- Revenue target more than halved
- Firm blames supply chain issues
- Customers also delaying works
Belfast-based shipyard owner Harland & Wolff (HARL:AIM), which will be forever known for building the White Star ocean liner Titanic, sorely disappointed investors with its full year trading update.
Shares in the group fell more than 25% to 15p, just over a month after news of a big contract sucked in many small investors and the share price quintupled from 5p to 25p.
ALL HANDS ON DECK
Having delivered positive news over the summer on upcoming contracts, the firm unexpectedly cut its full year revenue guidance by more than half from between £65 million and £75 million to £29 million to £31 million.
The main reason for the change of tack is the lack of availability of certain key materials which the firm needs to begin work on the £55 million programme to regenerate former Royal Navy minehunter HMS Quorn.
The contract, awarded in July, was seen as a breakthrough for Harland & Wolff’s defence business, but supply chain issues mean work has been delayed until next year with the result that £20 million of expected revenues have been deferred.
In addition, uncertainty over the global economy has caused certain other clients within the cruise and ferry market to either defer their contracts into 2023 or reduce the scope of works, meaning another £8 million to £10 million of revenues have been delayed until 2023, assuming those revenues actually materialise.
SAIPEM DEAL THROWN OVERBOARD
A third blow for shareholders came with the news the group had decided to scrap its deal with Italian energy services company Saipem (SPM:BIT) to build four wind turbine generator jackets.
The contract was originally signed in April 2021, since when the firm has encountered issues with payments, delays and defective materials.
Harland & Wolff says it decided that continuing with the project would be sub-economic from a target margin perspective.
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