MARKET REPORT: James Fisher & Sons sees its shares crash

James Fisher & Sons saw its shares crash to a nine-year low after the firm sounded the alarm on profits. 

The FTSE250 group, which provides support services to the offshore energy, defence and shipping sectors, plunged 35.5 per cent, or 278p, to 506p after predicting profits for the year of between £27m and £32m, below the £40.5m it delivered last year, amid a raft of warning signs across its business. 

Among these was an ‘impasse’ in negotiations over £2m due to the company for a long-term project, which it did not expect to be resolved this year. 

Crash: The FTSE250 group, which provides support services to the offshore energy, defence and shipping sectors, plunged 35.5 per cent 

The situation of one of its financially distressed customers had also deteriorated, increasing its bad debt risk by around £2m. 

Meanwhile, projects from clients in the firm’s marine contracting, decommissioning and nuclear businesses had been delayed due to ‘continuing challenges presented by the global pandemic’. The firm’s tankships business also experienced a ‘poor month’ in September. As a result of the situation, the group is reviewing its balance sheet to try to ‘fix or exit’ some of its non-core and underperforming businesses. 

Despite the litany of issues, revenues in the three months to October were up 7.6 per cent year-on-year, however, the figure was still down 3.9 per cent in the year to date. 

The FTSE 100 added 0.25 per cent, or 18.27 points, to 7,222.82 while the FTSE 250 inched up 0.04 per cent, or 10.12 points, to 22,941.78. 

Corporate earnings in both the UK and the US as well as the impending Budget from Chancellor Rishi Sunak appeared to distract the market’s attention away from inflation fears. 

Resource stocks helped lift the FTSE100, with miner BHP Group up 2.8 per cent, or 55p, at 1996p while sector peer Rio Tinto rose 2 per cent, or 94p, to 4766.5p, Antofagasta climbed 3 per cent, or 43.5p, to 1481p and Glencore edged up 1.3 per cent, or 4.9p, to 371.9p. Oil stocks were also on the rise, with Shell up 1.2 per cent, or 20.6p, at 1788.2pp and BP climbing 1.6 per cent, or 5.65p, to 360.65p after UK petrol prices hit their highest levels on record amid the spiralling cost of crude. 

Darktrace took a tumble, sinking 20.7 per cent, or 195.5p, to 750p, following a savage appraisal from analysts at Peel Hunt. In a note, the broker initiated coverage of the FTSE250 cyber-security specialist with a ‘sell’ rating and a target price of 473p, 50 per cent lower than its closing price of 946p last Friday. 

Analysts said there was a ‘disconnect’ between Darktrace’s market value and the ‘ultimate revenue opportunity’ of its business, particularly given what they said were ‘low barriers to entry’ in the network detection and response (NDR) market in which it operates. 

Peel Hunt added that the company’s customer review scores were low compared to its peers and that the firm ‘could lose out to the competition – both on product and on talent’ as a result of ‘underinvestment in [research and development]’. 

Stock trading platform Plus500 was up 2.7 per cent, or 37p, at 1430p after upgrading its full-year forecasts. 

Revenue in the three months to October had been ‘well ahead of pre-pandemic levels’ despite being down 2 per cent year-on-year at £154m. The company also posted a 43 per cent decline in new customers to 26,169 as the relaxation of lockdown restrictions meant fewer people were stuck at home using savings to play the markets. 

Takeaway delivery app Just Eat lost 2.1 per cent, or 122p, to 5619p after activist investor Cat Rock Capital called on the firm to sell off its US business, Grubhub, before the end of the year. 

In a letter to the board, Cat Rock – which owns around 5.1 per cent of Just Eat – said the company’s purchase of Grubhub for £5.3billion, completed just four months ago, had led to ‘an almost unbelievable undervaluation’ of the company’s shares, leaving it vulnerable to takeover bids.