James Fisher shares fall 35% on trading update

Shares of Barrow-in-Furness international marine engineering company James Fisher and Sons plc fell as much as 35% on Monday after it published a negative trading update warning of delays in projects and increases in customer bad debt risk.

James Fisher also said it continues “to advance at pace the divestment of non-core businesses and assets aimed at generating significant proceeds over the next year.”

It said year to date revenue is 3.9% below the prior year. Fisher shares are now down about 60% for the past 12 months.

The company said: “Following a difficult start to the year, improvement in the Fendercare ship-to-ship transfer business remains below the rate previously expected, with some growing evidence of market shifts in some key territories.

JFD has reached an impasse in negotiations over c.£2m due on a long-term project and is no longer forecasting a resolution in 2021.

Customers of the group’s Marine Contracting, Decommissioning and Nuclear businesses have further delayed projects in recent weeks.

“The projects were previously expected to commence, and in some cases finish, in 2021.

“The continuing challenges presented by the global pandemic, particularly in the safe mobilisation of teams to work sites, have influenced customer decision-making processes.

A recent deterioration in the condition of a financially distressed customer has increased bad debt risk by c.£2m.

Tankships experienced a poor month in September and as a result has a more cautious outlook for the full year.

Revenue in the quarter ended 30 September 2021 was 7.6% higher than Q3 2020 and 8.7% higher than Q2 of 2021.

“Year to date revenue is 3.9% below prior year.

The board now anticipates underlying operating profit for the full year, before separately disclosed items, to be in the range of £27m – £32m.

“The group continues to trade within its banking covenants (which are formally measured at each half year end) and at 30 September had headroom of c.£100m against its revolving credit facilities.

“In response to the latest short-term trading outlook, management is performing a detailed review of the group’s cost base and balance sheet.

“Aligned with the board’s commitment to ‘fix or exit’ non-core and underperforming businesses, the group is continuing to advance at pace the divestment of non-core businesses and assets aimed at generating significant proceeds over the next year, to reduce net debt and financial leverage as well as to simplify the business.

“Notwithstanding some revenue opportunity moving from Q4 2021 to 2022, the board currently expects this to be materially offset by the continuation of challenges the group is currently experiencing with customer demand and the safe mobilisation of teams to work sites.

“The board 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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