VARD Holdings reported a 15.4% YoY fall in revenue to NOK 2,489m and a 58.6% drop in PATMI to NOK 58m in 2Q15, such that 1H15 PATMI was still negative at -NOK 34m due to 1Q15’s net loss. EBITDA margin was reduced from 6.4% in 2Q14 to 1.8% in 2Q15, caused by weaker performance at some of the yards. At the end of 2Q15, VARD’s order book amounted to NOK 13.92b, down from NOK 15.63b at end 1Q15.

Looking ahead, the order outlook in the North Sea is still weak, though management sees some opportunities in certain specialised segments. However, due to the shortfall in new orders, the group has started to see lower utilization at some of its shipyards, and this trend is expected to accelerate during 2H15 and in 2016.

Maintain SELL with S$0.41 fair value estimate under review, pending an analyst briefing.

Source: OCBC Research - 22 Jul 2015