James Fisher and Sons has become the latest maritime services firm to see slowing energy profits offset by a thriving defence business.
Announcing its half-year trading update this morning, James Fisher revealed its overall performance was in line with expectations, with revenue around £190millon and its underlying operating profit at £13million.
The trading update confirmed James Fisher's defence division delivered year-on-year growth with "improved profitability across submarine escape and rescue, military diving and tactical delivery vehicles". The division is focused on scaling efficiently with new product development on track to support sustainable medium-term growth.
Meanwhile the update noted "challenging market conditions" in the energy sector.
Documents state: "Maritime transport performed well, with tankships achieving high vessel utilisation across the fleet, and taking delivery of three of its four newbuild vessels while Fendercare experienced strong demand for ship-to-ship transfers.
"The Energy Division experienced challenging market conditions leading to lower activity and delays in certain shorter-cycle and project-based work. Decommissioning and well testing activity saw weaker conditions.
"The delays and cancellation in Offshore Wind construction projects impacted Bubble Curtain. A recovery of oil and gas activity is anticipated in 2027, although the timing remains subject to geopolitical developments and broader market conditions."
Jean Vernet, Chief Executive Officer, said: "Our end markets are underpinned by significant long term structural drivers and have remained largely supportive in the first half, despite heightened geopolitical volatility and short-term uncertainty affecting upstream energy activity.
"We remain focused on delivering our strategic objectives and are seeing emerging service opportunities that support energy security. At the same time, we are expanding our presence in attractive growth markets, such as North America, Continental Europe and the Indo Pacific region, while continuing to invest in innovation and enhance our product offering.
"Overall, the board remains confident in the Group's ability to continue building towards its medium-term financial targets of 10% underlying operating margin and 15% ROCE.''
Offshore services companies, which in many cases have previously focused on oil and gas, are increasingly turning their attention to the defence sector, with many of the skills and expertise overlapping.
From subsea robotics and autonomous systems to naval sustainment, AI governance and critical infrastructure protection, companies and institutions rooted in Aberdeen's energy economy are being drawn into global defence priorities.
The geopolitical impact of the war in Ukraine, growing tensions in the Arctic and Indo-Pacific, concern over subsea infrastructure security, and NATO's renewed focus on deterrence have accelerated demand for technologies and operational expertise that North-east Scotland has spent decades refining offshore.
The region's diversification story is no longer simply about replacing oil and gas jobs with renewables. Increasingly, it is about applying offshore capability to national security, resilience and defence.
One of the clearest examples comes from Aberdeen-headquartered THREE60 Energy, which recently secured a major U.S. Navy contract under the Amphibious Sustainment Readiness Program.
The five-year award will support davit systems aboard San Antonio-class amphibious warfare ships, providing overhaul services, technical support and life cycle management.
Speaking earlier this year, Walter Thain, Group CEO of THREE60 Energy, said: "This contract marks an important step in the continued expansion of THREE60's U.S. business. Our focus on building a strong domestic presence, combined with our OEM expertise, is enabling us to scale effectively and support increasing demand for sustainment, overhaul and life cycle services across the region."
That expertise was built in the North Sea, where reliability, remote operations, safety assurance and asset integrity are essential. Those same disciplines are now increasingly vital to defence organisations operating complex fleets and critical maritime infrastructure.
Perhaps nowhere is the overlap between energy and defence more obvious than subsea operations.
The sabotage of the Nord Stream pipelines in 2022 transformed how governments view underwater infrastructure. Fibre optic cables, pipelines, offshore wind assets and seabed power connections are now regarded as strategic vulnerabilities as much as commercial assets.
That has created opportunities for firms developing advanced subsea autonomy.
Aberdeen-based HonuWorx recently became the first company to receive a NATO DIANA Rapid Adoption Service research and development contract on behalf of a NATO ally.
The company – originally focused on offshore energy applications – will support Canadian defence research by developing deeper-water autonomous subsea capabilities.
NATO DIANA stated the work would help "effectively and efficiently operate and maintain future, deepwater power and data infrastructure and support the testing of emerging deep-sea technologies".
HonuWorx's Loggerhead system replaces large offshore support vessels with autonomous underwater "mothership" submarines capable of deploying robotic systems remotely from shore.
Earlier this year, Lee Wilson, CEO of HonuWorx, said: "Autonomous subsea systems are evolving from data collection platforms toward the delivery of real capability, with the potential to change how sensitive seabed operations are conducted."
The diversification trend extends beyond autonomous systems.
Peterhead engineering firm JBS Group (Scotland) Ltd is also translating offshore engineering capability into defence applications, supporting the UK, Australian, Norwegian and Canadian navies through specialist blast containment solutions.
These are highly specialised engineering scopes demanding precision manufacturing, operational reliability and rapid delivery capability – strengths long embedded within the North-east supply chain.
According to analysis by EY, increasing UK defence spending to between 3.5% and 5% of GDP by 2035 could generate an additional £30 billion annually for the economy by 2045.
Peter Arnold, UK Chief Economist at EY, said: "If spent appropriately, increased defence budgets provide a dual opportunity to bolster UK security and generate lasting economic benefits that support the government's growth agenda."
For the North-east, the opportunity lies not in building tanks or missiles, but in exporting the enabling expertise behind modern defence operations: robotics, subsea systems, autonomous technology, remote inspection, digital infrastructure and asset integrity management.
The shift is not limited to engineering firms.
At the University of Aberdeen, Dr Maria Manoli recently secured almost £300,000 from the British Academy to lead international research into the governance of artificial intelligence in space.
Earlier this year, Dr Manoli said: "AI is rapidly becoming embedded in space systems, yet the governance frameworks that apply to its use beyond Earth remain fragmented and underdeveloped, raising legal and cybersecurity challenges."
For years, diversification in the North-east has often been framed as a choice between oil and gas or renewables. Reality is proving more complex – and arguably more promising.
Many of the capabilities developed through offshore energy are not disappearing. They are being repurposed.
The same region that became a global centre of excellence for harsh-environment engineering is now emerging as a strategic hub for subsea autonomy, infrastructure protection, naval sustainment and advanced engineering.
As NATO countries ramp up investment in defence capability, underwater security and autonomous systems, North-east Scotland is increasingly well-positioned to benefit.
The global demand for energy expertise may fluctuate. The demand for resilience, security and critical infrastructure protection almost certainly will not.