Friday, Harland & Wolff stock fell by more than 20 percent after the Belfast-based shipbuilder cut its 2017 sales forecast.
The AIM-traded company informed investors that it had been unable to complete “certain important workstreams” on a Ministry of Defense contract in recent months due to a shortage of specific manufacturing components.
As a result, it has delayed around £20 million in revenues to the first half of 2023, meaning that sales for this year are estimated to be between £29 million and £31 million instead of £65 million to £75 million.
In July, Harland & Wolff received its first-ever defense contract from the Ministry of Defense on behalf of the Lithuanian Defense Materiel Agency to refurbish a former Royal Navy mine-hunting vessel.
This agreement is expected to sustain 100 employment at the group’s shipyard in Devon, Appledore, which reopened two years ago after being acquired from the aerospace company Babcock.
Harland & Wolff, renowned for constructing the Titanic, stated that the M55 project remained “on track and by the vessel’s base redelivery timeline.”
At the close of trade on Friday morning, Harland & Wolff Group Holdings shares were down 21.2%, or 4.3p, to 15.9p, making it one of the top five decliners on the AIM All-Share Index.
However, their value remains significantly greater than it was when the UK government awarded the shipbuilder preferred bidder status on the £1.6 billion Fleet Solid Support contract last month.
As a result of rising prices and political unpredictability, several cruise and ferry industry clients have postponed their contracts until 2023, the company reported today.
In addition, it has reached an agreement with Saipem, an Italian multinational oilfield services company, to terminate a contract for the production of four wind turbine generator jackets for the NNG offshore wind project off the coast of Scotland.
Harland & Wolff was initially awarded the contract in April 2021, but payment issues, delays, and substandard components have caused costs to escalate.
According to the statement, the firm has assessed that continuing with the project would be sub-economic from a target margin viewpoint and hence not in the best interests of the group.
Instead, the company’s management has decided to concentrate on maximizing capacity at its Methil factory on the estuary of the Firth of Forth, where it is aiming for £10 million in contracts and has greatly increased its personnel.
Beginning in January, it wants to transfer to Methil the building of a pair of barges tied to a contract with Cory Group, a waste management, and recycling company.
