Talk of a recovery in global shipping markets remains just that. "No one's promising anything in the next 12 months," says Martin Beer, finance chief at Braemar Shipping (BMS). Some think it will take much longer. Still, Braemar deliberately diversified into maritime services years ago and that's offsetting a slump in profits from shipbroking, but not, unfortunately, rising costs.
Braemar absorbed over £10m of extra costs last year linked to acquisitions, work on the Rena shipwreck in New Zealand and a management reshuffle, so operating profit actually slipped 4 per cent to £9m. Shipbroking volumes increased, but each transaction is worth much less to Braemar these days as overcapacity hits vessel values and freight rates. Underlying operating profit slumped by a quarter to £5.4m and conditions have worsened for major tanker and dry bulk markets. And increased capacity in the global bulk carrier fleet is expected to outpace growth in seaborne trade again this year.
Still, a boom in demand for marine warranty surveys in Asia almost doubled profit at the technical division to £3.4m, and Mr Beer believes there's enough work here to keep the unit growing fast. Elsewhere, providing services for ports nudged up profits at the logistics division and the last tranche of work on the Rena helped the environmental business.
Taking a more conservative view on shipbroking, brokerage Westhouse Securities trimmed its current year adjusted EPS estimate to 36.9p.
BRAEMAR SHIPPING SERVICES (BMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 419p | MARKET VALUE: | £90.9m | |
| TOUCH: | 410-419p | 12-MONTH HIGH: | 435p | LOW: 300p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 321p* | NET CASH: | £23.3m | |
| Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 127 | 16.2 | 56.7 | 24.0 |
| 2010 | 119 | 13.5 | 47.9 | 25.0 |
| 2011 | 126 | 13.2 | 48.4 | 26.0 |
| 2012 | 133 | 9.8 | 33.8 | 26.0 |
| 2013 | 144 | 9.3 | 32.8 | 26.0 |
| % change | +8 | -5 | -3 | - |
Ex-div: 26 Jun Payment: 24 Jul *Includes intangible assets of £32m, or 148p per share | ||||
