Shipping markets are in the doldrums and likely to remain so for some time, yet Braemar Shipping has been busy diversifying away from its core broking business and first half results are encouraging.
Clearing up after Rena, the container ship that ran aground off the New Zealand coast last year, chipped in £15m of revenue and meant the environmental division made a £2m operating profit. Supplying technical services like marine warranty survey work pulled in £19.1m, too, and grew divisional profits by 56 per cent to £1.7m. True, acquisitions helped, but there’s also heavy demand from big energy projects - Braemar is carrying out checks for insurers on a huge gas field off the north west coast of Australia and offshore Vietnam.
Overall, underlying profit before tax jumped 27 per cent to £6.1m, and 63 per cent of operating profit came from non-shipbroking business. However, work on Rena will finish by the year-end and half-year revenue from broking was flat while operating profit fell by 14 per cent to £2.9m as overcapacity continued to offset rising volumes and depress freight rates. Still, Braemar is building up teams in Asia ahead of a cyclical recovery in the container market and demolition work is proving lucrative.
Broker Westhouse Securities expects adjusted EPS of 38.75p in 2013, compared with last year.
BRAEMAR SHIPPING SERVICES (BMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 425p | MARKET VALUE: | £ 91.8m | |
| TOUCH: | 420-425p | 12-MONTH HIGH: | 435p | Low: 288p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 309p* | NET CASH: | £17.3m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 61.5 | 5.03 | 17.6 | 9.0 |
| 2012 | 79.4 | 5.18 | 17.7 | 9.0 |
| % change | +29 | +3 | +1 | - |
Ex-div:14 Nov Payment: 14 Dec *Includes intangible assets of £32.6m, or 151p per share | ||||
