SINGAPORE (Oct 15): Shares of Vard Holdings are being hammered after the shipbuilder warned that its third-quarter results could disappoint.

The stock sank to a new low of 63 cents, down 23.2%, in late-morning trade, pulling back from 67 cents set at 10:21am (0221 GMT). It closed at 82 cents yesterday.

More than 33 million shares have changed hands so far.

Vard said in a statement issued late last night that slower-than-expected improvements in throughput and productivity at its new shipyard in Brazil are “impacting profitability during the ramp-up phase”.

It also incurred additional costs for two vessels that were built at a third-party yard and are now being outfitted.

According to Vard, while the overall performance of its European shipyards was stable in 3Q2014, it has lowered its estimates for a number of projects in its European order book because of cost overruns.

No impact on its delivery schedule is expected, but Vard said 3Q2014 EBITDA are likely to be “marginally” negative.

It added that it would not make any provision for a NOK200 million ($38.8 million) tax claim made by authorities in Brazil.

The case stemmed from matters relating to the transfer pricing of goods and services delivered from Vard’s Norwegian entities to Vard Niterói in FY2010.

Vard’s 3Q2014 results are due on Nov 11, before trading hours.

Until then, the share price is likely to be depressed as investors await more comments from the company.

DBS Vickers analyst Suvro Sarkar has downgraded his rating on the shipbuilder to “fully valued” from “buy” and cut his price target from $1.10 to 65 cents, pegged at eight times projected FY2015 earnings.

“The impact to profitability in 3Q2014 is significantly higher than in previous quarters and reverses the trend of improving EBITDA seen over the last couple of quarters,” Sarkar said in a note today.

He has cut his FY2014 and FY2015 earnings estimates by 54% and 34% respectively to factor in Vard’s profit warning.

“While we still expect EBITDA margins to recover, the pace of recovery is expected to be more gradual,” he added.