Marine services group sinks to annual loss as pandemic and energy costs take their toll

Cumbria marine services group James Fisher today announced lower revenues and a loss for the year to December 31, 2020, as the challenging trading conditions it referred to in its third quarter update last November continued.

Turnover fell from £617.1m in 2019 to £518.2m for 2020, and a pre-tax profit of £47.8m was transformed into a pre-tax loss of £52.2m.

The dividend per share has been slashed from 11.3p per share to 8p, due to the cancellation of the final dividend.

Net borrowings, however, were reduced from £230.4m to £198.1m due to a strong cash performance.

The group said it faced dual challenges during the year of the COVID-19 pandemic and energy prices.

Where appropriate, the group made use of the Government’s COVID-19 support scheme, furloughing around 400 staff, especially in the Marine Support division, to preserve jobs. However, as the year continued, the business had to make some redundancies to match market opportunities.

It also implemented a 20% pay deferral for approximately 800 staff across the world. The deferred pay was repaid in the second half, except for all board members, the executive and senior leaders.

In 2019, the group invested in two dive support vessels to take advantage of identified market opportunities with diving and offshore construction services for oil majors.

Both vessels required an element of refurbishment before they were able to come into service.

The purchase and subsequent refurbishment of the vessels coincided with the rapid decline in oil prices, coupled with delays in supply chains brought about by COVID-19.

Both vessels are now available for use but, recognising that end markets have changed, the group has taken the view that it should write these assets down to their estimated recoverable amount.

Three of the group’s divisions and its ship-to-ship transfer business performed with resilience in the year. But project-related businesses, particularly subsea activities within Marine Support, were significantly impacted by deferrals or cancellations.

Chief executive, Eoghan O’Lionaird, said: “2020 was a challenging year for the group.

“Despite the many issues we faced, our employees showed great resilience and the operating and financial performance of the group held up well in the circumstances, confirming the benefit of strong market positions and responsive niche businesses.

“Although early in 2021, the group is trading in line with our expectations, however, caution remains due to the ongoing effects of the pandemic.

“The group has a resilient business model with a broad spread of end markets, customers and geographies, supported by a strong track record of converting its operating profit into cash.

“Our ongoing strategic review confirms the fundamental strengths of the group and has also identified scope for significant financial and operational improvement.”

He added: “Our goal is to improve the quality of our business by focusing on structurally growing markets, improving operating margins, increasing returns and sustainably delivering value for all stakeholders.”

Chairman Malcolm Paul will be replaced by Angus Cockburn as a non-executive director and chairman from May 1, 2021. Mr Paul will retire as a director on April 30, 2021.