Revenue falls, underlying profit improves for James Fisher

10th Sep 2024 12:01

(Sharecast News) - James Fisher reported a period of both financial challenges and progress in its turnaround strategy in its half-year results on Tuesday.

The London-listed firm said revenue for the six months ended 30 June dropped by 12.1% to £221.5m, largely driven by a 17.8% decline in the energy division following the closure of inspection, repair, and maintenance (IRM) activities in late 2023.

However, excluding the impact of Subtech Europe and the Swordfish diving support vessel, overall revenue remained flat.

Despite the revenue decline, underlying operating profit increased 20% to £16.8m, bolstered by a £3m gain from the sale of 'Life of Field' rental assets and improvements in operational efficiency.

The operating margin improved by 200 basis points to 7.6%, benefiting from the removal of underperformance by Subtech Europe, with the underlying margin excluding RMSpumptools standing at 5.1%.

James Fisher said its return on capital employed (ROCE) also saw a boost of 280 basis points, reaching 7.5%, reflecting its emphasis on profitability and capital discipline.

However, reported profit before tax was minimal at £0.2m due to net finance costs of £12.5m and refinancing expenses of £2.5m.

Net debt was reported at £144.8m, though it was expected to reduce significantly in the second half of 2024 to around £65m following the sale of RMSpumptools and other assets.

James Fisher said its ongoing turnaround strategy had meanwhile shown continued progress.

The group said it expected to realise around £100m in cash from the sale of non-core businesses and assets, including RMSpumptools and Martek, by the end of 2024.

That, alongside a planned refinancing, was aimed at further strengthening the company's financial position.

Investments had also been made in high-value growth areas such as air compressors, bubble curtain technology, and fleet renewal.

Operationally, the company said it saw a positive performance from its energy, maritime transport, and defence divisions, while underperforming segments continued to be managed closely.

The executive team was bolstered with new appointments, and the company said it remained focussed on improving cash management and productivity.

Overall, James Fisher said it was on track with its turnaround efforts, with expectations for full-year performance aligning with market forecasts.

"We have made important strategic progress on our business turn-around this year, significantly deleveraging our balance sheet through the sale of non-core assets, to provide a stronger financial foundation for growth," said chief executive officer Jean Vernet.

"With the full executive committee now in place, we are committed to delivering on our company priorities and I am particularly pleased to see progress on our financial foundations.

"We are driving a step change in our capital allocation and discipline, targeting investment in high value markets that will deliver our financial targets."

Vernet said the company's focus on strengthening the supply chain would drive greater efficiency and operational excellence.

"This will complement a broader company self-help programme launched in June 2024 and our continued focus on underperforming businesses.

"We will continue to prioritise 'Exceptional Safety' across all our operations by investing in our talent development, training and employee engagement.

"Combined, this will develop a long-term safety culture together as 'One James Fisher'."

As the firm entered the second half, Jean Vernet said trading in July and August was in line with expectations, with the group's full year outlook remaining unchanged.

"Across all three divisions we continue to operate in supportive end markets, with a long-term customer base that is evolving for the future.

"This provides the framework for continued delivery and through our growth pillars of people, innovation and targeted geographical growth, we will drive the second phase of our business turn-around."

At 1130 BST, shares in James Fisher and Sons were up 0.57% at 352p.

Reporting by Josh White for Sharecast.com.