James Fisher on even keel

15th Mar 2011 15:32

Results for 2010 from marine services provider James Fisher were in line with market expectations, with underlying profit before tax up 9% despite a lower contribution from the offshore oil services division.Underlying profit before tax in 2010 rose to £27.1m from £24.8m in 2009, while underlying operating profit climbed 11% to £31.1m from £27.9m the year before.The Specialist Technical division, which includes the decommissioning of nuclear power stations among its services, made the biggest contribution to operating profits, notching up £17.6m compared to a profit the year before of £16.0m.Offshore Oil services profits dipped 13% to £10.9m, reflecting a slowing down in the Norwegian oil sector, while the Defence division saw profits climb to £5.2m from £3.7m in 2009.The Marine Oil division limped into profit, making £0.7m after a loss the previous year of £1.6m.The company benefits from a strong US dollar because of its export focus, so any significant weakening of the US dollar would be an adverse factor, the company advised. "We currently have about half of our annual exposure covered at $1.60 to the pound," the company revealed.Trading so far in 2011 has been in line with management expectations."The outlook remains good in Specialist Technical, although remember that last year the division benefited from a very strong oil contango market and there is no sign of a pickup in the nuclear business," said broker Panmure Gordon. A contango is when the futures price of a commodity is above the spot price."Offshore Oil should do well, reflecting an increase in customer activity on both sides of the North Sea and further growth in emerging markets. Defence should build on the strong platform it has established in recent years, possibly venturing into related submarine fields. The performance of the Marine Oil division to a large extent depends on the timing of a recovery in the supply/demand balance (and therefore rates) for the larger tank ships," the broker added.Panmure Gordon has a "buy" recommendation and 600p target price for the stock.The final dividend per share has been increased by 10% to 9.7p making a total of 14.7p for the year, up 8% on 2009's pay-out.