(Updates with additional detail on performance, strategy, outlook) OSLO (Thomson Financial) - Aker Yards ASA posted third-quarter figures well below expectations across the board after suffering from continued supplier-related problems, but the firm resisted the temptation to cuts its guidance and maintained both its full-year and longer-term targets.
For the third quarter, the Norwegian shipbuilder posted operating profits of 81 mln nkr, down from 202 mln at the same point last year, and well below the 178 mln consensus forecast of analysts polled by TDN Finans.
At the pretax level, profits fell to just 23 mln nkr from 176 mln, and well off the 154 mln consensus forecast.
EBITDA, meanwhile, came in at 200 mln nkr, down from last year's 304 mln and below the 290 mln figure forecast by analysts.
Aker Yards blamed the weaker-than-expected performance on a combination of seasonal fluctuations and continued pressure on suppliers.
Earlier this year the shipbuilder issued a profit warning related to delayed ferry construction at three of the firm's Finnish yards, along with cost increases due to the booming market and growing pressure on sub-suppliers.
Today, it said the "operational environment in the entire shipbuilding industry is still very heated".
"The operations in Finland are suffering from high pressure on subcontractors, and demand a careful follow up in order to reduce delays on projects and cost overruns." Meanwhile, at its yards at Floro in Norway, the firm said operations are still challenging, with a "tight delivery program in a heated environment".
"A stretched suppliers market causes delays, and a number of deliveries from suppliers are still suffering from unacceptable quality," it said. "The challenges are as described in earlier quarters, and no new major operational challenges have surfaced during the quarter." Despite the tough environment, Aker Yards said it is maintaining its previously issued guidance, both for the full year and the longer term.
The full-year EBITDA result is expected to be about 900 mln nkr, while net profits are seen at approximately 700 mln nkr.
In the longer-term, Aker Yards has already said it is expecting a 2008 EBITDA margin of 5-6 pct, while beyond that, it is targeting a figure of 7 pct.
Since the end of the quarter, South Korean investment group STX has bought a 39.2 pct stake in Aker Yards for 800 mln usd, and the Norwegian firm said today that this share purchase must be approved by the European Commission before STX secures its voting rights.
However, on top of this, Aker Yards said the new ownership structure of the firm means it has now decided to "actively explore the company's strategic options".
No specific details were given on the type of options it is considering, but the firm said it has already secured Arctic Securities as a financial advisors and that it will also take on an additional international advisor. alastair.reed@thomson.com ar/jrr/ar/ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved.
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