- Shipbroker flags weaker sales and profits
- Diversified model underpins robust performance
- Cash flow remains strong
Braemar (BMS) shares sailed into choppy waters after the shipbroker warned full year sales and profits will show year-on-year declines, news that sent the stock 10% lower to 235p in early deals on 24 March.
The London-headquartered company pinned the blame for the disappointing results on increased geopolitical volatility, which weighed on global charter rates in the second half of its financial year.
The downbeat news shouldn’t have caught investors off guard however, as Braemar’s shipbroking rival Clarkson (CKN) recently reported a slow start to 2025 and flagged concerns over the global shipping market.
RATES UNDER PRESSURE
Braemar, which proves expert investment, chartering and risk management advice to the shipping and energy markets, now expects revenue for the year ended 28 February 2025 to be ‘in the region’ of £141 million, implying an 8% year-on-year sales decline.
With maritime markets uncertain, the company guided for a near-9% year-on-year drop in underlying operating profit to £16.5 million.
‘Global charter rates, notably in the Tanker and Dry Cargo markets, came under pressure in the second half of the financial year, due to increased geopolitical volatility,’ explained Braemar, though the firm stressed that the impact of weaker charter rates was partially offset by strong performances in other parts of the group, notably Sale and Purchase.
NET CASH CUSHION
The share price damage might have been greater had Braemar not called out a strong year-end forward order book and insisted the strong fundamental drivers of the global shipping markets and the scale and diversified breadth of its operations ‘underpin the board’s confidence in the longer-term prospects for the business’.
Operating cash flow ‘remains strong’, insisted Braemar, which has swiftly returned to a positive net cash position at the start of its new financial year after a move into net debt.
WHAT DID THE CEO SAY?
CEO James Gundy insisted his charge has made ‘significant strides to strengthen the business in recent years, and it is encouraging to see the benefits of our actions come through in FY25. We have diversified our revenue streams and improved our operational platform, creating a more balanced and insulated business, and in so doing reduced the impact of cyclical rate pressures on individual market segments.’
Following the update, Canaccord Genuity trimmed its full year 2025 adjusted pre-tax profit estimate from £15.4 million to £14.4 million and its 2026 estimate from £15.3 million to £13.8 million.
Canaccord Genuity downgraded its price target from 380p to 350p, but the broker maintained its ‘buy’ rating on the stock, commenting: ‘While present trading is weaker (especially Tankers and Dry Bulk), we estimate that Braemar’s diversified revenue base and more efficient platform has helped counter-balance pressures and prior additions and focus will likely elevate self-help growth as the market sees a potential “flight to quality”.
The broker stressed that while rates are volatile short term, it believes ‘a maritime super cycle has potential to lift long-term rates and commissions.’
