INTERNATIONAL engineering, construction and shipbuilding business Kvaerner has announced massive pre-tax losses.

The group, which employs about 1,500 staff on Teesside, made a pre-tax loss of £405m in the year to December 31, 2001, compared to a profit of £39.4m in the previous year. Turnover was £3.68bn.

Helge Lund, president and chief executive of Kvaerner, said: "2001 was a very difficult year for the group and these results are clearly very unsatisfactory, but also highly irrelevant as the company now moves forward."

The losses were not, however, unexpected, and were largely in line with those anticipated by the new board in connection with the refinancing of Kvaerner.

The company is planning to merge with Norwegian rival Aker Maritime, a deal that is expected to be concluded next month. The deal is seen as a lifeline for Kvaerner's operations.

Mr Lund added: "The starting balance sheet of Kvaerner with Aker Maritime operations included, is as we predicted, and this gives us a good opportunity to create value for the future."

Earlier this year Kvaerner's creditors agreed to a refinancing package that kept the business afloat.

Kvaerner has launched a £122m rights issue, which it said was proceeding as planned. A further £30m of debt has been deferred for ten years. The company has about £80m of debts .

In the fourth quarter of last year, there were signs that the recovery was under way for the group.

Operating losses in that quarter were £46m compared with £50.2m in the previous quarter.

That was attributed to operating losses in the engineering and construction business of £22m, the Warnow shipyard in Poland of £6.5m and losses of £6.7m in the US shipyard in Philadelphia.

Last year Kvaerner sold its hydrocarbons and process technology businesses, including operations in Thornaby employing more than 60 staff, for £23m.

Kvaerner's well documented problems followed aggressive expansion in the 1990s as it became Europe's largest shipbuilder.

In 1996, it bought Britain's Trafalgar House, which had earlier failed in a bid to buy Northern Electric.

Kvaerner ran into trouble, with heavy losses in 1998 and 1999 and a plummeting share price that forced major restructuring, including the sale of many of its shipyards