Repair and maintenance spending freezes in the troubled oil and gas industry undermined an otherwise decent showing at James Fisher (FSJ). Group underlying operating profit slumped 18 per cent to £20m for the first half as the marine engineer's offshore oil segment was hammered by collapsing oil prices.
The division's underlying operating profit more than halved to £5.3m, prompting management to "swiftly" reduce costs. The operating margin slipped nearly 7 percentage points, but remained high at 14.7 per cent, which broker N+1 Singer took as evidence that the issues were related to volume rather than pricing.
James Fisher's three other divisions posted profit growth of 15 per cent, led by the specialist technical unit. Nuclear decommissioning projects, a diving system order and new military submersible contracts offset the continued impact of sanctions on Russia, resulting in a 23 per cent jump in divisional sales. "Significant orders" awaiting confirmation are also anticipated in the second half.
Management expects recent acquisitions to revitalise profits in the group's core marine support segment. More deals could be on the horizon, too, despite £30.2m in acquisition costs that drove net debt up to £104m at the balance-sheet date.
N+1 Singer slashed its adjusted pre-tax profit forecasts for the next three years by 17 per cent, 24 per cent and 25 per cent respectively. It now expects EPS to fall 7 per cent to 65.9p in 2015.
| JAMES FISHER & SONS (FSJ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 971p | MARKET VALUE: | £485m | |
| TOUCH: | 966-973p | 12-MONTH HIGH: | 1,442p | LOW: 959p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 415p* | NET DEBT: | 50% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 216 | 20.8 | 32.4 | 7.1 |
| 2015 | 213 | 17.9 | 30.2 | 7.8 |
| % change | -1 | -14 | -7 | +10 |
Ex-div: 1 Oct Payment: 5 Nov *Includes intangible assets of £152m, or 305p a share | ||||
