Update on synergies and Cost Reduction Program - Target increased

19.12.2017 09:44 am

  • Achieved annualized synergies and cost reductions of approximately
         NOK 400 mill during 2017

  • Target increased to annualized reductions of NOK 700-800 mill within end of 2018
  • On 6 February 2017 the plan to merge Solstad Offshore ASA, Farstad Shipping ASA and Deep Sea Supply Plc into one company, and thereby becoming one of the world’s largest Offshore Support Vessel owners, was released. Further, it was announced that the new company was targeting annual synergy and cost savings of NOK 450 – 600 mill compared to the 2016 cost level (regardless of activity level). The merger was formally in place in June 2017 and based on the experiences from the first six months in operation as one company, Solstad Farstad ASA is now increasing the targeted annualized savings to NOK 700 – 800 mill.

    By the end of 2017 the cost reductions relating to measures already implemented represents annualized savings of approximately NOK 400 mill.

    The savings mainly relate to three different areas;

    1) Global onshore administration; new organization structure implemented and the administration expenses have been reduced by combining offices globally and centralization of functions. Different projects to implement common ICT systems are well progressed, and this will further increase efficiency and strengthen operations.

    2) Offshore crew; expenses are being reduced through using best practice to customize crew composition to each specific vessel, flag-state requirements, customer requirements and area of operations.  

    3) Procurement and economy of scale; combining the three companies have given economies of scale relating to purchasing and logistics, and use of best practice will further reduce costs relating to maintenance and dry-dockings.

    The Company has also explored revenue synergies related to the merger. While there are several contracts that illustrate the existence of such synergies, the Company has at the present moment chosen not to quantify these.

     “Solstad Farstad ASA has been and are still working hard to meet the commitments we made to our stakeholders following the merger”, says CEO Lars P. Solstad. He continues; “I am impressed by the strong commitment to reduce costs at the same time as we operate safely and efficiently to the satisfaction of our clients. With the reduced cost base we will be more competitive and with our high quality vessels and operations, we will be in a very good position when the market recovers.”

    Contact:
    Lars Peder Solstad, CEO at +47 91 31 85 85

    Skudeneshavn, December 19th 2017

    Solstad Farstad ASA
    www.solstadfarstad.com

    This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)