City round-up: James Fisher; Ultimate Products
James Fisher, the Cumbrian marine engineering group, said the good start to its financial year has continued, in an update for the six months to June 30, today, including news of a boardroom change.
Group revenue from continuing operations in the period is expected to be approximately £250m, representing growth of around 16% compared with the same period in 2022.
Underlying operating profit and operating profit margin from continuing operations are both expected to show modest growth compared with the same period in 2022, with the revenue uplift more than offsetting increased investment to strengthen core capabilities within the group, including the formation of its Business Excellence team.
All three divisions delivered revenue and profit growth compared with the same period in 2022, with the Energy division performing particularly well following strong market demand for well testing, bubble curtain and artificial lift products and services.
Defence is expected to report a modest profit for the period compared with a modest loss in 2022. Within the Maritime Transport division, Tankships has maintained its good performance, with high tanker utilisation and solid day rates for spot charters. Fendercare’s ship-to-ship transfer business has stabilised at levels in line with the second half of 2022.
Net bank borrowings at June 30, were circa £147m, compared with £133m at December 31, 2022. The normal seasonality of the business, unwind of working capital balances and costs associated with the £210m new revolving credit facility have led to a cash outflow in the first half of the year, despite asset sales generating net proceeds of around £20m in the period.
The group said it continues to expect net bank borrowings to reduce by the end of the 2023 financial year, in line with its usual trading profile.
And it said while it enters the second half of the year mindful of heightened macro-economic uncertainty, the group’s markets remain resilient and the board’s expectations for the full year remain unchanged.
Chief executive, Jean Vernet, said: “I am pleased with the group’s first half performance, with all three divisions contributing to revenue growth of 16%, alongside a modest improvement in margins.
“We are starting to see the benefits of the operational improvements being implemented throughout James Fisher. These, combined with the previously announced business and asset disposals and the refinancing concluded in June, provide us with a stronger platform for the future.
“Despite uncertainty in the macro-economic environment, the group’s markets remain resilient and the board’s outlook for the full year remains unchanged.”
Meanwhile, Duncan Kennedy has informed the company of his intention to step down from his position as chief financial officer and executive director within the next 12 months. The board has instigated a search for his successor and Duncan will remain in post until his successor commences to ensure an orderly handover.
Chairman, Angus Cockburn, said: “On behalf of the board I would like to thank Duncan for his contribution to the company over the last two years, particularly in relation to the recent implementation of our new strategy. On behalf of everyone at James Fisher, we wish him all the very best for the future.”
Duncan Kennedy, said: “I have enjoyed my time as CFO of James Fisher and am proud of the progress we have made in simplifying the business and reducing its debt. My best wishes for the future go to everyone at the company.”
The group will publish its half year results on September 21.
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Ultimate Products bosses, Andrew Gossage and Simon Showman
Oldham consumer goods group, Ultimate Products, which owns a number of homeware brands including Salter and Beldray, said today that it expects its financial year end net debt to be in the region of £15m, which is significantly ahead of current market expectations of around £21m.
As announced on June 7, 2023, current trading remains in line with market expectations, which, due to the improved net debt position, is expected to result in a substantially improved net bank debt/adjusted EBITDA ratio of 0.7x as at July 31, 2023 (July 31, 2022: 1.3x). The improved net debt performance is due to ongoing improvements in working capital management and the phasing of trading during the second half of the year.
Given that current interest rates are causing finance costs to increase, the group said it is pleased that the lower net debt helps to mitigate these rises. In addition, the group continues to hold a suite of hedging instruments composed of a number of interest rate caps and swaps, which have greatly reduced the effect that rising interest rates have had on its income statement.
Lower net debt and hedged interest rates will continue to result in financing charges at Ultimate Products being in line with current market expectations of £1.2m for the current year, and £0.9m for 2024.
