 A month ago, this group’s shares were up to 358p each, since when they have eased back to just 325p, that was on Thursday of last week.
The shares of the James Fisher & Sons (LON:FSJ) group are now looking a bit perkier at 337p – and could be ready for a much firmer run over 2025.
This coming Thursday, 18th March, should be seeing the £170m-capitalised group declare its results for 2024
Employing some 2,000 people across its operations, its business is based in the provision of unique marine solutions in Energy, Defence and Maritime Transport.
I have followed this group for decades and weathered with it through its swells and troughs.
Now I take the view that its shares should become constituents in the portfolios of risk-tolerant investors, especially those who can respect a company with over 180 years of corporate history.
The Business
Dating back to the 1840’s, this Barrow-in Furness, Cumbria-based group, over the years has built itself up from its origins, as a ship owner and operator, to now being a leading provider of specialised services to the marine renewables, shipping, oil and gas, defence and other high assurance industries worldwide.
For the Maritime Transport sector, it is acknowledged as a trusted marine expert and innovator, for whom it is a leading provider of targeted coastal shipping and global oil and natural gas ship-to-ship transfer services.
In the Oil and Gas sector it is a world leader in the provision of specialist products and support services, and in being a provider of turnkey operations to major corporations, while it provides the Renewable Energy sector with integrated marine solutions, as an experienced project manager, delivering successful and cost effective offshore renewable energy projects.
The Defence sector recognises the group as a world leader in submarine rescue for and provider of specialist solutions, it provides fast, safe and reliable subsea rescue services, underwater systems and life support capabilities for the defence and commercial diving markets, while providing products, engineering services and training to 80 countries and to 33 of the world’s navies including the Royal Navy, Australian, Singapore, India and South Korean Navies.
Its customers are predominantly large multinational corporations, and governments.
The group’s client list includes, amongst hundreds of others, leading names such as Shell, Total, BP, Chevron, Maersk Oil & Gas, ConocoPhillips, ExxonMobil, Halliburton, Schlumberger, Weatherford, EDF Energy, Sellafield Limited, Airbus and the Ministry of Defence.
Management Comment And Outlook
Just over a month ago, on Wednesday 5th February, the group guided the market that its 2024 results will be showing ahead of market expectations.
The company stated that it had made solid overall trading performance through the second-half supported by its end-markets, with its underlying operating profit of some £29m for the year.
At that time CEO Jean Vernet stated that:
“I am encouraged by our 2024 ;performance which will show underlying profit ahead of expectations together with an improved cash position.
We ended the year in a stronger position having continued to execute on our turnaround strategy, including undertaking disposals and refinancing our debt facilities.
As a result, we are now beginning to see the benefits of our transformation programme coming through.”
Despite near-term political and economic uncertainty, the group’s focus remains on delivering against the turnaround plan, with the next phase of initiatives now underway.
It has declared that it sees opportunities to build up on the progress made to date and looks to drive the business further towards its medium-term target of 10% underlying operating profit margin.
Early last month it reported that trading in the early part of the new year had been in line with expectations, with a certain confidence in delivering further progress during the balance of 2025.
The Equity
The group has a total of 50,398,063 shares in issue.
Significant holders include the Trustees of the Sir John Fisher Foundation (21.04%), Schroders Plc (11.10%), Odyssean Capital (7.14%), Aberforth Partners (6.51%), FIL Investment Advisors (6.27%), NFU Mutual Insurance Society (5.41%), Baillie Gifford (4.81%), Invesco Asset Management (3.82%), Threadneedle Asset Management (3.23%) and Norges Bank Investment Management (2.98%).
Analyst’s View
Analyst Alexander Paterson, at Peel Hunt, following the group’s recently issued Trading Update, assessed that the good 2024 momentum is expected to continue in the current year, while giving a ‘Buy’ rating and a 425p Target Price for the group’s shares.
Paterson noted that the positive upswing had been helped by the defence division’s strong fourth quarter, during which it secured notable contract wins in Australia, India and other parts of Asia.
He stated that:
“After several challenging years, this is an encouraging update, with strategic progress continuing as planned, as is investment across the divisions to drive future growth.”
Consensus Views
On a consensus average basis, the five analysts who follow the company rate its shares as a Buy, with a 450p Target Price – the Highest at 510p, the Lowest at 337p.
The analyst estimates for the 2024 year are for revenues of £446.0m, with underlying profits of £24.9m, and 10.4p earnings per share.
The current year to end-December 2025 average consensus estimate predicts £433.1m in revenues, with £27.2m underlying profits and 21.2p per share in earnings.
For the year to end-December 2026 they estimate some £456.1m in revenues, and £32.6m of profits, while generating earnings of 26.7p per share.
In My View
I really like this company, its heritage speaks volumes and its reach is totally global.
If all of its business activities were properly described, especially within the defence sector, I believe that the group’s equity would achieve a significantly higher rating.
The company is still on the recovery track while enduring challenging conditions around it, but it has suffered greater squalls and prospered.
Its shares at 337p have strong attractions. |
Baird Maritime.... 29 April 2024
In early 2020, when the UK’s James Fisher and Sons had a market capitalisation of over US$1.3 billion, we asked whether there was “something fishy at James Fisher.” None of the company’s numbers made any sense to us, and the metronome-like consistency with which the company reported earnings growth across all four of its divisions every year for years, whilst bingeing on random acquisitions and adding good will to the balance sheet, seemed inexplicable – suspicious, even.
Since we wrote our piece, the wheels have completely fallen off the company. Write-down after write-down has followed, the business has had three CEOs in five years, and earnings have collapsed. But don’t worry, it now has a gender inclusivity target on page 26 of the presentation!
The company sold its two subsea and diving vessels Subtech Paladin and Swordfish for cents on the dollar at the bottom of the market in 2021 and 2022. It has now announced that it will be closing the Subtech Europe office, incurring a loss of around US$4 million.
90 per cent value destruction for shareholders
Today, James Fisher and Sons is worth approximately US$150 million. The charitable trust that is the company’s largest shareholder has seen the value of its investment seriously damaged – and yes, we did point out that the trustees were extremely ill-advised to have doubled down in 2021 and bought more shares in the business, as the torrent of bad news showed no sign of abating.
Since then, the shares have fallen another 66 per cent and now stand at 276 pence, back where they were in 2004. The trustees should perhaps focus on the fact that their primary responsibility is to the charity, and to its ability to fund its charitable causes in Barrow-in-Furness, not to supporting the share price of the marine company that is their largest investment.
The latest set of annual results (here) announced two weeks ago show the extent of the wipe-out. As usual, James Fisher’s embattled management focused on “underlying operating earnings” of £29.6 million (US$37 million). Unfortunately, these underlying operating earnings exclude the small matter of the company’s finance charges, the cost of refinancing the business, taxes, and the cost of restructuring its disastrously ill-managed businesses.
Again, we counsel readers to ignore such obfuscation and focus on the bigger picture and the actual reported numbers.
On a fully inclusive basis, taking into account all these pesky details (because, you know, tax is actually a cost, as are interest and refinancing charges), James Fisher and Sons lost £18.6 million (US$23.3 million).
Ouch.
Asset-light because barely any assets remain
Now the company has announced that it will be selling off RMS Pumptools for £90 million (US112.5 million) in an effort to stabilise the balance sheet, which had over US$180 million of debt at the end of 2023. RMS makes drilling intervention tools and artificial lift equipment for oil and gas companies. James Fisher has also sold off its nuclear business.
Looking ahead, James Fisher says that it wants to be “a services company operating in the Blue Economy, leveraging market and customer synergies” with a claim of becoming “asset-light with a focus on pooling assets, people and resources.” Given that there are barely any assets left, this seems appropriate.
Our bet is that the remainder of the business will be bought by a private equity company and leveraged up again. Its bubble curtain business will be attractive to green investors like Cyan Renewables and other sustainable investors – bubbles curtains are deployed to shield the marine environment from the noise of windfarm piling.
The sad tale of James Fisher is a reminder of the line from the HBO miniseries Chernobyl about the Soviet mismanagement that led to the destruction of the eponymous nuclear plant: “Every lie we tell incurs a debt to the truth. Sooner or later that debt is paid.” |
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