Vast overcapacity, tight credit markets, natural disasters and low freight rates sound like ingredients for a perfect storm in shipping terms. Not for broker Clarkson, though. Increasing transaction volumes and growing market share meant it sailed comfortably past City forecasts and the company looks well set for when the recovery comes - leaving the shares looking attractive.
A small increase in dollar revenue from its core broking business was "staggeringly good," according to finance director Geoff Woyda, although a combination of depressed freight rates and a weak greenback cut operating profit there by 13 per cent to £35.9m. Still, cutting costs and ditching loss-making businesses held underlying group pre-tax profit steady at £32.2m. A sharp increase in profits at the smaller support and research divisions helped, too.
Meanwhile, losses at the finance division halved to £2.3m and it was running close to break-even in the second half. Clarkson has put together a number of major financing deals for shipping companies and more should follow given the reluctance amongst banks to lend.
Broker Panmure Gordon has cut its forecast for underlying EPS for 2012 by 3 per cent to 113.1p, reflecting a higher tax rate (121.53p: 2011).
CLARKSON (CKN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,334p | MARKET VALUE: | £ 253.3m | |
| TOUCH: | 1,315-1,335p | 12-MONTH HIGH: | 1,355p | LOW: 1,012p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 10 | |
| NET ASSET VALUE | 649p* | NET CASH: | £133m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 173 | 25.6 | 96.4 | 40.0 |
| 2008 | 250 | 18.2 | 41.9 | 42.0 |
| 2009 | 177 | 22.5 | 90.0 | 43.0 |
| 2010 | 203 | 32.4 | 125 | 47.0 |
| 2011 | 195 | 35.4 | 134 | 50.0 |
| % change | -4 | +9 | +7 | +6 |
Ex-div: 23 May Payment: 08 Jun *Includes intangible assets of £40.3m, or 212p per share | ||||
