Aker Yards Reports Loss; CEO Steps Down

The troubles at Aker Yards now have a number to them, as the company reported a loss for the year and that its CEO has been forced out. Aker Yards ASA reported an EBITDA result of NOK -500 million ($96,000) for the 4Q of 2007. The EBITDA result for 2007 was NOK -16 million ($3m), down from NOK 1 443 ($277m) in 2006. Earnings per share (EPS) were NOK -2.81 for the quarter, and NOK 0.95 for the full year 2007.

Fast growth in the very heated environment has, as previously announced, resulted in operational challenges in the quarter, and affected the 2007 results negatively. Loss provisions have been made for several projects.

Order intake in the fourth quarter was $1b (NOK 5 449m), giving the company an order backlog of $15b (NOK 78 960m) at the end of the quarter, comprising 140 vessels. Aker Yards had revenues of NOK 9 683 million in the fourth quarter of 2007, an increase of 23.9 percent compared with NOK 7 815 million in the corresponding period of 2006. Aker Yards had an EBITDA result of NOK -500 million in the fourth quarter of 2007, compared with NOK 401 million in the corresponding quarter of 2006. The EBITDA margin for the fourth quarter of 2007 was -5.2 percent. A loss provision of around NOK 600 million has been made related to the Finnish operations in the fourth quarter. A further loss provision in Florø of NOK 150 million has also been made in the quarter.

CEO is Out

In conjunction with the announcement of the loss, the company announced that Yrjö Julin has with immediate effect left the position as CEO of Aker Yards ASA. The Chairman of the Board Svein Sivertsen will in an interim period act as CEO, until a permanent CEO has been recruited. Sivertsen said "We present weak and disappointing results for 2007. The Board believes that it is important to have a new CEO to reestablish confidence with all stakeholders and that we can put the operational challenges behind us. We have a very capable and experienced crew at Aker Yards, and we have a record high order backlog. I am confident that we will see improvements through 2008." Julin said "I have had six very exciting years with Aker Yards. But the last months has been very demanding. The Board and I had a common understanding that the best solution for the company going forward is that a new CEO takes over"

Earnings per share (EPS) were NOK -2.81 for the quarter, compared with NOK 4.35 in the same period in 2006. Access to qualified personnel is a key focus area in most of the countries in which Aker Yards operates. The operations in Finland are still suffering from high pressure on subcontractors. A stretched suppliers market causes delays, and a number of deliveries from suppliers are still suffering from unacceptable quality. These challenges have been addressed through specific improvement measures, which are gradually taking effect. The loading in ferry construction is gradually coming down towards a more normalized level.

In October, the Korean shipbuilding group STX acquired a 39.2 percent ownership stake in Aker Yards. The EU competition authorities are currently evaluating the acquisition of the shares. The Board of Directors proposes not to pay any dividend for 2007.