Shipping has always been a boom-and-bust business and, on the evidence of broker Clarkson's (CKN) interim results, there isn't much sign of a return to the boom. A glut of shipbuilding during the pre-2007 boom years has put a record number of ships on the high seas, with all of them chasing a finite amount of cargo. As a result, shipping rates for brokers have been under pressure, so the fact that Clarkson registered flat underlying pre-tax profits, when one-off gains and charges are stripped out, is a sign of resilience, if not progress.
Activity in the half was even more depressed than the same period in 2012, with the company's own ClarkSea index registering an 8.5 per cent year-on-year fall. The core dry bulk broking market, which is heavily influenced by iron ore shipping, saw rates fall by 11 per cent. The fleet is still growing at more than 6 per cent a year, which doesn't help rates, but the mining supplies market is forecast to improve. The division's revenues were only marginally lower at £73.4m and management has opted to expand and win market share. Overall, management expects to see a second-half weighting to the company's performance, which reflects delivery times for new ships.
So broker Panmure Gordon forecasts adjusted EPS of 87.6p (76.8p in 2012), rising to 117p in 2014.
CLARKSON (CKN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,925p | MARKET VALUE: | £366m | |
| TOUCH: | 1,895-1,925p | 12-MONTH HIGH: | 1,925p | LOW: 1,135p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 705p* | NET CASH: | £71.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 88.0 | 14.5 | 53.3 | 18.0 |
| 2013 | 89.1 | 9.0 | 32.7 | 19.0 |
| % change | +1 | -38 | -39 | +6 |
Ex-div: 11 Sep Payment: 27 Sep *Includes intangible assets of £39.5m, or 208p a share | ||||
