Harland & Wolff shares surge on £1.6bn MoD consortium award

Harland & Wolff updated the market on Team Resolute's appointment as preferred bidder on the Fleet Solid Support (FSS) contract on Thursday.

The AIM-traded firm said the UK Ministry of Defence (MoD) selected Team Resolute, comprising Harland & Wolff, Navantia UK and BMT, as the preferred bidder to build support ships for the Royal Navy, with a £1.6bn value before inflation.

It said Team Resolute was appointed to deliver three crucial support ships to the Royal Fleet Auxiliary (RFA), where such vessels would provide munitions, stores and provisions to the Royal Navy's aircraft carriers, destroyers and frigates deployed at sea.

With no less than 60% UK content including British supply chain procurement and fabrication, the company said the contract would create 1,200 UK shipyard jobs, 800 indirect jobs and generate “hundreds” of graduate and apprentice opportunities in shipbuilding.

As part of the contract, the consortium pledged £77m of capital investment into Harland & Wolff, which the board said would be “crucial” to develop its infrastructure to facilitate works to be carried out under the contract, in addition to enabling its shipyards to be “well-placed” for future export and domestic build opportunities.

The investment would also assist in delivering the strategic aims of the government's “ambitious” national shipbuilding strategy.

Planning applications for the Belfast shipyard upgrades would be issued in the coming months, with full-scale production due to begin in 2025.

Prior to 2025, several revenue-generating pre-fabrication, engineering and design work streams would be undertaken by Team Resolute during the next 18 to 24 months in preparation for full-scale fabrication.

All three support ships would become operational sequentially, with the last vessel delivered by 2032.

The company said it would now enter a period of negotiation to finalise the terms and scope of the specific works it would undertake.

“This is a truly defining moment for Harland & Wolff and a major boost both for our assets and for the shipbuilding industry in the UK,” said chief executive officer John Wood.

“The FSS programme will revitalise shipbuilding across our four UK sites and will deliver significant levelling up - from Northern Ireland to North Devon.

“We are delighted that this contract will be the catalyst for substantial investment in the Belfast facility in particular, ensuring that it has a vibrant future supporting not only domestic and international shipbuilding, but also the offshore and commercial fabrication markets.”

Wood said the firm’s partners in Team Resolute would join forces to ensure its successful outcome, noting that Navantia had a track record of delivering ships on time and budget, while BMT was known to produce “distinguished” designs.

“The technology transfer and skills training this international collaboration will bring will be essential as we rebuild our production capability and capacity.”

At 1332 GMT, shares in Harland & Wolff Group Holdings were up 39.52% at 24.97p.

Reporting by Josh White for Sharecast.com.