- Shares climb 7% on 50% jump in earnings
- Dividend raised for 20th year in a row
- Scope for further growth across sectors
Integrated shipping services firm Clarkson (CKN) produced record underlying earnings in 2022, in what chairman Laurence Hollingworth described as ‘a remarkable year’ for the shipping industry.
The company’s shares gained as much as 7% to a new six-month high of £35.45 with more than half a million shares traded by mid-morning, significantly more than the average daily volume over the last few months.
BOOM TIMES FOR BROKING
Revenue for 2022 climbed 36% to £604 million thanks to a particularly strong performance in the broking division.
The year started with countries emerging from Covid lockdowns at different paces, meaning there was significant congestion and disruption in trade flows and supply chains.
The invasion of Ukraine and the sanctions which followed caused further disruption, leading to even greater demand for the firm’s broking services.
Underlying pre-tax profits topped the £100 million mark for the first time, up 45% to £100.9 million, bringing earnings per share to a record 250.3p, up just over 50%.
In keeping with its long history of raising the dividend, the firm increased the full-year payout to 64p, which together with the interim dividend of 29p took the total distribution to 93p, the same amount the company generated in earnings per share back in 2000.
PLENTY OF ROOM FOR GROWTH
Chief executive Andi Case sees continued scope for growth not just in the shipping sector, where fleet profiles the oldest for over a decade and low order volumes mean there are likely to be ‘meaningful supply-side constraints’ in many areas in coming years.
With Russian oil and gas off-limits, there is huge demand from the firm’s clients to find alternative sources to ensure their own energy security, which is driving demand for its offshore services division.
At the same time, the shipping industry is in the midst of its biggest transition for decades as regulators, charterers and consumers push for lower carbon emissions and new, more environmentally-friendly vessels, which is helping drive Clarkson’s Green Transition consultancy business.
If there is a fly in the ointment, the financing division faced a tough market in 2022 as some companies paused their capital raising, meaning several deals which were due to be completed in the second half of last year have slipped into this year, but some have already completed or are close to completion.
However, the order book for invoicing for the next 12 months stood at $216 million in January against $165 million in 2022 which means the firm has even better visibility of revenues and earnings than a year ago.
