Davie Yards Releases Fourth Quarter, Year End 2008 Results
Davie Yards Inc. has released its financial and operating results for the twelve month period ended December 31, 2008.
Financial Highlights Fourth Quarter 2008:
Revenue for the fourth quarter ending December 31, 2008 was US $36.8 million and net profit was US $27.4 million. The results mainly comes from the reversal of the loss provision taken in 2007 and the residual provision taken in the second quarter of 2008 following contract price adjustments accepted by Davie's clients and a strengthening of the U.S. dollar during the quarter. Operations in the quarter were negatively influenced by a lack of materials and a need to preserve the rest of the Corporation's cash, leading to a closing of the operations and lay-off of the employees on December 12.
Financial Highlights 2008:
In the year ended December 31, 2008, Davie recorded operating revenues of US $88.2 million. This revenues growth in the twelve months of 2008 is essentially due to an increased level of building activities on the three first ships on contract. TThe first one is 52 completed, the second is 21% completed and the third is 10% completed. The gross profit for the year was recorded at US $10.3 million with a net loss of US $24.1 million.
"We started resuming operations in the beginning of March, and we currently have 832 employees at work. All employees are expected to be called back to work by the beginning of April. Planned productivity is expected to be reached at the end of June. We have five vessels on order with a total contract price of US $740.6 million and our order book takes us to first quarter of 2011. In order to finalize these ships we need all of the close to 1,100 employees we had in December and another 500 more", stated Steinar Kulen, CEO of Davie Yards Inc.
Mr. Kulen continued: "Due to the financial turmoil, the market outlook is characterized as 'wait and watch'. However, the fundamentals within the offshore oil and gas industry are still positive, and offshore activity is going into deeper and deeper water. WWe also see that net fields will be developed in the near future for which several vessels are not yet built and there are also promising Canadian domestic requirements for new vessels".
To date, the Corporation has financed its operations mainly through share issuances, borrowing, and revenues from contracts. The Corporation has incurred significant operating losses and cash outflows from operations as reported in the two last quarter. Due to this, the Corporation began working on its financial restructuring plan during second half of 2008. As part of this plan, the Corporation reached agreements with its clients for price increases of US $95 million on their existing contracts and obtained US $10 million of loans from Investissement Quebec. At present the Corporation is finalizing an increase of the equity through a US $20 million private placement share issuance.
If the Corporation fails to complete the US $20 million private placement, its available cash and cash equivalents and committed sources of cash are not presently sufficient to fund expected cash requirements through the next 12 months. As a result, there could then be uncertainty as to whether the Corporation will have the ability to continue as a going concern.
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