James Fisher and Sons Full Year 2024 Earnings: EPS Beats Expectations, Revenues Lag

James Fisher and Sons plc (FSJ.L) has reported its full-year 2024 earnings, revealing a mixed bag of results that highlight both the company's resilience and the challenges it faces in the current market environment. The company's profit before taxation for the year ended 31 December 2024 stood at 54.0 million pounds, a significant turnaround from the loss of 39.9 million pounds reported in the previous year. This improvement is reflected in the underlying profit before tax, which increased to 11.9 million pounds from 8.3 million pounds. Additionally, the underlying earnings per share (EPS) increased to 16.5 pence from 11.4 pence, beating market expectations.

However, the revenue picture is less rosy. For the year ended 31 December 2024, revenue declined to 437.7 million pounds from 496.2 million pounds in the prior year. This decline is primarily due to disposals and business closures, which have impacted the company's top-line performance. Adjusted for these factors, revenue increased by 8.6%, indicating that the company's core operations are performing better than the headline figures suggest.

The company's strategic turnaround, marked by the implementation of the "One James Fisher" model, has had a significant impact on its financial performance and market positioning. This model has helped the company to simplify its portfolio, significantly deleverage its balance sheet, and refinance its debt facilities. The net debt to EBITDA ratio stands at 1.4x, which is a positive indicator of the company's financial health. The underlying operating margin has increased by 90 basis points to 5.4%, and the return on capital employed (ROCE) has improved by 160 basis points to 8.2%. These metrics suggest that the company is on track to achieve its medium-term financial targets of a 10% underlying operating profit margin and 15% ROCE.

The key drivers behind the 8.6% increase in revenue, adjusted for disposals and business closures, can be attributed to several factors. The company reported growth in its Energy and Defence segments, which offset the decline in the Fendercare segment. Specifically, the Energy segment saw an increase in revenue, driven by factors such as "Life of Field gains" and the "CCSJV contract." The Defence segment also contributed to the overall revenue growth, with a notable increase in revenue from 16.8 million pounds to 16.9 million pounds.

Market demand is another significant driver. The company's strategic positioning in markets with increasing demand is a significant driver. For instance, both oil & gas and offshore wind demand are set to increase through the next decade, aligning with energy demand drivers. Additionally, the global investment forecast for defence is expected to increase across all regions, particularly in the US, which is the largest defence market.

Operational efficiency is also a key factor. The implementation of the "One James Fisher model" has streamlined operations and improved overall financial performance. This model has helped in simplifying the portfolio and significantly deleveraging the balance sheet, which in turn has contributed to revenue growth.

The sustainability of these drivers in the current market conditions can be validated by the following points:

- Market Trends: The increasing demand for oil and gas, as well as the exponential growth in offshore wind, suggests that the Energy segment will continue to be a strong contributor to revenue. Similarly, the defence market's growth, driven by global investment forecasts, indicates sustained demand for the Defence segment.

- Operational Improvements: The company's focus on operational efficiency and financial discipline, as evidenced by the implementation of the "One James Fisher model," positions it well to navigate market uncertainties. The significant deleveraging of the balance sheet and refinancing of debt facilities further strengthen the company's financial position.

- Geopolitical Uncertainties: While the company acknowledges geopolitical uncertainties, the Board remains confident in delivering further progress. This confidence is based on the company's strategic positioning and operational improvements, which are expected to mitigate the impact of external uncertainties.

In conclusion, James Fisher and Sons plc's full-year 2024 earnings report presents a mixed picture. While the company has made significant strides in improving its financial performance and market positioning, it still faces challenges in terms of revenue growth. The implementation of the "One James Fisher" model has been a key driver of the company's turnaround, and the company's strategic focus on growth in aligned markets and operational efficiency positions it well for future growth. However, investors should remain cautious of geopolitical uncertainties and the impact of disposals and business closures on the company's top-line performance.