With the oil majors continuing to delay or cancel offshore exploration projects, the technical division of Braemar Shipping Services (BMS) continued to suffer in the first half. And though chief executive James Kidwell is confident that seabed drilling will eventually pick up with prices, the sector’s current parlous conditions were highlighted by the division’s operating loss of £2m, including £1.5m in restructuring charges.
That restructuring is focusing the business on south-east Asia and India rather than the North Sea, where costs are higher and confidence lower. Elsewhere, the logistics division put in a consistent performance, contributing £0.9m in operating profits, though higher freight forwarding rates put some pressure on margins.
Freight rate pressure also weighed on the shipbroking business's bottom line, though transaction volumes picked up and the company could yet benefit from the recent collapse of container giant Hanjin Shipping. Though a small client of Braemar's, the broker could benefit from a role in the fire sale or scrapping of the South Korean group's vessels.
Prior to these figures, analysts at Edison were guiding for adjusted pre-tax profits of £8.8m and EPS of 22.6p in the 12 months to February 2017, down from £13.4m and 34.7p last year.
BRAEMAR SHIPPING SERVICES (BMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 325p | MARKET VALUE: | £98.2m | |
| TOUCH: | 325-328p | 12-MONTH HIGH: | 500p | LOW: 311p |
| DIVIDEND YIELD: | 8.0% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 336p* | NET CASH: | £0.7m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 79.6 | 5.20 | 13.3 | 9.0 |
| 2016 | 70.2 | 0.15 | 0.38 | 9.0 |
| % change | -12 | -97 | -97 | - |
Ex-div: 17 Nov Payment: 16 Dec *Includes intangible assets of £79.9m, or 265p a share. | ||||
