Vard

Vard: 3Q15 results missed estimates, as net loss widened to NOK486m (3Q14: -NOK37m), which brought 9M15 losses to NOK520m (9M14: +NOK195m), compared to the street's full year estimates for a net profit of NOK212.6m.

Revenue dropped to NOK2.27b (-19% y/y) on reduced activity at its European shipyards due to a shortfall in new orders.

Operationally, Vard's losses (before restructuring cost) grew to NOK467m (3Q14: -NOK51m) and -NOK356m year-to-date (9M15: +NOK309m), caused by loss provisions for additional project overruns and delays in Brazil.

While its European shipyards are currently profitable, margins are declining for ongoing projects combined with increased cost of underutilized capacity.

Bottom line was dragged by an unrealised FX loss (NOK385m) due to a yard construction loan in Vard Promar denominated in USD, and restructuring cost (NOK36m) related to termination benefits.

Meanwhile, the Brazilian tax claim is still pending an appeal decision and no provision has been made.

At the current price, Vard is valued at 0.63x P/B.