Braemar Shipping (BMS) made a lot of money from salvage work on the wreck of the Rena container ship in New Zealand last year. But that contract ended in February, and with nothing to replace it, reported results were always going to struggle. Still, strip out the £15m of Rena-related revenue and £1.8m of pre-tax profit, and the top line actually grew 3 per cent and profit rose by 27 per cent to £4.3m. There’s growing optimism that a cyclical recovery in shipping markets is underway, too, and it’s highly likely the benefit will be felt as early as the second half.
The Baltic Dry Index (BDI), a measure of freight rates charged to ship raw materials, surged just after Braemar’s period-end, driven by Chinese restocking of iron ore. That will have generated substantial commissions for Braemar’s broking business where underlying operating profit slumped by 62 per cent to £1.1m in the first half. A sharp uptick in so-called newbuilding work, where Braemar acts as middle man between ship buyer and the ship yards, improves order visibility, too. An explosion in offshore exploration, meanwhile, continues to drive strong demand for marine warranty surveys in the Far East, and a three-year contract with Nigeria LNG swelled profit at the technical services division by three-quarters to £3m.
Broker Westhouse Securities expects full-year adjusted pre-tax profit of £10.1m, giving adjusted EPS of 36.7p (from £10.8m and 40.2p in 2013).
BRAEMAR SHIPPING SERVICES (BMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 535p | MARKET VALUE: | £116m | |
| TOUCH: | 532-545p | 12-MONTH HIGH: | 550p | Low: 350p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 314p* | NET CASH: | £7.1m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 79.4 | 5.18 | 17.7 | 9.0 |
| 2013 | 66.1 | 4.30 | 15.1 | 9.0 |
| % change | -17 | -17 | -15 | - |
Ex-div: 13 Nov Payment: 13 Dec *Includes intangible assets of £31.6m, or 145p per share | ||||
