James Fisher and Sons H1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
September 8, 2026

Key Takeaways

  • Positive Sentiment: Underlying operating profit rose 27.9% to £14.2 million in the first half, with the margin improving to 7.2% and ROCE rising 210 basis points to 8.2%.
  • Positive Sentiment: Defense revenue increased 43% to £53.8 million and operating profit rose to £5.3 million. The £295 million order book, plus approximately £95 million of framework awards, provides strong forward revenue visibility.
  • Positive Sentiment: Maritime Transport delivered a 48% increase in operating profit to £10.2 million, supported by strong tanker utilization, improved spot rates and higher Latin American ship-to-ship activity. Three of four new tankers have now been delivered.
  • Negative Sentiment: Energy remained a significant headwind, with revenue down 20.6% and operating profit down 45% as geopolitical uncertainty, delayed oil and gas projects and weaker offshore wind construction reduced higher-margin activity.
  • Neutral Sentiment: Management maintained its full-year expectations, provided energy markets do not materially worsen, while continuing to target 10% operating margins and 15% ROCE without specifying a timeline for reaching those goals.
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Earnings Conference Call
James Fisher and Sons H1 2026
00:00 / 00:00

Transcript Sections

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Operator

Good afternoon, and welcome to the James Fisher and Sons plc half-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we dive into the live Q&A session, we would just like to play a recorded presentation covering the results.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Good morning, everyone, and welcome to our 2026 interim results earnings call. I am joined by our Chief Financial Officer, Karen Hayzen-Smith, and I will first cover the key business highlights for the first half ended June 30, 2026. Karen will follow with an overview of our financial results at group and division level. I will then provide an update on how we are positioning the business to grow and scale and concluding with our outlook and Q&As. First, a quick recap on the things we do at James Fisher. Our company is organized across three divisions: Defence, Energy, and Maritime Transport, where we solve our customers' complex challenges in the blue economy. The Defence division supports and rescues lives underwater through our global leadership in submarine rescue, rebreathers, and mobility solution for special forces.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Our Energy division provides upstream services across oil and gas and offshore wind so that our customers can meet increasing energy demand more efficiently, safely, and sustainably. Maritime Transport ensures on-time delivery of clean petroleum products and chemicals through coastal shipping and provides global ship-to-ship transfer of oil and gas cargoes to third parties around the world. Now, let's move on to our 1H 2026 business highlights. We delivered a solid first half performance with robust trading in Defence and Maritime Transport, helping to offset challenging market conditions in Energy. Given the mix of our markets and the business turnaround actions we have taken in recent years, we have delivered results in line with our expectation. 1H 2026 revenue was up 2.1% year-on-year on a reported basis, and underlying operating profit increased by 27.9%. ROCE improved by 210 basis points to 8.2%.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Leverage remained within the upper end of our target range at 1.5x, reflecting our investment in enablers for the long-term growth of the business, which I will cover later. The divisions continue to operate in attractive end markets, supported by long-term structural demand. In Defence, revenue and underlying operating profit grew strongly year-on-year, with performance improving across all product lines. A strengthened order book provides good visibility into the second half. Maritime Transport also performed well, supported by strong tank ship utilization, favorable spot rates, and higher ship-to-ship activity in Latin America. By contrast, market conditions in energy has caused headwinds, with customers' caution and project delays affecting upstream oil and gas activity and policy changes leading to lower activity in offshore wind constructions. As a result of the short-term energy market backdrop, 1H 2026 performance was lower year-on-year, which Karen will cover shortly.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

However, the medium-term fundamentals are attractive, and we are managing for this challenging market. Across the group, we continue with self-help actions in the short term, while we are also investing in our people, capability, innovation, and customer-led geographic expansion needed to support future growth. This positions James Fisher to scale in target markets. With that, I will hand over to Karen to walk us through the financials.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

Thank you, Jean, and good morning, everyone. Notwithstanding the energy market backdrop, I am pleased that we have been able to deliver solid results overall. Benefiting from our diversified portfolio, we have delivered good results in Defence and Maritime Transport in the first half of 2026. We have also continued to deliver on our wider growth plans, and overall, we have made further progress towards our financial targets, and I will go through these now. Starting with the headlines, revenue was up 2.1%, driven by Defence and Maritime Transport, offset by a decline in Energy revenues. Underlying operating profit was up 27.9%, with the margin moving upwards to 7.2% when compared against the 2025 period. Net debt was GBP 65.7 million at 30th of June, and our net debt to EBITDA ratio of 1.5x on a covenant basis was within our target range.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

Lastly, return on capital employed also increased to 8.2%, which is a 210-basis point uplift as a result of the increase in profitability. If we now turn to the breakdown of revenue, this slide shows the ups and downs in the revenue profile. Revenue increased year-on-year to just under GBP 196 million, and you can see that in 2025 there was GBP 8.7 million related to the IRM business in Mozambique, not repeating in 2026. There was a net GBP 9.5 million volume increase in the period, which comprised of a GBP 19.8 million increase from Defence and Maritime Transport, offset by a GBP 10.3 million reduction in Energy. Moving on to operating profit, we saw an increase in profit to GBP 14.2 million with a margin of 7.2%, which is higher than reported in the trading update at the end of July.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

There was growth of GBP 7 million up from the prior period, which was largely due to the volume increases I have just explained in Defence and Maritime Transport, and this was offset by a net fall in profit in Energy of GBP 4.6 million. This reduction was from our higher margin services such as well testing, decommissioning and bubble curtain, which has been offset by cost reductions.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

Corporate costs increased by GBP 400,000 to GBP 6.6 million. The next slide should be familiar, as it is used to illustrate the financials on a like-for-like basis, showing the increase in both revenue and operating profit in the continuing businesses, with margins increasing towards our initial 10% target. We have made progress in a number of areas which have added to the improvement in margins such as supply chain savings, self-help and the rebound in Defence, which Jean will discuss in more detail later.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

If we now turn to look across the divisions. In Defence, we started to see the investment made in previous periods together with contract execution from recent contract wins generate revenue. Revenue increased from GBP 37.6 million in 2025 to GBP 53.8 million for this period, up 43%, driven by good performance in submarine rescue, tactical diving vehicles, and military diving. Profit also increased from GBP 0.7 million to GBP 5.3 million, with a high proportion of the increase in revenue falling through to operating profit, given we were carrying a cost base to support that growth in previous periods. This is evidenced with a much-improved margin to just below 10%. We have been improving our operational efficiency and achieving supply chain savings. We have strong momentum and customer interest in our products, and we continue to invest in the capabilities required to capitalize on those opportunities.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

We have invested in people to support increased bidding activity, project management given the uptick in projects, and engineering skills. We will also be increasing our capabilities in sales as well as process and system improvements to scale the division. Execution is key to delivering further profit improvements. Turning to orders. The order book at 30th of June was GBP 295 million, together with awards under framework agreements of around GBP 95 million. Even with a 43% revenue increase, we have been able to continue to replenish the order book. The orders and awards together total GBP 390 million, which is up on December 2025. It is estimated that around 60% of this total will be realized over the next three years, and together with a GBP 15 million run rate, each year provides good visibility of our secured revenue.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

We have had a number of smaller important strategic wins and are close to finalizing a number of contracts which we expect to turn into orders in the next few months. Moving on to Energy. Revenue was down GBP 17.7 million, with GBP 8.7 million related to the Mozambique contract and GBP 9 million down across the other product lines, giving rise to a 20.6% reduction in the division. Energy services has had a challenging year, with the Middle East crisis having a greater impact than originally anticipated. With revenues down GBP 15 million. The market uncertainties have impacted our customer spending plans, resulting in delays to the commencement of projects across our key markets. Overall, we have experienced reduced customer spend on both well testing activities and decommissioning. The number of projects in offshore wind construction using our bubble curtain technology has reduced in the period.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

The macro and policy decisions have reduced our U.S. activities, and although we had intended to pivot to alternative geographies such as Europe, there has been an overall reduction in new offshore wind platform build programs. The volume reductions are in activities that attract higher margins, and therefore there is a higher fall-through impact with a 45% reduction in operating profit and a drop in margins to 7.8%. In the other product lines, the IRM business in Brazil has had a good performance due to increased activity levels, and in the offshore wind aftermarket, there was increased demand for blade services and also recorded performance-related revenue in the period. Given the overall downturn, we have been reducing costs to offset the volume reduction but being mindful of retaining those critical capabilities to respond when the market recovers. Turning to Maritime Transport.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

This division had a good performance in the period. Despite a slow start to the year from poor weather conditions, tankships managed to end the period with revenue up 7.5% to GBP 46 million. This was achieved by good utilization and improved spot rates. The Cattedown Wharves business continued to perform well with good volumes through the port. In Fendercare, the strong performance at the end of last year continued through into 2026, resulting in revenue increasing to GBP 28 million, an increase of just under 9%. This was a result of increased volumes on ship-to-ship transfers in Latin America. Overall, the division improved operating profits to GBP 10.2 million, an increase of 48%. This was a result of the volume increases, but also with a focus on cost savings and efficiencies.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

We have also taken delivery of three out of four new tankers, with two in the first half, one in July, with the fourth expected towards the end of this year. If we now turn to the cash flow waterfall, I will just pick out a few points here. On working capital, we saw an outflow of just under GBP 7 million in the period. This reflected the increased working capital, in particular in inventory and defence, to ensure we deliver to customer timings and on contract work in progress. This should unwind in the second half, but is of course subject to the timing of completion of project milestones. Cash collection improved with DSO days reducing to 39.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

We had an inflow of cash of around GBP 5 million from asset disposals, and we will be selling additional assets in half two as the IRM Middle East and Africa closures are finalized. Net finance costs were GBP 3.7 million, which comprises a bank interest of GBP 4.6 million offset by interest income, and our average rate of bank interest reduced in the period to 7.8%. Lease payments, including lease interest, was GBP 15.5 million, marginally up compared to 2025. As we have entered new lease arrangement, lease payments will increase in the second half. Although the vessels are replacing existing ones that we have, we will be able to obtain higher pricing on these vessels as contracts renew. CapEx was GBP 14.5 million, which I will explain further on the next slide. We have continued to invest for future growth.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

In Defence, we have been investing in our new product base, including the new Stealth Multi-Role rebreather and tactical diving vehicles with GBP 3 million of investment. In Energy, we have been building a new fleet of electric compressors to meet the electrification requirements of our customers. In Maritime Transport, the CapEx represents deposits paid on vessels together with the usual drydock maintenance CapEx across the fleet. Looking at the debt position of the group, we are comfortably within our covenants. Net debt has increased from December 2025 by around GBP 11 million to GBP 65.7 million, which is only marginally up on June 2025. This is mainly timing and phasing of cash payments due to working capital seasonality, which follows a similar trend to previous periods.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

The two new tankers in Maritime Transport are funded by lease arrangements, and therefore you can see that the right of use liabilities in the period have increased to GBP 114 million. As previously guided, each vessel adds around $25 million of lease liability. In March 2026, we added another lender to our banking group with a hold of GBP 25 million, increasing liquidity. The next slide sets out our priorities in relation to capital allocation. This is unchanged from the position presented earlier this year. We continue to focus on organic investment, including new product development and innovation. We will balance investment in the growth opportunities we see ahead of us with the need to maintain financial discipline and operate within our debt range, making investment decisions which are aligned with our financial targets.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

We understand the importance of shareholder returns and are reviewing our dividend policy to assess the appropriate time to restate a dividend. We will also consider bolt-on acquisitions that fit with our strategic priorities in due course. Overall, during the course of this period, we have been focusing on those areas that are growing, also investing for future growth, and managing a weaker energy market. We are taking the steps to reduce costs but protect core capabilities required for when the market improves. Therefore, to summarize, we have improved performance in the majority of our key metrics, demonstrated growth and margin improvement in Defence, invested in new products and capital expenditure for future opportunities, including capabilities required for scale, and managed our debt position, giving us the financial ability for growth and to take advantage of new opportunities.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

I will now hand back to Jean to take us through the rest of the presentation.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Thank you, Karen. Before we move on to strategy, let me recap how the turnaround efforts we started four years ago created a stronger company. We have now reshaped James Fisher into a stronger, more resilient business. We have strengthened the balance sheet, simplified the portfolio, and built a leadership team focused on accountability and disciplined execution. We have invested in the foundations that will support the next phase of our growth, including stronger governance and controls, an integrated supply chain, strong support functions, and greater investment in people, technology, and innovation. Together, these actions help us to serve our customers better while improving efficiency, effectiveness, and standardization across the group. The result is a more client-focused service technology business with a clearer operating model and stronger execution discipline. We are now better positioned to scale in the markets where we see the strongest customer-led opportunities.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Now let me turn onto our growth strategy. Our financial targets are 10% underlying operating profit and 15% ROCE. We ended 1H 2026 with underlying operating margin up 140 basis points year on year to 7.2%. We continued to work at improving our portfolio performance with a staged closure of our Subsea Middle East and Africa business and the strengthening of our renewable aftermarket business. Decommissioning was also affected by the market headwinds, but we are nevertheless preparing for when activity returns, expanding into new markets and investing in differentiated technology. We made progress on self-help initiatives started into the prior years, with additional measures underway this year in the Energy division at a time of lower activity. Defence has rebounded in the first half to a run rate which brought it close to our 10% UOP target range.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Finally, the integration of our supply chain delivered important incremental sustainable savings in 1H 2026 while improving key supplier relationships and processes. Our three-year supply chain integration plan is on track, allowing us to build our operations in support to our strategy. Beyond the 10% UOP and 15% ROCE targets, we see further opportunities to go above these levels in the longer term. Moving on to growth. Our strategy is underpinned by powerful mega trends impacting all three divisions. Global energy demand will continue to grow despite this year disruptions, increasingly shaped by energy security. Second, rising geopolitical tension, digitization, and automation are also changing how our customers operate with a growing emphasis on local content. Our focus remains on positioning to grow, embedding the operational disciplines that support customer excellence and strengthen our supply chain.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

We are funding targeted investments in technology, innovation, and sustainable solution that give our customers a competitive edge. We are also developing specialist engineering capabilities in emerging areas such as data science and autonomous systems. Investment in our people and global workforce of the future remains pivotal to our strategy, focusing on quality and bringing superior service delivery. This provides the platform to scale the company, which is driven by three engine. Firstly, selling more to our existing clients, deepening intimacy with Tier 1 customers who already trust us, increasing wallet share in home markets, and building higher quality, repeatable business. Secondly, selling our existing product and services into new geographies, acquiring new customers, focused on the Americas, Continental Europe, and Indo-Pacific, three regions which are large and growing across both Defence and Energy.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Finally, accelerating innovation as a core differentiator focused on the areas where we can create the greatest value for our customers, as measured by our Vitality Index. Now if I go to the division prospect. In Defence, with NATO and allied government targeting defence spending at around 5% of GDP by 2035, our estimated GBP 6.1 billion serviceable obtainable market remains highly attractive.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Our focus is on executing against this growing opportunity. In 1H 2026, we continued to deepen relationships with leading global partners across Europe, Indo-Pacific, and the U.S., including Saab, ST Engineering in Singapore, and Teledyne FLIR in the U.S. This allows us to progress the next generation of mission-critical product and services with our customer across all product lines. We started work on the Polish Navy's Ratownik project, which was awarded at the end of last year, which will help protect critical underwater infrastructure in the Baltic Sea.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

We also secured a key submarine platform contract extension and a a new TDV maintenance contract in the first half. Together, with further awards and the framework agreements, this is providing revenue visibility and positive order book momentum through the second half. We have strengthened the division's presence in Asia Pacific, opening a new Subsea Centre of Excellence in Singapore. While in Sweden, we expanded TDV capacity to support manufacturing of our craft to meet a growing demand. In the U.S., we have appointed an experienced and highly regarded board of directors to our Special Security Agreement company and recruited key commercial talent to drive the business. Finally, Defence is leading in new product development, such as our Stealth Multi-Role next-generation military diving rebreather, and we have already secured our first order.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

We also continue to invest in our submarine rescue capabilities, which was recently demonstrated in a successful RESCUEX East 2026 exercise involving the U.K., France, and Norway. Now let's move to Energy. Despite a challenging first half driven by macro conditions, we made progress against key growth priorities within energy services and renewables. in February, we secured the first Digi-Rig contract in the Caspian Sea, creating a digital twin to support the redesign and delivery of bespoke air, steam, and well test packages. This marks a strategic milestone in digital innovation and the expansion of our James Fisher's asset management capability. Renewables saw increased activity supported by additional performance-related payments and continued growth in the blade services aftermarket.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Europe is becoming the center of offshore wind aftermarket activity with over 90% of current out-of-warranty turbines located in this region, which creates a clear opportunity for us to grow as the market matures. In oil and gas, our geographic expansion centered on Guyana in the first half, where we opened a larger operational base to reinforce our footprint in the Latin America region, which brings us closer to customers in a strategically important and growing market. The energy division is investing in innovation with a strong pipeline of new product coming to market over the next three years. One recent example is our development of our new electric compressors in Norway, with the first ones already in operation. This reinforces the role technology can play in supporting safer, cleaner, and more efficient operations.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

We also see opportunities emerge in adjacent markets such as critical underwater infrastructure, we call this CUI, where energy security, offshore infrastructure, and national security requirements are converging. This creates an opportunity for James Fisher to deploy our unique solutions across energy and defence to build early market proof points. Now let's move to Maritime Transport. The image of Orca Fisher that you see on the slide is a reflection of the long-term partnerships we have established with our customers and suppliers to meet the demand for safer, more efficient, lower-carbon coastal shipping. It also ensures that James Fisher and its customers meet forthcoming regulatory commitment to decarbonize the shipping industry. If we look at our geographic growth, we also saw strong ship-to-ship activity in Latin America, supported by our expansion into the region in 2025.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Safety, quality, and compliance remain top of our customers' priorities, and this is why clients continue to trust us as a main supplier. Our success in Latin America more than offset lower volumes in other geographies, including the Middle East, which was impacted by the Iran war. From the innovation side, our fleet replacement program remains on track, with three of our four newbuild tankers now delivered. This early investment positions us well in the Northwest Europe market, where 70% of existing smaller tankers are forecast to reach obsolescence by 2031. Looking ahead and to summarize what we have covered today. In conclusion, we delivered first half trading in line with expectation, with good momentum in Defence and Maritime Transport expected to continue across the second half of the year.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Energy continues to be affected by geopolitical and macroeconomic uncertainty, with challenging market conditions expected to remain through the second half. If we assume no material worsening and disruptions in the energy markets, the board's overall expectation for the full year remain unchanged. The long-term fundamentals of our markets remain attractive, supported by structural demand growth across Defence, Energy, and Maritime Transport. James Fisher enters the second half with a stronger operational platform. While we remain disciplined in navigating the near-term market uncertainty, I am confident in our ability to grow and scale towards our medium-term financial targets. I'd like to close by thanking all our employees and their families for the really hard work they deployed in H1, which led to these results, both in good and more adverse markets, and the difference they make in delivering superior service to our customers.

Operator

Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our investor dashboard. Jean, Karen, as you can see, we have received a number of questions throughout today's presentation. If I may, we'll dive straight into the first one here, which reads as follows. What returns do you expect from the fleet modernization program, and when should its full benefit become visible in cash flow and return on capital employed?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Right. Karen, you want to take this one?

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

Sure. Thank you for the question. You may have seen before that within the tankships business, 80% of our revenue is generally contracted with a customer base, and then 20% of that is in the spot market. The way in which returns will come through from the fleet program is when we negotiate the new contracts with our customers. The customer contracts tend to span two or three years. We have been negotiating some new contracts with our customers this year, which has an uplift in pricing to take account of the new vessel program, and that will continue over the next few years and beyond as we negotiate those contracts with the customers. Also, there is a more immediate benefit in the spot market with regard to the vessels that are operating at the moment.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

The other benefit that we see obviously from the modernization of the fleet is around maintenance, for example, and also ensuring that the utilization rates stay high. This year, obviously, in the first half, sorry, we have had a very good utilization of our fleet. Obviously, that increase in profitability will come into the cash flow and obviously the ROCE as we go forward. The other point to note that you would have heard Jean outline in the presentation is that we obviously monitor the build program associated with the smaller tankers in the market in which we play, and that is predicted to be reduced, which should give greater pricing power as we go forward actually, where we are anticipating that there will be greater demand for the transportation services and less supply available.

Operator

Anything else from there? Perfect. Thank you, Karen. Next question here with two parts to it. How significant could the convergence of defence, energy security, and offshore infrastructure become? Can you give an example of an opportunity that uses capabilities for more than one James Fisher division?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Right. That is a fundamental strategy question for us. There has always been a tradition of interplay between the technologies we have developed in the commercial sector with defence, particularly all our tradition in saturation diving, deep diving, have allowed us to play a major role in the deep water combat area or support of human life in a military environment. What we have seen over the past 5-10 years with increased geopolitical tension is the theme of energy security, which means, as I think I mentioned earlier, the threats to existing energy infrastructure. This has led us to think about the technology and services we have developed traditionally for this specific application. I can give you a couple of examples, particularly because the energy infrastructure, whether these are wind farms or oil and gas, are typically in vulnerable areas in this day and age.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

The first example is bubble curtain. Bubble curtain is a great way to kill the sound propagation underwater. We have used it and perfected it on an outward going way to protect sea life against the radiating sound from the hammering of piles for the wind construction industry. But we can use exactly the same technology the other way around, i.e., when you have an incoming threat from a drone, for example, or underwater craft. These are typically sonar driven. Sonar navigation system is based on acoustic waves, and the bubble curtain is a perfect wall against acoustic waves. So we have shown and proven in the field that these bubble curtains are 100% effective to deflect incoming drones. This can be applied to protect against bad actors trying to destroy infrastructure.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Coupled with identification of threats, we suddenly trigger these bubble curtains, which act as a shield, but it can also act to protect military assets, floating assets, or offshore assets such as vessels and port infrastructure. So that's an example. You've read in the press, whether it's the Iran war or the mischief happening in the Baltic Seas. A bubble curtain is a perfect tool combined with other mechanism to protect assets against threat. Another example is the monitoring of cable we have done to be more efficient in the prognostic of cable health for offshore wind and locating faults where those cable breaks.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

What we have noted is that all those monitoring, the sensing we do along cables, that sometime are very long cables, 80 miles, 100 miles, act as a real-time antenna underwater, where we can really track and see real-time underwater traffic as well as surface traffic. So we've noted this fact which is of great interest for border patrol and protection force for the littoral of several nations. So this is just two examples. There are others. What we have seen is a real interest and pick a practical request to prove our solution and to monetize our solution. Although the revenue impact this year is minimal, the significance of this qualification bodes very well for the future as a new application of our technologies.

Operator

Thank you, Jean. Another question here reads, "What customer interest are you seeing in your new fully electric compressors, and could this technology materially strengthen your position in offshore energy markets?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Yes. We have traditionally seen out of Norway, whether it's Equinor or other customers, several requests to really be on the leading edge of safety, decarbonization, and efficiency with the use of technology. One of the big theme in Norway is how can we electrify the oil and gas industry. Those electric compressors were born out of this customer-driven request. We have demonstrated that we can do this efficiently and effectively. The good thing is these influence from the Norwegian standards have a long tradition of spreading out across the industry, and Equinor is present across the Americas and in other places. So wherever Equinor goes we spread our electric compressors. We see that as an example of our contribution to decarbonizing the oil and gas industry. We are really one of the only one to be that advanced in that field.

Operator

Thank you, Jean. Next up is, "Do you expect to meet your medium-term targets of 10% operating margin and a 15% ROCE in 2027?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

I'll take that.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

Sure. We haven't given a timeline associated with the targets. It's probably worth giving a bit of background on the business side. So, Maritime Transport and Energy, until the energy markets were disrupted this year, we're earning margins in excess of 10%. One of the levers that we have been stating, and again, you would have seen on Jean's slide, was around the defence rebound. In the first half, that business also came up just under the 10% mark. So we're definitely moving in the right direction. With regard to some of our contract decisions and the markets that we, I would say the requirements actually in terms of making contract decisions is looking for good gross margins and operating profit margins in excess of 10%. So I think the right ingredients are there to get to the 10%, and we're in the right profile.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

There are a few things around, obviously, volume. In this first half with the energy market being down, as we have stated, we are still carrying costs in our critical capabilities for that when that market rebounds, so therefore that obviously has an impact in margin at the moment. I cannot give the timeframe, but I think we are certainly moving in the right direction. Obviously, if Energy was up and less disruptive as at the moment, we would obviously be much closer to that. On the ROCE, again, moving in the right direction. I would just point out one thing. I know a lot of companies actually quote pre-tax ROCE, and we have a higher tax rate at the moment. So our ROCE pre-tax, you might have seen in the slide, is actually over 13%.

Karen Hayzen-Smith
Karen Hayzen-Smith
CFO at James Fisher and Sons

As profitability comes up and volume improves, then actually we should start to see that ROCE getting closer to our target.

Operator

Thank you, Karen. Moving on to the next question. There has been a big growth in ship-to-ship transfer business in the Middle East as the result of the problems in the Strait of Hormuz. Has James Fisher taken any steps to get involved in this area?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

We have a traditional presence in the Gulf. We have been there for many years. However, with the conflict around that region, we have refrained from operating since the conflict began because we haven't seen the sufficient security assurance from our clients to be able to operate there. So although we have many inbounds, we have decided to step down because we don't want to have fatalities or injuries around the military risk. There has been a significant pickup indeed, but a lot of this pickup is also related to sanction trades, whether it's Iran or Russia or other bad actors, or sanctioned actors, I would say. We have a much higher compliance hurdle than our competition. So again, for that reason as well, we wouldn't have seen an increase from our side.

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

On the other end, what we have seen is because of the tension across the market, we have seen some activity pickup elsewhere, which we have been selectively capturing, and that contributes to a good start of the year for Fendercare.

Operator

Thank you, Jean. The last question we've got here is, how many tactical diving vehicles have you sold? Have they been accepted by the U.S. Armed Forces?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Yeah. We are not communicating the number of TDVs we have sold. This is under quite a veil of secrecy, but what we can share with you is the volume is picking up. It's coming from various countries that are either part of NATO or closely aligned to NATO. Then again, we cannot share anything too particular to a country, so I will refrain from responding to the U.S. question. The only thing I can say is that our craft is raising significant interest across the board and as the demand evolves, we will meet that demand.

Operator

That's great. Well, look, Jean, Karen, thank you for addressing all those questions from investors today. But Jean, before I redirect investors to provide you with their feedback, which one is particularly important to yourself and the company, could I please just ask you for a few closing comments?

Jean Vernet
Jean Vernet
CEO at James Fisher and Sons

Yes. First of all, thank you for your interest. We had a bit of a mixed first half. Mixed because really good, strong results in Defence, good results in transport, and challenges in Energy. All in all, we were able to meet expectation, our expectation, consensus expectation in the first half. We believe this situation will carry on to the second half. This is why we believe we will meet consensus, provided the energy market doesn't worsen. The thing I'd like you to take away is these are short-term disruptions. There is a fundamental structural growth in demand for energy. A large part of this will come from oil and gas supply and offshore wind, right? We see the mid and of course long-term future quite positively. In the meantime, we position ourselves to be able the ones capturing that growth which will come back.

Operator

Jean, Karen, thank you once again for updating investors today. Could I please ask investors now to close this session, as you will now be automatically redirected to provide your feedback which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.

Executives
    • Jean Vernet
      Jean Vernet
      CEO
    • Karen Hayzen-Smith
      Karen Hayzen-Smith
      CFO
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