Shipbuilder in trouble trims revenue forecast due to a key contract being delayed by parts shortage
In an update that saw shares plunge by a fifth, the historic shipyard which built the Titanic was forced to cancel key contracts and delay them.
Harland & Wolff, the Belfast yard that constructed the White Star Line vessel, stated that a crucial military contract to repair a minesweeper in the Lithuanian Navy was delayed due to parts shortages.
The 2023 deadline for ferry and cruise work will be extended to 2023. This means that income of up to £30m is expected to arrive later this year.
A £5m contract to supply four wind turbine generator jackets was also cancelled.
Harland & Wolff had hoped for revenues between £65m-£75m, but it now expects to earn less than half that.
The update caused shares to plummet by 22%. Due to its £22m debt, the company must maintain its income in order to pay the interest.
This year has been difficult for the shipbuilder, including a dispute with HM Revenue & Customs and the abandonment of plans to build a new Royal yacht called “Britain’s Air Force One”. Harland was among the two final bidders for the project.
Harland attributed delays in its ferry and cruise work to inflation and a poor economic outlook.
It was unable to obtain parts for warships due to problems, but it stated that it would still deliver the ship on schedule.
John Wood, chief executive of the group, stated: “While it is disappointing that 2022 has not been achieved due to timing issues we have made significant progress in the past twelve months.
He said, “I believe we are now on the cusp of a major transformation and the team works hard to convert bids into contracts.”
Harland won a number of contracts this year, which fueled hopes for a revival in British shipbuilding. After the company won a part of a contract for Royal Navy supply ships, shares rallied strongly in November.
It has fallen 15% in 2022, despite lingering worries about the company’s debts.
HMRC filed a petition to have the company liquidated for the second year in June, over an unpaid bill of £92,275
According to the company, the latest legal claim was not valid. However, the taxman said that it took appropriate action.
Harland made steps to refinance its debt in November. It moved from 12pc interest rate to cheaper, but unnamed terms.
It was part of a consortium that included Navatia, a Spanish shipbuilder, who won a £1.6bn contract for three Royal Navy supply vessels.
The company stated that up to 60% of the work would take place in Britain. However, the Government has only said that the majority of the shipbuilding will be carried out in Britain.
In 1986, Harland received a Ministry of Defence contract for the construction of a military boat. RFA Fort Victoria was announced in 1990. It was completed in 1994.
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