Harland & Wolff (HARL) , the marine engineering specialist, announced the establishment of Harland & Wolff Technologies Limited or HWT, a fully-owned subsidiary of the company.
The new technology-focused arm will be based in Aberdeen and operate in conjunction with Harland's four delivery centres across the UK. In other shipyards, it will operate independently and directly with Harland's clients. One of the main services provided by HWT will be in-service support to assets that are already operational and not in any dry dock.
Harland said Richard Davidson had been appointed with immediate effect as Managing Director of the new HWT subsidiary. In Mr. Davidson's last role with Echandia, he was responsible for developing and monetising large scale battery technologies for the marine market.
"With projects starting to ramp up and new technologies increasingly being incorporated into the majority of them, the establishment of HWT enables us to be at the forefront of client requirements now and into the future." commented CEO John Wood.
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New technologies within the marine market are advancing at a fast pace. We recently commented on the rapidly growing field of Maritime Domain Awareness or MDA - an acronym increasingly used in financial and government circles to refer to digitalisation and monitoring technologies developed to improve security/law enforcement, safety, and environmental protection within the maritime domain. MDA is roughly analogous to the development of air traffic control in past decades.
Additionally, marine transport is expected to follow an electrification trajectory similar to land vehicles, albeit at a delayed pace. This process has already begun with small vessels and should eventually reach even large container ships, especially as the energy density and reliability of batteries improves. Toyota's recently announced solid state battery breakthrough promises to double the energy density of current generation lithium-based chemistries within 5 years, with similar products being actively developed by other major players as well.
As AI and electrification technologies inevitably affect the marine sector, Harland wants to stay ahead of the curve with its own technology arm, being the reason for today's announcement. Harland has already demonstrated a willingness to be an early adopter of new technologies, so it makes sense the company is consolidating its efforts in battery, propulsion, future fuels, AI, and systems integration into a new entity, aiming to stay aligned with the UK's net zero targets.
Initially HWT will be focused on in-service support including mechanical, pipework, fabrication and outfitting services. HWT's offerings will allow assets to be in operation while being serviced by Harland's riding crews. Ultimately, this will reduce the time spent by an asset in a dry dock, reducing downtime costs for the client.
HWT is already developing a suite of support agreements and joint venture partnerships with OEMs in order to support Harland's existing client base. With the recent Government announcement on a series of new North Sea licensing rounds, and the number of enquiries Harland has been receiving for offshore electrification and new platform construction projects, HWT will be well-placed to address a sizeable opportunity across these markets.
Investors welcomed the news, pushing HARL shares 3.55% higher on Thursday. The movement added to a larger rally over the past 2 weeks, with shares up 45% since Friday 21 July. Earlier this week, Harland won a large £60-70m contract for the mid-life refurbishment of a large undisclosed vessel, to be completed in early 2024.
In its recently issued audited final results for FY22 ended 31 December 2022, Harland detailed significant progress in the period, with revenue growth of 51% to £27.96m, and a contracted backlog of £900m, compared to £100m in FY21. Late last year, a Harland-led consortium was awarded the massive £1.6bn contract for the Royal Navy's Fleet Solid Support (FSS) Programme, prompting a large jump in share price, which has since consolidated. Later in FY23, Harland was awarded its subcontract for the project, yielding several years of significant revenue visibility.
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