Marine services provider James Fisher (LON: FSJ) significantly improved margins in 2025 as the turnaround of the company is helped by strong defence spending and new product launches. There is still potential for significant recovery in performance.
In 2025, revenues adjusted for disposals and closures increased 4% to £377.2m. Last year’s profit was boosted by gains on disposals. Underlying pre-tax profit improved from £11.9m to £15.3m. Operating margin was 2.5 percentage points higher at 7.6%. All three divisions improved margins. There was also a reduction in corporate overheads and interest charges.
Net debt was slightly lower at £54.4m at the end of 2025, even though £33m was spent on capital and development expenditure. There are £9m worth of assets held for sale.
Defence revenues grew 11% to £88.8m and operating margins jumped from 2.4% to 6.2%. Defence has an order book worth £317m plus £50m awarded but not yet contracted. Three-fifths of the order book should be recognised over the next three years.
The energy division improved profit even though there was a modest improvement in revenues due to a soft oil and gas market. Decommissioning activities moved into profit after years of losses.
Tankships had 97% utilisation this year, with 80% contracted. Four new tankers will replace existing vessels over the next two years. There was strong second half growth for the marine transport operations in South America.
Singer forecasts a rise in 2026 pre-tax profit to £17.7m even though it trimmed expectations for revenues from £417m to £397.6m.
The profit improvement is coming from the continued rise in margins. According to Singer, they could improve to 8.9% in 2028. The company’s medium-term target is more than 10%. Cost efficiencies and improving defence activities will help to reach the target.
Singer does not forecast any dividends, but management does want to reinstate the dividend in the future.
There is some disruption to activities in the Middle East, but the outlook is positive. Defence spending continues to increase and increasing energy demand mean that James Fisher has good long-term prospects.
The share price has been on a rising trend, but it dipped 3p to 501p. The prospective multiple is 23 and it could fall to 15 by 2028.