Investment Column: Marine services keep James Fisher shipshape

Like Rexam, James Fisher has been a lesson in how to manage the transition from an ex-growth industry into something more interesting. The man turning around this one-time shipowner is Tim Fisher, a former P&O boss who pitched up in 2001.

He freely admits the Barrow-in-Furness-based group's tanker operations are mature, while the prospects for its cable-laying and maintenance ships "remain bleak". In the latter, the collapse in the telecoms boom means that 12 of the world's 52 cable ships are lying idle.

Every cloud has a silver lining, though. A deal with the US-based General Dynamics means Fisher's own two remaining cable layers will be more than covering their costs for another two years at least. And in tankers, a tighter market has pushed up rates by another 10 per cent to 15 per cent in the past year.

That means Fisher made almost as much from 17 tankers in the first half of 2004 as it did with 21 in the same period of 2003. But the real driver behind yesterday's interim pre-tax profits - up 10 per cent to £6.61m in the six months to June - was the marine services division.

This has seen its contribution to half-year profits jump from 15 per cent of the total in 2002 to 46 per cent in the latest figures. Its activities now range from decommissioning old nuclear power stations and rescuing submarines, to running ships for the Ministry of Defence and British Nuclear Fuels.

With plenty of scope to expand these operations, Fisher should be capable of about 13 per cent growth in earnings this year, putting the shares, down 4.5p at 269p, on a forward p/e of 11. Hold.