|
The Group primarily operates in markets with longterm
growth characteristics.There are two principal
drivers of this long-term growth.
The first is increasing environmental legislation and
awareness.This is a driver behind the growth of
many of the Group’s businesses from water systems,
where environmental legislation is driving the need
for more sophisticated water treatment systems
on board ships, to gas systems where natural gas
is being preferred as an energy source as it is the
cleanest of the hydrocarbon fuels.
The second is the growing demand for energy and
the increasing geographical dislocation between
consumption and production. Coupled with a move
towards the increasing use of natural gas as a
fuel source this is driving increased demand for
investment across the gas supply chain..
The Group operates in four main markets: gas
production and transportation; oil production and
transportation; cruise ships; and merchant shipping.
In gas production and transportation, deliveries of
both LNG and LPG carriers are currently at historical
highs, driven by very high levels of ordering in 2005
and 2006. As this new shipping capacity comes on
stream the focus of investment will shift away from
shipping towards other parts of the gas supply chain:
onshore and offshore production and regasification.
The Group has successfully responded to this shift
by innovating system solutions across the broader
LNG supply chain.
The oil production and transportation market is
exhibiting similar dynamic, with current high levels of
deliveries of tankers but a shift towards increasing
investment in offshore production. As previously stated
in the Group’s latest interim report, a number of key
FPSO projects have experienced delays, largely due
to geopolitical issues. However, activity levels have
increased markedly in this area in the last quarter.
The cruise ship market continues to be robust with
the main constraint to growth being a lack of capacity
at the European shipyards where these vessels are
built. A number of the major Korean shipyards are
beginning to invest in developing the capabilities
needed to deliver cruise ships in the future.
The merchant shipping market achieved a record level
of deliveries in 2007, driven by the global demand
for transportation of both raw materials and finished
goods. Shipyards continue to have very full order
books with most major yards full into 2011.
|
The near-term outlook for the Group is secure, being
underpinned by a strong order book which the Group
expects will deliver another year of strong sales.
In the medium-term, the security of this strong order
book is expected to be maintained with a change
in product mix reflecting the changing dynamics in
the Group’s markets. It is anticipated that there will
be a shift in emphasis towards the strong growth
segments of onshore and offshore production of oil
and gas, LNG regasification and cruise ships, and
away from the gas carrier and tanker markets with
demand for new vessels reducing as fleet capacity
expands.The Group aims to drive an improvement in
margins through increased emphasis on operational
efficiency across all businesses. In the long term,
the fundamental growth drivers of environmental
legislation and energy demand remain very strong.
The Group is pursuing a strategy that makes it well
positioned to take advantage of these dynamics and
the board therefore looks forward with confidence.
The Directors believe that Hamworthy has strong positions within its chosen markets and, in particular, that Hamworthy has the following key strengths:
-
A strong order book (£311.8 million at 31 March 2008);
-
A long standing trading history with a strong record of recent growth;
-
Innovative technology with a modern, efficient and low cost facility in China enabling Hamworthy to procure and assemble quality products at competitive prices;
-
Well-known and respected brands in its markets which have led to significant levels of repeat business;
-
A broad spread of current and future technologies applicable to a wide variety of ship types and sold into all major international marine markets;
-
A global network of its own sales and service companies and agents;
-
Significant position in markets which are growing both as a result of rising demand and the requirements of increasing environmental, safety and noise legislation and regulation
In addition, Hamworthy operates in a fragmented industry capable of further consolidation which the Directors believe will provide opportunities for well selected acquisitions.
Our goal is to continue to deliver enhanced shareholder value through long-term earnings growth. Our strategy to deliver this is outlined below.
In order to protect our shareholders against individual
market cycles, we aim to have a balance of earnings
across a number of specialist markets. In doing so
we target markets with long-term growth prospects.
Our main market today is the new building of
specialist ship types, predominantly oil and gas
carriers and cruise ships. Looking forward, we are
putting increased focus on growing our position in
related markets with different cycles with particular
emphasis on oil and gas production. We are also
increasing our aftersales services across our whole
range of existing and new businesses. In addition to
maintaining a balanced business we believe these
markets will deliver higher margins and thus improve
Group returns.
|
