Marine services group unveils new strategy on path to recovery

James Fisher, the Cumbria marine services group, is embarking on a new group strategy as it looks to recover from a turbulent trading period caused by the coronavirus pandemic and rising energy prices.

It said it aims to drive performance and improve returns.

In March this year the group revealed the impact of the previous year when it announced its figures for the year to December 31, 2020, in which turnover fell from £617.1m in 2019 to £518.2m, and a pre-tax profit of £47.8m was transformed into a pre-tax loss of £52.2m.

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

The group is unveiling a new strategy to refocus and reinforce its competitive advantages to deliver value to all stakeholders.

It said this includes embarking on a purpose-led and values-driven journey to drive internal alignment and engagement. It said it will bring stakeholders into the heart of the company, upgrade leadership talent, drive operational excellence, embed a new capital allocation process and risk management culture, advance project management and commercial excellence processes, and refocusing the portfolio on niche sectors within its chosen markets, addressing underperforming assets and businesses and accelerating investments into responsible energy transition.

The new strategy will focus on growing a portfolio of niche businesses with leading market positions and strong barriers to entry, maintaining focus on attractive and growing segments in marine, energy and defence markets, reinforcing internal processes to support sustainable organic growth, margin expansion and increased shareholder returns, and engage the group’s wider stakeholder group.

Its capital allocation policy will be to invest in driving sustainable profitable growth, increase exposure to energy transition, reduce leverage – in the short term through the sale of non-core assets, and reintroduce a progressive and sustainable dividend policy at the right time.

It said its medium term financial targets are to achieve an underlying operating margin above 10%, a return on capital employed above above 15%, and a net debt/EBITDA leverage of between 1.0-2.0x.

In a pre-close trading update issued today, the group also revealed that offshore oil has continued to perform well, with tendering and contract wins in oil and gas decommissioning projects growing strongly.

There are encouraging signs of a return to more normalised volumes in tankships and the specialist technical division is trading in line with management’s expectations.

In marine support, the ship-to-ship transfer market remains challenging and is currently trading below previous expectations, however the group is seeing further improvements in marine contracting with recent wins in offshore wind projects at St Brieuc and Fécamp off the French coast and Sofia in the Dogger Bank.

It said it has maintained its focus on managing net debt. As anticipated, the first half will show a working capital outflow. This is principally due to larger projects within the specialist technical division moving towards milestones and invoicing in the second half.

The group continues to believe that it is on track to deliver improved underlying operating profit over that achieved in 2020, with profits anticipated to be more weighted to the second half of the year than historically.

It said the new strategy announced today is designed to begin realising the inherent potential of the group for this and future years.

Chief executive, Eoghan O’Lionaird, said: “Today, James Fisher’s board and executive management team is setting out its purpose ‘to pioneer safe and trusted solutions to complex problems in harsh environments, to create a sustainable future’.

“We are excited about our new holistic and purpose-led strategic direction, which encompasses all stakeholders and will create an intrinsically sustainable business.

“We have reset our strategy to reinforce our strengths and realise our full potential.

“This strategy leverages the group’s fundamental strengths in marine services, with a renewed focus on driving better future performance and returns for all stakeholders.

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