Full steam ahead at A&P despite choppy climate

[Whickham]

Budget trimming by commercial operators has made for a difficult start to the year at A&P Group, the ship repair and engineering company has revealed.

But the Hebburn-headquartered business said it still expects to match its 2011 performance when turnover passed the £100m mark and profits rose despite costs associated with redundancies at A&P Tyne.

A&P, which owns three shipyards in England, said it expects the trend of operators trimming their maintenance budgets to continue but backed its long term customer relationships, its workforce and a "sizeable" order book to underpin satisfactory trading in 2012.

In the year to 31 December 2011, the company upped sales from £95.9m to £103.7m, building on its increased profile in both the traditional ship repair and conversion market and also in the renewable and the oil and gas sectors.

Pre-tax profit also rose from £4.4m to £5m despite restructuring costs of £1.2m relating to the redundancies of about 90 staff following the loss of a £5m subcontract for work on aircraft carrier HMS Prince of Wales.

A&P's directors said its results were achieved in the face of expectations at the start of 2011 that a difficult economic climate would affect profitability. In particular the company held concerns about a tight market in its core ship repair business and little activity in the offshore sector.

Accordingly, the business focused on securing larger ticket ship repair work and fabrication contracts, while improving performance on previously acquired long term work.

The UK aircraft carrier project on HMS Queen Elizabeth came to a successful conclusion during the year using A&P's new £3m automated "panel line" fabrication facility installed in 2009 and the £2.8m upgraded West Quay facility completed in 2010 at the Hebburn yard on the Tyne.

The business said it looked forward to starting the main contract on the second carrier, HMS Prince of Wales, in 2013.

Looking ahead, A&P said it was currently pursuing a number of opportunities direct with the Royal Australian Navy after successfully completing a regeneration project and a training contract on HMAS Choules, formerly RFA Largs Bay, for the navy subsequent to its purchase of the vessel from the Ministry of Defence.

Defence sector projects were expected to feature strongly in 2012 after a "significant contribution" to the 2011 results.

A&P operates seven dry docks across its three locations and said the Falmouth, Tyne and Tees dry docks experienced "encouraging occupancy levels" for most of 2011 with Falmouth in particular being underpinned by the work for the MoD.

The group said it was determined to take advantage of the Falmouth and Tyne sites, which it believes are well placed to secure work as part of the supply chain for and to provide services to the emerging renewable energy sector and also into the oil and gas and heavy engineering industry.

In February 2011, the business was acquired by Atlantic & Peninsula Marine Services – a 50:50 investment company between Peel Port Holdings and private investors.

By Laurence Kilgannon
Copyright © 2012 Newsco Insider Limited