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Harland & Wolff sees a revenue shortfall of up to £900 million after series of defense contracts won
- The shipbuilder will assist in the construction of three support vessels for the Royal Fleet Auxiliary
- Last week it won six maintenance and manufacturing contracts worth more than £10 million
Harland & Wolff has increased its sales backlog to £900m after building on its mammoth warship program deal with further defense contracts won.
The shipbuilder recently secured a £1.6 billion contract as part of the Team Resolute consortium, which also includes consultancy firm BMT and Spanish state-owned company Navantia, to help manufacture three support vessels for the Royal Fleet Auxiliary.
It expects to create a further 1,200 jobs at the heritage shipyards of Appledore and Belfast and raise around £700m to £800m in total revenue from the deal.
Deal: Harland & Wolff recently secured a £1.6bn contract as part of the Team Resolute consortium to help manufacture three support ships for the Royal Fleet Auxiliary
Following the successful execution of that contract, the company closed several additional deals last week, including six contracts worth more than £10m in the defence, cruise and ferry and commercial manufacturing markets.
Harland & Wolff now has a confirmed contracted revenue backlog of £900 million for seven years, over 80 per cent of which is represented by the Fleet Solid Support contract.
In addition, the company has a weighted pipeline of new customers worth £3.6bn, giving it an expected backlog of £1.24bn based on current earnings.
The marine engineer currently has two dozen requests for cruise ship work after winning contracts last year to maintain Cunard’s Queen Victoria and P&O Cruises’ Aurora ship, the first cruise ship job in two decades.
It is also getting interest from cross-Channel ferry companies and is eyeing multi-year defense contracts worth more than £300 million.
John Wood, the company’s CEO, said: ‘It is gratifying to see how much activity is already in all of our yards, knowing that this will only increase steadily – and materially – from now on.
“The Harland and Wolff machine is really starting to hum, and our ability to work flexibly across multiple facilities will become increasingly important as a differentiator in the industry as our workload increases. We look to the future with increasing confidence.’
For 2023, the company is targeting revenue of £100m to £115m, followed by £200m to £230m the following year, when it also expects to break even on cash flow.
On Wednesday, the company also announced that it had successfully increased its debt facility with Riverstone Credit Partners by an additional $25 million.
It sought changes to its debt payments to improve working capital provisions while finalizing a £200 million refinancing package with UK Export Finance and Astra Asset Management.
Harland & Wolff Shares were up 2.1 percent at 17.1 pence at the close of trading on Wednesday and are up 70 percent since being designated a preferred bidder on the FSS contract in mid-November.