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James Fisher pulls guidance after oil price collapse
30th Apr 2020 09:35
(Sharecast News) - James Fisher & Sons said on Thursday that group trading in the first quarter was in line with the board's expectations, which were set at the beginning of the year, although it was now withdrawing its guidance as a result of the coronavirus crisis.
It said that the effects of the Covid-19 pandemic were becoming evident towards the end of the quarter, and had continued to impact the group from that point.
The FTSE 250 company said travel restrictions were adversely affecting projects in the Asia Pacific region in specialist technical, and a lack of subsea projects in West Africa was restricting "otherwise good progress" in marine support.
Ship-to-ship services and tankships had seen little negative impact to date.
"However, the effects of the Covid-19 lockdown have been exacerbated by a sharp fall in the price of oil and it appears likely that the imbalance between supply of oil and gas and real demand will maintain downward pressure on oil prices for a prolonged period," the James Fisher board said in its statement.
"The group is well diversified by end market and geography and, whilst in Norway - 3% of Group revenue - there has been an immediate drop in demand, other businesses continue to trade in line with our expectations despite logistical challenges.
"It is evident that the seasonal pick up in the second quarter in offshore oil and in renewables is likely to be delayed."
As it said on 26 March, given the uncertainty of the effects of Covid-19, the group had taken proactive actions to reduce costs, to optimise cash flow and to protect liquidity.
To date, those actions had included the deferral of all discretionary capital expenditure, instituting a hiring freeze, placing around 400 employees on temporary furlough and deferring pay for approximately 800 employees of 20%, including the salaries and fees of each board member.
The group said it had a "strong" balance sheet and good liquidity, supported by the actions it had taken in response to the crisis, including the suspension of the final dividend for the year ended 31 December 2019, as it confirmed on 26 March.
On an IAS 17 basis, net debt as at 31 December totalled ?203m, with around ?42m of headroom.
Committed facilities were increased by ?30m in March to ?280m, and headroom as at 31 March was ?64m, with a further ?13m of headroom on uncommitted overdraft facilities.
"It is impossible to forecast with any reliability what overall impact Covid-19 will have on the group - this will depend on how long the crisis lasts and on how quickly our businesses recover.
"Similarly, the effects of the oversupply of oil and gas remain difficult to predict.
"Mindful that the landscape can change rapidly, therefore, we have withdrawn financial guidance for the 2020 financial year, and will update investors when we have a clearer view of the likely outcome."
James Fisher said it was a "well diversified" company by geographical sector and by end market, providing resilience to profitability and cash flow, notably in the current challenging environment.
"We continue to closely monitor our business and will not hesitate to take swift and decisive action where necessary to ensure the group is well placed to provide long term value to our shareholders."
At 0937 BST, shares in James Fisher & Sons were down 5.7% at 1,346.68.
It said that the effects of the Covid-19 pandemic were becoming evident towards the end of the quarter, and had continued to impact the group from that point.
The FTSE 250 company said travel restrictions were adversely affecting projects in the Asia Pacific region in specialist technical, and a lack of subsea projects in West Africa was restricting "otherwise good progress" in marine support.
Ship-to-ship services and tankships had seen little negative impact to date.
"However, the effects of the Covid-19 lockdown have been exacerbated by a sharp fall in the price of oil and it appears likely that the imbalance between supply of oil and gas and real demand will maintain downward pressure on oil prices for a prolonged period," the James Fisher board said in its statement.
"The group is well diversified by end market and geography and, whilst in Norway - 3% of Group revenue - there has been an immediate drop in demand, other businesses continue to trade in line with our expectations despite logistical challenges.
"It is evident that the seasonal pick up in the second quarter in offshore oil and in renewables is likely to be delayed."
As it said on 26 March, given the uncertainty of the effects of Covid-19, the group had taken proactive actions to reduce costs, to optimise cash flow and to protect liquidity.
To date, those actions had included the deferral of all discretionary capital expenditure, instituting a hiring freeze, placing around 400 employees on temporary furlough and deferring pay for approximately 800 employees of 20%, including the salaries and fees of each board member.
The group said it had a "strong" balance sheet and good liquidity, supported by the actions it had taken in response to the crisis, including the suspension of the final dividend for the year ended 31 December 2019, as it confirmed on 26 March.
On an IAS 17 basis, net debt as at 31 December totalled ?203m, with around ?42m of headroom.
Committed facilities were increased by ?30m in March to ?280m, and headroom as at 31 March was ?64m, with a further ?13m of headroom on uncommitted overdraft facilities.
"It is impossible to forecast with any reliability what overall impact Covid-19 will have on the group - this will depend on how long the crisis lasts and on how quickly our businesses recover.
"Similarly, the effects of the oversupply of oil and gas remain difficult to predict.
"Mindful that the landscape can change rapidly, therefore, we have withdrawn financial guidance for the 2020 financial year, and will update investors when we have a clearer view of the likely outcome."
James Fisher said it was a "well diversified" company by geographical sector and by end market, providing resilience to profitability and cash flow, notably in the current challenging environment.
"We continue to closely monitor our business and will not hesitate to take swift and decisive action where necessary to ensure the group is well placed to provide long term value to our shareholders."
At 0937 BST, shares in James Fisher & Sons were down 5.7% at 1,346.68.