Organic growth boosted revenues above expectations.
James Fisher hikes interim dividend as profits rise 26%
- Shares in James Fisher up by 2% on encouraging first half performance
- Revenues and underlying profits beat expectations, driven by particularly strong growth in Marine Support and Specialist Technical divisions
- We recommend James Fisher as a ‘buy’ for growth seeking investors
One of our long-time favourite shares James Fisher reported half year results this morning that were overall fairly encouraging and have lifted the shares in early trading by roughly 2%. Revenues for the British provider of marine engineering services rose by 12% to £261m, while underlying profits jumped by 18% to £24.5m. These impressive figures, which beat expectations, were driven by organic growth in all divisions and there were particularly strong performances in its Marine Support and Specialist Technical divisions.
The FTSE 250 group also delivered on the first submarine rescue system for the Indian navy, with a second vessel expected to be delivered in the second half. James Fisher also secured its first long term maintenance contract in Renewables. Investors should acknowledge that even its Offshore Oil division, which suffered following the oil price plunge in 2014, continued to demonstrate improvements and management say that it remains well placed for the upturn in the oil industry.
Profits before tax rose by 26% to £21.5m over the period and this, along with impressive cash flows conversion rate of 120%, has led management to lift the interim dividend by 10% to 10.3p.
We continue to like the company very much as it is well run and each of its divisions shows signs of better future prospects with new contracts being signed and more in the pipeline. Its largest division, Marine Support experienced strong growth mainly due to support contracts for the UK Offshore wind market, and we believe this to be a market that will continue to see growth. As a result, we recommend James Fisher as a ‘buy’ for investors seeking capital growth and willing to accept a medium level of risk.
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