SHIPBUILDER Vard Holdings' net profit for the first quarter ended March 31, 2015, plunged 89.7 per cent to eight million Norwegian kroner (S$1.43 million), compared to 78 million kroner in the year-ago period, mainly as a result of net foreign-exchange losses and higher interest expenses.
Revenue for the quarter was up 14.6 per cent at 3.06 billion kroner, versus 2.67 billion kroner in the corresponding period last year, due to higher activity at the yards with subcontractors.
Looking ahead, the group expects new order prospects to continue to be weak in the near and medium term.
The group said: "While oil prices have recovered somewhat from their lows in the first quarter, expectations for new investments by oil and oil services companies are much reduced, and OSV (offshore support vessel) fleet owners are suffering from temporary overcapacity in most segments and markets that Vard serves, resulting in unsustainable charter rates, idling of vessels and very limited demand for new projects.
"Counterparty risk is increased as a result of the current market environment. Competition for the limited number of new projects currently under development in the market is fierce."
To address the challenges, Vard is currently implementing a strict cost-cutting programme across all units, with the aim of increasing flexibility and reduce overheads and improving efficiency and cost control in the projects.
Loss per share for the quarter was1.36 Singapore cents while net assets value per share was 60 Singapore cents. No dividends were declared for the quarter.
On Tuesday, the counter of Vard Holdings had closed trading up 0.86 per cent at S$0.59.