Harland & Wolff, (HARL) , a marine engineering specialist, updated markets on its strategy to enhance maritime operations, improve ferry services to the Isles of Scilly, and potentially secure levelling up funding for its initiatives.
Regarding maritime operations, Harland said it aims to establish its own marine operations division, citing inefficiencies in subcontracting beyond a certain level. Substantial cost savings can be made by commencing the marine operations division, further supporting the decision.
Additionally, Harland notes that as it progresses towards the FSS Programme in 2025, the demand for marine operations is set to increase. To this end, the company has prioritised acquiring a tug with a 75-tonne bollard pull, to be used internally and in the lucrative spot market. This addition complements the two green tugs previously announced, which are expected to be operational by the end of 2023.
Harland said it has identified the underserved route between the Isles of Scilly and Penzance, primarily in terms of tourism and freight services. As a result, it plans to build and operate two ferries on the Penzance to Scilly route and one inter-island vessel. Instead of relying solely on commercial debt, it aims to use available levelling up funding of £48m to improve services.
The company also intends to introduce a new fast ferry service between Penzance or Newlyn and the Isles of Scilly from May to September starting in 2024.
Regarding its freight services, Harland said aims to collaborate with local organisations to offer an end-to-end freight service, deploying vessels of different sizes to ensure a minimum capacity of 550 tonnes of cargo per week, with the potential for spot market deployment.
Finally, the company believes levelling up funding is necessary for financial viability. Harland has proposed managing vessels on behalf of a Special Purpose Vehicle, though there's no guarantee of being awarded this work. Its operational plans differ from existing proposals, focusing on smaller, more adaptable vessels.
John Wood, Group Chief Executive Officer, Harland & Wolff commented: "As part of our continued growth and the route to the £500m turnover strategy, we are excited about launching our marine operations to reduce internal costs and to provide a better service at an affordable cost externally. Whilst there is no guarantee that we will win the bid to build and operate the new vessels, we are excited about the revenue generating capacity of the fast ferry and freight services offering. The team that we already have in the Company has extensive knowledge of marine operations and this is a natural extension of our business. We will provide further updates on ownership and chartering details in due course as the project develops."
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Harland & Wolff’s strategic shift to establish its own marine operations division represents a substantial opportunity for cost savings and operational efficiency, further supported by the growing demand for maritime operations.
Aside from today's update, other recent highlights from Harland include a significant project involving the mid-life upgrade and dry docking of a large vessel with expected revenues ranging from £60-70 million. Harland also secured its first contract win for a heavy lift vessel in Belfast, amounting to £1.5 million.
Financially, Harland noted its H1 revenues stood at £25.53 million, a 65% increase from the previous year’s £15.41 million. Looking ahead, directors believe that trading remains on track to achieve FY23 revenues of £100 million, with revenue guidance for FY24 of £200 million.
Overall, Harland has shown impressive momentum in 2023, with the FSS contract providing substantial baseload over the next five years. Coupled with significant opportunities maritime operations, the maritime engineer is in a good position to continue along its strong trajectory.
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