Clarkson hits choppy waters but sees plain sailing ahead

Imran Khan
Northern Germany Is Hub Of International Shipping
Clarkson is a shipping broker which was founded in 1852 (Source: Getty)

Shipping broker Clarkson told investors in its preliminary results today that the outlook for profits in the medium term is good.

The company said there “are now a number of indicators of improvement in the industry via measurable, if as yet relatively modest, demand growth and a slowing in the new capacity reaching the market.”

The figures

Underlying profits before tax fell 11 per cent to £44.8m, compared to £50.5m in 2015, “reflecting significantly lower freight rates and asset values during the year, but this was offset by increased transaction volumes, market share and a strong US dollar”, Clarkson said.

Reported pre-tax profits rose to £47.3m from £31.8m on revenues up to £306.1m from £301.8m.

A final dividend of 43p a share was declared, an increase from 40p in 2015, adding up to a total dividend of 65p, up 5 per cent.

Clarkson share price

Northern Germany Is Hub Of International Shipping
Clarkson is a shipping broker founded in 1852

Why it’s interesting

Shipping volumes are considered to be a proxy for global trade so any uptick or downturn in shipping brokerages’ activity may be used to inform economists’ expectations about global GDP growth.

The company said “seaborne trade continues to increase and further positives for growth include the prospect of higher infrastructure spending from the world's two largest economies“ and “a change in investor appetite from the fourth quarter”.

However, the company said short-term, shipping markets seem most likely to remain challenging whilst current difficult market conditions and an opaque global macro-economic environment persists.

The share price has risen three per cent since the company published its preliminary results this morning.

What Clarkson said

Andi Case, Clarkson chief executive, said: “Clarkson remains cash generative and highly profitable, allowing us to deliver continued dividend growth for our shareholders despite the challenging shipping markets.”

“A number of indicators suggest that the shipping and offshore markets are beginning to calibrate and we are well positioned to capitalise on the opportunities this presents in 2017 and beyond.”

In short

Clarkson is currently trading in challenging conditions but it sees the light and now may be a good time to jump aboard ready for calmer waters ahead.

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