Marine engineer Harland & Wolff (HARL) announced it has been awarded preferred bidder status for the Falkland Islands Port Replacement Project (FIPASS) by the Falkland Islands Government.
Harland estimates the project will generate revenues of £100-120 million over a 2-year period, subject to final contract pricing and conclusion of commercial negotiations. Works are expected to commence this year.
The FIPASS project involves the build, transport, and installation of 4 floating pontoons of approx. 90 metres each in the Falkland Islands. Conditional on the terms of the final contract, Harland said it would spread the work across its multiple facilities in order to provide optionality and derisk the fabrication of the pontoons.
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Harland adds another large contract to its order book, estimated to boost FY24 revenues by £100-120m. A major addition to Harland's non-defence portfolio, the award followed a highly competitive bid process, further underscoring the marine engineer's growing reputation as the go-to yard for large and complex programmes. The news sent HARL shares 15% higher in early trade.
The FIPASS contract should benefit from Harland's existing relationship with the Falkland Islands Government. HARL enjoys a good reputation on the islands as it built the 6 linked barges which make up the existing port facility.
In December 2023, Harland secured government approval to obtain a £200m guaranteed loan facility from UKEF. The process of securing the facility commenced in January. The extra cash runway should enable the company to get through its rapidly growing orderbook. In the meantime, HARL's cash balance and ongoing cashflows from existing contracts should be sufficient to cover its working capital requirements.
Harland's revenues surged 65% to £25.53m in 1H23, following a 51% rise in FY22. With strong momentum in orders and a growing contracted backlog, HARL's management is aiming for £200m of revenues in FY24. The forecast takes into account the massive £1.6bn contract for the Royal Navy's Fleet Solid Support (FSS) Programme that a Harland-led consortium was awarded late last year, yielding several years of significant revenue visibility.
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