Marine services group positioned for second half recovery

Marine services group, James Fisher, reported lower interim revenues and profits today, but said it is well placed for an upturn in the second half of its fiscal year.

The Barrow-in-Furness-based business suffered a 10% fall in turnover, to £258.1m in the six month period to June 30, while pre-tax profits fell by 59% to £7.1m.

The group is paying an interim dividend, but the 8p per share payout is 29% down on the previous year’s 11.3p per share dividend.

Having cancelled the final dividend for the year ended December 31, 2019, the board justified the payment, saying it believes the group has weathered the initial storm of COVID-19 and has seen a significant improvement in the financial headroom on its committed banking facilities.

Global economies are slowly recovering, and the price of oil has partially recovered from the low point in April.

It said: “We operate in diverse markets and have a wide geographic spread so whilst certain parts of our business have been seriously impacted by COVID-19, other parts of our business have been resilient.”

During the period the business has managed to reduce debt levels by £30m.

Today’s update said that the first half of 2020 was particularly challenging for the group’s employees, customers and suppliers, local communities and shareholders as, after a stable start to the year, oil prices were adversely impacted by over production relative to real demand which was then quickly followed by the global lockdown due to COVID-19.

Swift actions were taken to reduce costs, optimise cash flow and protect liquidity, including the deferral of all discretionary capital expenditure, a hiring freeze, placing around 400 UK employees on furlough and implementing a 20% pay deferral for approximately 800 employees across the world.

The deferred pay will be repaid to staff during the second half of the current year, with the exception of all board members, the executive committee and senior leadership team who have agreed that their pay reduction of 20% for the second quarter will not be reimbursed.

The group returned to full salaries with effect from July 1, and has ceased to take advantage of the UK Government’s furlough scheme since July.

Chief executive, Eoghan O’Lionaird, said: “The first half of 2020 was one of the most demanding periods the company has faced.

“The group responded swiftly to both the unprecedented headwinds presented by COVID-19 and the longer-term implications for energy demand by taking actions to reduce costs and protect the group’s liquidity.

“Whilst the second half is expected to remain challenging and the outlook for our end markets is uncertain, we expect trading to improve through the second half, assuming no material deterioration in the COVID-19 situation.”

He added: “James Fisher is well diversified by geographical sector and end market.

“The resilience of the group, our strong liquidity position combined with swift actions taken to reduce costs, position James Fisher well for any improvement in market conditions in the second half and beyond.

“Whilst the financial performance in 2020 will be lower than 2019, the Group remains well placed to deliver future growth for its shareholders.”