Clarksons (CKN), the world’s leading provider of shipping services, posted record earnings for the year to December.
The results pleased investors, with the company’s shares gaining 7.5% to £33.45 while the FTSE 250 mid-cap index dropped 4.5% on the ongoing war in Ukraine.
STRONG MARKET
Last year saw a healthy rebound in shipping markets after the upheaval caused by the pandemic.
Shipping rates improved thanks to a better supply/demand balance and port congestion due to the rapid global recovery from Covid.
A lack of new shipbuilding capacity meant the value of existing vessels rose, which also benefitted the firm.
As a result of these positive trends, the company reported record underlying pre-tax profits of £69.4 million, an increase of 55% on the previous year.
Clarksons’ shipbroking operation matches charterers, who have cargoes they need to ship, with ship owners.
Cargoes could be dry, such as coal, iron ore or grains, or wet such as crude oil or chemicals.
POSITIVE OUTLOOK
The firm started this year with an order book of invoices of $165 million compared with $116 million at the start of 2021.
Chairman Laurence Hollingworth said the firm expects the ‘favourable supply/dynamics’ of the shipping market to continue and freight rates to remain strong.
Reflecting this confidence, the firm raised its total dividend payout from 79p to 84p, the 19th year of year of consecutive dividend increases.
BROKER UPGRADE
Analyst James Beard at research firm Numis said the record results were in line with his forecasts, taking into account Clarksons had raised its profit guidance at the start of the year.
Based on the company’s strong order book and ‘a continued favourable market backdrop in early 2022, despite ongoing macro uncertainty’, Beard raised his 2022 pre-tax profit forecast by 12%.
With a price target of £42, and given the recent weakness in the share price, the firm raised its recommendation from Add to Buy.
