vard Søviknes (Norway) to DOF 1 Other (Forrage Carrier) � Eidsvaag Pioner from Vard Aukra (Norway) to Eidsvaag As at 30 June 2013, the Group had 41 vessels in the order book, 22 of which will be of VARD’s own design. 11.07.2013 | Page 6

  6. Order book development New order intake during the period (NOK million) 1) 27 Vessels 12 555 28 Vessels 16 Vessels 11 117 9 501 4 Vessels 5 692 8 Vessels 6 Vessels 4 458 3 991 2Q 2013: NOK 1 209 million 1Q 2013: NOK 2 782 million 2008 2009 2010 2011 2012 1H 2013 Order book value at the end of the period (NOK million) 1) 22 389 17 031 16 675 16 411 15 096 13 950 2008 2009 2010 2011 2012 1H 2013 1) Includes firm orders only. Includes variation orders and trading packages 11.07.2013 | Page 7

  7. Order book status Delivery Norway / Brazil Vietnam Total Order book as of 30 June 2013 (# of vessels) year Romania 2016 3 2016 3 3 Other 1 PSV 2015 7 2015 7 2 OSCV 1 Other 3 Other 2 AHTS 2 AHTS Delivery year 4 PSV 1 PSV 1 PSV 2014 20 2014 20 5 OSCV 3 Other 2 Other 3 AHTS 1 AHTS 10 PSV 1 PSV 2 PSV 2013 11 13 2013 24 3 OSCV 4 Other 1 AHTS 1 AHTS 15 PSV 1 PSV 1 PSV 2012 22 delivered 2012 22 1 OSCV 2 Other 0 10 20 30 11.07.2013 | Page 8

  8. Order book by region and vessel type Order book Deliveries Order intake Order book By Region 31 Mar. 2013 2Q 2013 2Q 2013 30 June 2013 Norway / Romania 31 6 3 28 Brazil 13 1 - 12 Vietnam 2 1 - 1 Total 46 8 3 41 Order book Deliveries Order intake Order book By Vessel Type 31 Mar. 2013 2Q 2013 2Q 2013 30 June 2013 AHTS 7 1 - 6 PSV 14 5 2 11 OSCV 10 1 - 9 Other 15 1 1 15 Total 46 8 3 41 11.07.2013 | Page 9

  9. Operations update – Brazil (Vard Niterói) � Successful delivery of one PS V during the quarter � Business environment in Brazil still challenging; characterized by high personnel turnover and very high pressure in the subcontracting market � Vard Niterói still suffering from overload situation; further delays and cost overruns incurred � Dependency on outsourcing of hull construction a major driver of deteriorating performance during the second quarter – but last hull built outside the yard has now been delivered � Mitigating actions � Reorganization of production beginning to bear fruit in terms of productivity � Strict follow-up of subcontracted work � Increased use of expatriates from Norway and Romania to strengthen the organization � Overload situation will naturally be reduced from 4Q as a result of project progress 11.07.2013 | Page 10

  10. Vard Niterói: Revised delivery schedule 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 DELIVERED Pro29 Pro30 Pro31 Pro32 Pro33 mar-13 jun-13 sep-13 dec-13 mar-14 jun-14 sep-14 11.07.2013 | Page 11

  11. Operations update – Brazil (Vard Promar) � Operations commenced as scheduled with first steel cutting in J une 2013; shipyard construction to be completed within 3Q 2013 � Capex budget on target but higher-than-expected pre-operational expenses, and revised estimates of start-up cost � Negative contribution from two hulls being built at external shipyard � Recruitment and training ongoing � T otal number of employees currently around 350 � Recruitment progressing above expectations, with many experienced workers joining the organization � Training program ongoing; first welders in the shipyard are certified � State-of-the-art new facilities offer opportunities for growth, better operational stability, and a substantially improved cost position � Foundations in place for new order intake and sustainable operations in Brazil 11.07.2013 | Page 12

  12. Production started at new yard Vard Promar First steelplates arriving at Vard Promar First steel cut 11.07.2013 | Page 13

  13. Operations – Norway, Romania & Vietnam � Operations elsewhere in the Group not affected by the situation in Brazil � High workload in Romania � Completion of several major yard investments in Tulcea, Romania, in Q3 2013, giving an excellent platform for future competitiveness � Successful delivery of seven projects from Norwegian yards, including prototype vessels and projects with very short lead times � Sub-optimal utilization in Vietnam following delivery of second-to-last vessel in the order book 11.07.2013 | Page 14

  14. 2Q 2013 Financial highlights 11.07.2013 | Page 15

  15. Revenues and margins Revenues (NOK million) EBITDA (NOK million) and EBITDA Margin (%) 6 500 1 000 6 148 13.9% 6 000 5 692 900 853 5 500 800 5 000 700 4 500 3 337 4 000 2 945 600 460 7.5% 3 500 500 3 000 425 400 2 500 121 2 000 300 2 747 2 811 393 304 1 500 200 1 000 100 500 0 0 1H 2012 1H 2013 1H 2012 1H 2013 11.07.2013 | Page 16

  16. Statement of income – major items 2Q ended 30 June 1H ended 30 June D( %) D( %) (NOK million) 2013 2012 2013 2012 Revenue 2 945 3 337 -11.7% 5 692 6 148 -7.4% Materials, subcontract cost and others (2 163) (2 272) -4.8% (3 986) (4 102) -2.8% Salaries and related costs (518) (484) 7.0% (1 003) (958) 4.7% EBITDA 121 460 425 853 -73.7% -50.2% EBITDA % 4.1% 13.8% n/ m 7.5% 13.9% n/ m Operating profit 20 431 -95.4% 295 793 -62.8% Net financial income / (cost) 16 12 4 22 33.3% -81.8% Profit before tax 35 444 -92.1% 299 817 -63.4% Profit for the period (44) 278 -116% 136 548 -75.2% Note: Write down of remaining goodwill related to the Niterói yard in Brazil of NOK 70m included in Q2 2013. High effective tax rate in the period mainly due to losses in Niteroi, without the corresponding deferred tax asset recognized, as well as the aforementioned write down. 11.07.2013 | Page 17

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