Engineering group’s share price plummets 30% after profit warning

James Fisher Group

A profit warning saw James Fisher’s share price crash 30% in early trading this morning.

A sell-off saw the engineering group’s share price hit a nine-year low after it warned investors that its operating profit could be up to 30% lower than expected.

It revealed that its underlying operating profit for 2021 is now forecast to be between £27m-£32m. Only last month the group had provided guidance that it would be “around the same level as that achieved in 2020”, which was £40.5m.

The share price dropped significantly in early trading, down as low as 529p from Friday’s close of 784p.

It continues a miserable two years for investors. Before the pandemic hit UK stocks, James Fisher’s shares were trading around and above 2000p.

This latest shock means the share price has lost 70% of its value since January 2020 and reached its lowest point since February 2012.

James Fisher, which supplies specialised services to the marine, oil and gas industries, faces a list of problems which are contributing to its lower forecasts.

It has “reached an impasse in negotiations” over £2m due on a long-term project and a “recent deterioration in the condition of a financially distressed customer” has increased bad debt risk by £2m.

Its Fendercare ship-to-ship transfer business continues to struggle and recovery has been slow, “with some growing evidence of market shifts in some key territories”.

Customers of its marine contracting, decommissioning and nuclear businesses have further delayed projects in recent weeks while its tankships division experienced a poor month in September and now has “a more cautious outlook”.

The Barrow-based group’s management is now carrying out a detailed review of its cost base and balance sheet, and is continuing to look for quick exits of non-core businesses and assets. It hopes this will generate “significant proceeds over the next year, to reduce net debt and financial leverage as well as to simplify the business”.

Despite this, it told investors that it “remains confident in the Group’s strategy to deliver sustainable profitable growth from the significant market opportunities that are available to it and remains committed to executing on its long-term strategy.”

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