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A buoyant shipping market and record freight rates has left management at ship broker Clarkson confidently predicting that the group's full-year results for 2008 will "exceed expectations". Indeed, strip-out a £21m exceptional charge from settling two long-running legal disputes with Russian shipping companies and the group reported a 67 per cent increase in its underlying pre-tax profit to £17.7m. That reflects a robust performance from the dry bulk, sale and purchase, as well as the futures broking segments of its business.
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During the period, operating profits from dry bulk rose 116 per cent to £10.6m, while profits rose 54 per cent to £5.4m from the sale and purchase operations. Clarkson's global reach is spreading, too, with new offices opened in Geneva, New Delhi and Hamburg helping to boost revenues. The star performer, however, was the futures broking business, Clarkson Securities, which increased revenues by over 200 per cent to £14.5m, and boosted operating profit from £1.2m to £5m. A strong forward order book and the impact of the strengthening dollar is expected to boost performance in the second half.
Broker Charles Stanley forecasts full-year pre-tax profits of £31.5m and EPS of 112p.
| Clarkson (CKN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,000p | MARKET VALUE: | £187.8m | |
| TOUCH: | 993-1,000p | 12-MONTH HIGH: | 1,135p | LOW: 674p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 432p* | NET CASH: | £32m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2007 | 72.6 | 13.4 | 52.6 | 14.0 |
| 2008 | 118 | -1.9 | -9.6 | 16.0 |
| % change | +63 | - | - | +14 |
Ex-div: 17 Sep Payment: 3 Oct *Includes intangible assets of £46.9m, or 250p a share |
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Settling the legal issues helps remove a major drag on the shares - which rose 5 per cent on the back of these results. But the impact of slowing consumer demand on global freight movements remains a concern so - despite the decent yield and after a decent run - the shares are fairly priced.
Last IC view: Good value, 745p, 17 March 2008.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
