Aker Yards lowers financial expectations
Europe’s largest shipbuilder, Norway’s Aker Yards, has lowered its earnings forecasts for 2007 due to “challenges” related to ferry projects at three of its Finnish yards.
Aker Yards’ revised earnings before interest, taxes, depreciation and amortization (EBITDA) figure for 2007 is now estimated to be about NOK1 billion ($171.7 million) to NOK1.1 billion ($188.8 million) while net profit is estimated at about NOK800 million ($137.3 million) to NOK900 million ($154.4 million).
The Oslo-based company said the main reason for the revised estimates lies in the heavy load in the Finnish operations, and is mainly related to the building of ferries.
“The very high level of growth in activity level at the same time as the market is booming has lead to a lack of resources giving a knock-on effect on the total backlog of ferries,” Aker said.
“The number of ferries in the backlog in Finland is seven, of which five will be delivered in the next 12 months. In addition, the suppliers of the shipyards are also experiencing a booming market, leading to higher prices than anticipated. This is giving a negative effect on most of the backlog in the Cruise & Ferries business area”
Yrj' Julin, who was appointed as Aker’s president and chief executive officer on June 11, said: “We have decided it is correct to revise project estimates, primarily related to ferries based on the cost increases we see in the suppliers market, our tight delivery schedule, as well as the general high activity level in all areas of the value chain.
“I am not pleased by having to bring this news to the market. We take this matter very seriously, and will dedicate ourselves fully to improve the situation. However, I am convinced we have a good foundation for improvements, and that the entire organization will pull together to make this work. We have identified a set of immediate actions in order to rectify the situation, and the operating model in Finland will be re-evaluated, and a new structure will be in place soon.”
As a result of the ongoing process in Finland, Aker’s second quarter results release for 2007 has been postponed to Aug. 24.
Meanwhile, a number of the senior management team have increased their shareholdings in the company:
* Svein Sivertsen, chairman, increased by 5,000 shares to 15,000 shares.
* Julin, up 4,000 shares to 22,750 shares.
* Leif Borge, chief financial officer and executive vice president: up 4,000 shares to 39,000 shares.
* Ole A. Heggheim, executive vice president of business development, up 4,000 shares to 26,500 shares.
* Oddvar Slettevold, executive vice president of projects and technology, up 4,000 shares to 29,000 shares.
Aker Yards lowers financial expectations
