In common with other shipbrokers, Clarkson (CKN) has been navigating through some rather crowded sea lanes. That's because global shipping, in a curious parallel with some other capital-intensive industries, has been dogged by over-capacity. And with the global economic outlook at ebb tide, it's unsurprising that management describes it "the most challenging rate environment seen in many years". Bearing this in mind, a sustained top line coupled with an 11 per cent fall in adjusted operating profits actually represents a creditable result at the half-year mark.
Clarkson lost nearly a fifth of its market value in immediate reaction to last month's profit warning, but the half-year figures were ahead of City expectations and the market reacted accordingly. And though the major shipping indices remain in negative territory, these results underline the core strengths of the business; namely, a highly cash-generative model unencumbered by excessive borrowings. And as a brokerage, Clarkson's bonus-linked salary structure provides an effective "pressure release valve" during market downturns. This represents another structural advantage given that wages form the central component of the group's cost base.
Panmure Gordon anticipates EPS of 100.2p for the December year-end and has increased the 2017 estimate by 1.7p to 108.7p (from 121.9p in 2015).
| CLARKSON (CKN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,195p | MARKET VALUE: | £663m | |
| TOUCH: | 2,189p-2,199p | 12-MONTH HIGH: | 2,649p | LOW: 1,629p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 1,210p* | NET CASH: | £83m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 145 | 10.8 | 15.0 | 22.0 |
| 2016 | 147 | 17.5 | 41.7 | 22.0 |
| % change | +1 | +62 | +178 | - |
Ex-div: 8 Sep Payment: 23 Sep *Includes intangible assets of £293m, or 970p a share | ||||
