Aker warns of challenges in Finnish yards

Norwegian shipbuilder Aker Yards said in a recent statement that it was revising its 2007 earnings forecasts down as a result of challenges, mainly to do with ferry projects at its three Finnish yards.

Juha Heikinheimo, the head of Aker’s Cruise & Ferries arm, said that although the company would restructure its Finnish operations, none of the three yards was facing the axe.

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. 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 business area Cruise & Ferries.

Yrjö Julin, who was appointed President and CEO on 11 June 2007 states in a comment: “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.”

Julin continues “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, the second quarter results release for 2007 has been postponed to 24 August 2007.