Marine

Marine
H1 12 H1 11 Change
Order book (£bn)3.92.7* +44%
Underlying revenue (£m)1,070 1,171  -9%
Underlying OE revenue (£m)622695-11%
Underlying services revenue (£m)448476-6%
Underlying profit before financing (£m)147157-6%

* 2011 year-end data
N.B. H1 2011 restated to take into account the transfer of Bergen to Engine Holding on January 2nd as per Note 2 on p.19

Financial

• A 44 per cent increase in the order book to £3.9bn includes £2.2bn of new orders compared with £1.0bn in H1 2011. Most of this increase is due to the £1bn order by the UK MoD to deliver reactor cores for its fleet of nuclear-powered submarines. Offshore orders were encouraging and reflected the increasing bid activity in the Oil & Gas sector in areas such as Brazil, partially offset by weak order flow in the Merchant sector. The Naval business remains stable. Significant orders in the period included:

o A contract with the US Navy to supply power and propulsion systems for the two latest vessels in the Littoral Combat Ship (LCS) programme.
o A contract with the Republic of Korea’s Navy to supply the MT30 gas turbine to power a new FFX frigate. This is the first order for the MT30 in Asia.
o Over £100m of contracts to design and equip 13 Offshore Supply Vessels (OSVs) for Norway’s Farstad Shipping, Korea’s Hyundai and Brazil’s Navegação São Miguel.

• Revenue fell by nine per cent reflecting lower OE volumes and deferrals by customers of services activity. Services revenue was also affected by lower customer spend as a result of reduced workscopes. This was partially offset by a better capture of the available market from the recent investment in the global network of services centres.

• Profit reduced by six per cent due to lower OE and services volumes, competitive pricing pressures and some adverse foreign exchange movement, partially offset by cost reduction.

Portfolio

  • The reactor core contract with the UK MoD includes the regeneration of our manufacturing facility in Derby. The phased re-build will provide a leading-edge manufacturing facility with the highest standards of safety to support the future programme needs of the UK MoD.
  • The OSVs we design and equip support complex and demanding subsea projects, including construction and servicing of oil and gas wells on the sea bed up to 3,000 metres beneath sea level. We are well positioned to take advantage of growth in this market as an increasing proportion of the world’s oil supply comes from beneath deep seas.
  • Tognum will add complementary high-speed diesel and other products and scale to our existing portfolio and systems integration capabilities.
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