Vard Holdings Limited (VARD) reported its FY13 results this morning which was in-line with our expectations. Revenue was flat (+0.2%) at NOK11,155m and was 3.7% above our full-year forecast. PATMI slumped 55.6% to NOK357m, or 1.0% below our FY13 estimate. During 4Q13, VARD delivered five vessels and clinched contracts for three new buildings, bringing its end 2013 order book to NOK19,356m (end FY12: NOK15,096m). However, VARD highlighted that its Niteroi shipyard in Brazil continued to face further delays and cost overruns, although operations were stable at its shipyards in Europe and Vietnam. A negative surprise came from VARD’s decision to not declare any dividends in FY13, which we believe would disappoint the market. We were expecting a S$0.02 first and final DPS. Management attributed this to an extraordinarily high dividend payout in FY12, record high investments in 2013 and a sharp fall in profitability. We will review our Hold rating and S$0.84 fair value estimate pending an analyst briefing later.

Source: OCBC Research - 25 Feb 2014