Harland & Wolff Group (HARL ) said it now has sufficient materials to scale up on fabrication at the NNG Project where it secured its first major fabrication contract with Saipem in April 2021.
The multisite fabrication company secured its first major fabrication contract with the Italian oilfield services company Saipem to manufacture eight wind turbine jacket structures for the NNG Project, which carries a contract value of approximately £26 million, back in April 2021.
Whilst the Company achieved a significant amount of prefabrication, component assembly and engineering works on the jackets in 2021, delays as a result of supply chain issues affecting the global economy have resulted in the majority of fabrication occurring in 2022.
Accordingly, in consultation with its auditors in the current audit process, the board said it has taken a prudent approach to revenue recognition and determined that a material portion of revenue, which had been expected to be recognised in 2021, will now be recognised in 2022.
John Wood, CEO of Harland & Wolff, commented: “Global supply chain problems have clearly impacted our business, as they have impacted others. This was the primary reason we opted for our client (Saipem) to provide the materials for our first renewables project.” He said these problems have now been substantially resolved in relation to Harland’s existing contracts.
As a result, gross revenues for the Company are expected to be between £18 million and £20 million for the 17-month period ended 31 December 2021, subject to completion of the audit.
Today, the company announced that it now has sufficient materials released at the correct stage of prefabrication by the client to scale up on fabrication. Accordingly, Harland & Wolff (Methil) has recruited over 245 employees in 1Q22 and has established a night shift, it said.
Harland & Wolff Group, which said it remains aligned with the client, expects the first phase of the project to be substantially completed during the second half of the current financial year.
Meanwhile, in a trading update for the first quarter of 2022, Harland & Wolff said the period had been extremely busy, especially for its Belfast facility which has been full since the first week of January and has welcomed over 15 vessels to undertake a number of repair works.
Harland & Wolff (Appledore) has been scaling up on the pontoon build for RNLI and has welcomed smaller vessels such as dredgers and offshore support vessels, it detailed.
The Company said Harland & Wolff (Arnish) continues its fabrication at pace and that it has signed an additional contract which is expected to generate additional revenues for the site.
As it moves into 2Q, the Company is involved in a number of advanced negotiations that it believes should come to fruition over the course of the next few weeks and months. As a result, Harland said it remains confident in its ability to meet the 2022 guidance previously provided and that it is now “very close” to having all five of its key markets commercialised.
“Looking ahead, whilst we remain in a challenging environment, I am confident that we will successfully navigate our way through a balanced backlog of projects across our sites as our continued exposure to five markets and six service sectors is beginning to reap rewards.
We are seeing significant movement within the cruise and renewables markets and are at advanced stages of negotiations on several potential contracts,” Wood told investors. He highlighted that while the defence market tends to have a longer gestation period prior to contract award, that the company continues to make good progress “on various fronts.”
“The issuance of the National Shipbuilding Strategy as well as the successful outcome of the Scotwind licensing round bodes well for the decade ahead and fits perfectly into our strategic vision set out at the start of the Harland and Wolff journey twenty-four months ago,” he added.
Harland & Wolff expects to announce its results for the 17-month period ended 31 December 2021 in April 2022.
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