Vard

Vard: 2QFY14 results were in-line with estimates, with net profit coming in at NOK140m versus a net loss of NOK20m, taking 1H14 net profit to NOK232m (+38.1%). Revenue was flat at NOK 2.9b, with Vard delivering seven vessels during the quarter, although noteworthy was that EBITDA margins rose to 6.4% from 4.1% the previous year, signalling a gradual recovery in profitability. Commenting on its operations, Vard highlighted that its yards in Europe continue to experience generally stable operations and high activity levels, although operations in Brazil remains challenging. As such, additional resources from Europe are being mobilized to Brazil to strengthen the organization and implement productivity improvement measures. Going forward, Vard believes that demand for highly specialised Offshore Subsea Construction Vessels (OSCVs) and subsea support vessels will be the strongest in the near-to-medium term. The group adds that its order flow is supported by a growing and more international client base, but a slowdown in new orders in 2H14 is expected compared to the exceptional order intake in 1H14. Vard’s current order book stands at NOK 21.6b, which will underpin revenue visibility over the next three years. At the current price, Vard trades at 11.8x forward P/E.