Maritime engineering firm Royal IHC says it is focused on rebuilding profitability after a difficult period in which it posted operating losses of more than £34m and shrank its workforce.
New accounts for the the shipbuilding specialist's North East-based operation, which includes bases at the Port of Blyth, Nepture Energy Park site on the banks of the Tyne and in Newcastle city centre, describe the 2021 performance as "disappointing" as turnover more than halved to £21.8m. Bosses said the numbers reflected efforts to try and deliver highly innovative projects to tight timeframes and within budget.
Covid was said to have severely impacted work during the year, as had the general economic outlook, as time spent on sales leads had not come to fruition. The substantial hit to turnover meant Royal IHC had turned to its Dutch parent company for support.
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Earlier this year, the wider group underwent a major restructuring exercise including cost reductions. The plan, known as a 'WHOA', was ratified by a Dutch court in March after some lenders objected. It included the sale of its IQIP subsidiary - a company that specialises in foundations and installations for the offshore wind market - and proceeds from the sale were used to reduce borrowings and improve Royal IHC’s liquidity.
Existing support from a consortium of banks will continue, which the group said would enable it to pursue new shipbuilding and equipment contracts. And the market was said to be "back on track" with indication that demand was picking up - though the UK-based operation noted that support from its parent required the "materialisation of a significant amount of unsecured orders".
In the North East, staff numbers reduced from more than 200 to 157 with the firm saying it expected its workforce to become smaller still through 2023 with a target of around 140 employees. Confirmation also came of an exit from its Stocksfield site which had been subject to a break clause of July this year, but an early settlement was negotiated with landlords.
Writing in a report accompanying the accounts, director Jan-Pieter Klaver said: "Royal IHC continued its delivery of innovative equipment and solutions, and focused on actions to regain profitability and project control. Steps were made to further strengthen its management and the organisation in order to execute orders effectively. Despite this difficult period, IHC maintained its innovation and corporate social responsibility efforts to preserve its reputation as the leading provider of integrated solutions in the maritime industries, both in Europe and the rest of the world.
"Royal IHC continued to be severely affected by Covid-19 in 202l. Due to the uncertainty surrounding the course of the pandemic - and also the general economic outlook - many of the sales leads that the company worked on did not lead to concrete orders.
"As a result, Royal IHC was unable to make up for the strong loss of turnover compared to the pre-Covid-19 period. Therefore, it also had to rely on Parent company support, which enabled the company to continuing to work towards the period when the uncertainty surrounding the pandemic would subside and the market would once again be willing to invest in new equipment."
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