John Wood, CEO at Harland and Wolff joined London South East for an in-depth operational update.
John told us that he has “never been more optimistic about the business” that he is ‘in several parallel contract negotiations right now” and that “we are in a great position. We were a one project company and now we have four different facilities with 52% of the marine fabrication capability and capacity in the UK – a great place to be.”
“This is the first time we have been operating all four yards in a parallel, all revenue generating. Covid has slowed us down a bit, we are probably 6-9 months behind where we had wanted to be, but who knew when we bought the Belfast yard we would have two years worth of Covid?”
“We have two key themes at the moment, the first is the unprecedented spend in defence, and secondly renewables, where multi-billions are being spent on the renewables market, so two boom markets as we move forwards.”
John is hoping to see the National Shipbuilding Strategy to be released before Christmas, which he thinks will make a big difference.
This progress hasn’t been easy however, and the latest share placing which raised £7.7 million net was highly dilutive for shareholders who were naturally upset. “I fully sympathise with that,” said John. “As you know I bought a pretty significant holding myself on the open market and my break-even number is well North of where we are at the moment. If you talk to Cenkos they will tell you I wasn’t very complimentary about the placing price.”
“One of the reasons for the placing was we are trying to bring long-term debt into the business, we have various term sheets for that, and by raising the placing we are able to significantly lower the coupon attached to the debt – and it breaks the equity cycle of coming back to market and raising more money.”
For now I think this is a time to focus on the assets we have and the capacity we have got as we secure longer term multi-year contracts said John. “Our weighted contracts pipeline is a tad under 2 billion with a 38% conversion rate at the moment. These projects have a two year gestation period on them, so we are bringing in work now from two years ago.”
“We hope to be at break-even by the end of this year and have the ability to service debt that we didn’t before as our projects ramp up, so we see a significant debt facility being put in place. I’ll be camped out on Arun’s dooorstep to see the December numbers and I expect I’ll be a lot happier than I have been.”
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