UK classification society Lloyd’s Register (LR) will be more reliant on its marine and offshore business income following its decision to sell off energy unit LR Energy to investment firm Inspirit Capital.
The increasing importance of marine and offshore to the company was signalled last month when head of marine Nick Brown was named as chief executive from January next year.
Under pressure
LR Energy has been under pressure since the 2014 oil price slump.
A stable of companies was acquired to grow LR’s energy business from 2005, but there is speculation that some had not performed.
LR Energy’s days also appeared numbered when chief executive Alastair Marsh commented on a “difficult” energy market in the company's 2019 annual report.
Last year, a new leadership team was put in charge of energy and overheads were cut. A decision was taken to withdraw from markets where services were commoditised.
Commenting on the decision to sell, Marsh said it represented the best way of securing LR Energy's long-term future.
LR will not comment on the valuation of the sale, but disposing of the company will significantly reduce the overall organisation's total future revenue.
Last year, energy accounted for nearly £144m ($184m) from a total turnover of £893m at LR.
The marine and offshore business made up nearly £428m of this revenue, and is likely to represent more than half of LR’s future total income now that the energy business has been sold.
Main money earner
LR’s other main money earner is business assurance and inspection services, which reported a turnover of £322m last year.
A spokeswoman for the classification society said marine and offshore had always been at the core of LR's business.
“Maritime remains at the forefront to LR, and we will continue to offer offshore services, clean energy solutions and digital products,” she said.
LR has also not entirely quit the energy business and will continue to work with Inspirit on a number of projects.
Offshore and renewable energy markets will also remain a key part of the marine and offshore business.
Core business
“The offshore market remains an important part of our core business, with exciting potential for growth as it recovers and evolves, and a critical part of the energy integration and energy transition portfolios,” the spokeswoman said.
Following conclusion of the sale on 31 October, LR Energy will become a stand-alone engineering and technical consultancy offering specialist asset performance, risk management and project management expertise, taking in complex industrial assets, energy transition and rail infrastructure.
