Vard’s deepwater investments take a hit as oil prices plunge

Its order wins momentum is grinding to a halt.

Mainboard-listed offshore and marine firm Vard Holdings is struggling to secure new orders thanks to steadily declining oil prices, with analysts turning negative on the firm’s prospects as it is heavily exposed to deepwater investments.

According to OSK DMG, Vard’s management has already warned of a slowdown in new order intake, while oil prices now are already causing some projects in the North Sea and other deepwater areas to be delayed or re-tendered.

The report also noted that Vard’s revenues and margins may not recover as quickly as street hopes, as street earnings downgrades are likely and may maintain pressure on its share prices.

“Given the current oil price environment, our NOK14.5bn/NOK13.5bn assumptions for FY14/FY15 now look optimistic and we cut these to NOK12bn/NOK11bn/NOK11bn for FY14-16. These have a knock-on effect on our FY14/FY15 revenue forecasts, which we cut by 9%/13%. We also introduce FY16F figures. We cut our FY14-15 EPS forecasts by 15%/21% as a result of our revenue and margin cuts,” OSK DMG stated.