In 2015 JSC “Rigas kugu buvetava” (the Riga Shipyard) started regaining its earlier capacity in terms of ship repairs and building new vessels while also producing industrial products of metal processing.
‘While in 2014 the company saw some sort of crisis, this year, 2015, is one of growth, and the company has even started a new line of business,’ says Mr Janis Skvarnovics, Chairman of the Board of the Riga Shipyard, while describing the situation at the company. What he tells is based on the fact that, compared to the previous year, this year the company is not only working at a profit but it has also been able to provide more ship repair services, build more fishing vessels and vessel hulls, and even convert the metal processing capacity not used in ship repairs and building into the production capacity of specific metal coils. ‘We’ve done significant work to ensure that the company’s operations in 2016 are even more successful than this year. Foundations for this have been laid both by participating in tenders for ship repairs, construction of shipping vessels and vessel hulls, and by introducing new products at the company,’ J. Skvarnovics notes.
Although Year 2015 has not yet ended, the indicators of economic activity of the company are better than for the entire Year 2014. That is to say, the net profits of the company during the first 9 months this year reached EUR 237,247.00 while last year saw losses amounting to EUR 1.28m. Last year ended in EUR 17.6m profit, while the profits during the first 9 months this year have already reached EUR 15.5m, EUR 12.8m of which came from ship repairs, which is nearly two times as much compared to a similar period last year, when the profits reached a total of EUR 6.5. ‘The profits from ship repair will yield ca. EUR 17m this year,’ J. Skvarnovics predicts. He points out to the fact that this year the Riga Shipyard has provided repair services for 64 vessels, of which 58 were repaired at the dock, whereas last year the Riga Shipyard provided repair services for 51 vessel during the entire year. ‘Two vessels are undergoing repairs at the docks now, in December, and there are two more vessels waiting at the wharf, which allows to predict relatively good results for the future,’ J. Skvarnovics says. He also points out that it is already clear what the company will be doing during the winter months: in January and February next year. ‘We’ve won some tender contracts and we’re now waiting for the vessels to arrive,’ says J. Skvarnovics in reply to a question about how the company managed to attract the vessels for repairs. He stresses that the Marketing Department of the Riga Shipyard is following tenders for vessel repairs very closely, which enables making a competitive offer.
‘Four new fishing vessels have been supplied to our Nordic customers this year, one of which is a bulkier vessel containing both a warehouse for caught fish and a fish processing section, as well as five vessel hulls,’ J. Skvarnovics says. He notes that the Riga Shipyard is increasingly cooperating with Norwegian fishermen who need vessels for managing salmon farms in the sea. ‘In the past, salmon farms used to be kept in fjords; now they are being made father and farther away from the coast due to various reasons, this is why different vessels are needed,’ J. Skvarnovics says. He says this tendency will remain in the future as well. ‘This year more attention was paid to producing more expensive products: delivering a fully equipped vessel rather than simple vessel hulls. ‘The direction to follow in business is clear; it is also clear what should be done, and how, in order to achieve this,’ J. Skvarnovics says. Although the Riga Shipyard once built patrol vessels for the Latvian Sea Border Guard, and similar vehicles were also built for the Swedish Coast Guard, new tenders in this segment have not even been announced in this part of Europe. ‘It’s not a problem of the Latvian State alone; other countries too lack state budget funds to order coastguard vessels because these vessels also require a lot of costly and specific equipment to be installed,’ J. Skvarnovics says in reply to a question about orders of military vessels.
The head of the company refers to the area of industrial products of metal processing as a singular yet successful example of the company operations this year. ‘Nothing of the sort has ever been done at the Riga Shipyard before: this year we used our production capacities unused in vessel repairs and building to make industrial products. The first product is specific cable metal coils that we supplied to a Norwegian company specialising in laying wires and cables for oil and gas offshore platforms, submarines at docks etc.,’ J. Skvarnovics says. He says that the production of metal coils sized 8.5 m in diameter allowed to gain extra income. ‘We already have a good record of collaboration with Nexans Norway AS, a customer of ours from Norway, and they have already placed an order for the next batch of these metal coils,’ J. Skvarnovics says in reply to a question about the future of products in this niche. He also points out that the Riga Shipyard took part in a tender for the supply of large-size steel structures for a supermarket in Tallinn. ‘The results are still unknown but this tender was more of a challenge to our company to obtain assurance about the capabilities of the Riga Shipyard to work in a market segment where the company has never even tried to operate so far,’ J. Skvarnovics points out. Another direction – production of large-size steel structures mentioned in August 2015 – has not been neglected as well. ‘The Riga Shipyard has prepared and submitted a tender proposal for the construction of a tunnel to an island near the shore in Germany, however, the results of the tender have not yet been announced,’ Chairman of the Board of the Riga Shipyard notes.
Ship repairs and construction of new vessels is a specific area where preparatory work done in advance plays an important role. ‘In 2015, the Riga Shipyard has worked specifically with a view to the segment of orders expected in the next few years, and I hope there will be results,’ J. Skvarnovics points out. He admits that the most difficult part of the process is not the ship repairs but rather getting an order and preparing the technical documentation of the project. It’s the same with orders for building new vessels. ‘This applies to all products; there will be nothing to repair or build unless relevant homework has been done in advance. Since it takes no less than 8 months from starting building a vessel hull till transferring the ready product to the customer, and in the case of more complex projects it takes even more than a year, this has a significant effect on the company turnover. A small advance is paid in upon starting the work and the balance of the order amount is only paid after transfer of the order to the customer. In the case of the Riga Shipyard, they are all from abroad. Therefore the Riga Shipyard actually carries out orders at its own expense,’ J. Skvarnovics notes.
According to Janis Skvarnovics, Chairman of the Board of the Riga Shipyard, ‘To our company, 2015 has been a year of development, laying down good foundations for securing orders from foreign customers for a variety of products and services.’
Janis Skvarnovics Chairman of the Board of Directors of "Rigas kugu buvetava" JSC t.+371 67353433
