Shares in shipping company Clarkson (CKN) sank 4.8% to £22.70 after a one-off charge virtually wiped out its profit for 2019. The company also warned that the coronavirus will impact its 2020 performance, adding to the gloomy update.
In its full year results to 31 December, reported pre-tax profit stood at £200,000, down from £42.9m the year before as it reviewed the need for a non-cash impairment relating to its 2015 acquisition of Norwegian shipbroker RS Platou ASA.
The FTSE 250 company said it has determined that a £47.5m impairment charge, relating to goodwill attributable to securities and offshore broking, was required.
However, underlying pre-tax profit - excluding such exceptional items and acquisition costs - rose to £49.3m, up from £45.3m the year before.
Revenue increased to £363m, compared to £337.6m in 2018, while its dividend per share was up 3p to 78p.
VIRUS HITS FREIGHT RATES
While Clarkson said it has an improved forward order book from 2019, it warned the coronavirus is likely to impact first half performance this year, with the outbreak in Asia in particular causing a big drop in short-term freight rates.
Global seaborne trade, which is closely linked to economic developments in Asia, is likely to take a big hit this year with the virus combined with fragile geopolitics impacting demand.
Chief executive Andi Case said, ‘We started 2020 with a stronger forward order book than in 2019, however, the emergence of the COVID-19 virus will impact our first half performance.
‘In the medium term, the environmental regulatory drivers and supply demand dynamics in the shipping industry are favourable and we remain confident in the prospects of the group.’
Shore Capital analysts Peter Ashworth said Clarkson’s ‘leading position across its markets’, as well as its geographic footprint, make the group ‘resilient’.
He highlighted the firm’s net cash position, with net cash and available funds rising to £84.7m at the end of 2019, compared to £73.4m the previous year.
