- Shipping company's sales and earnings largely consistent with last year despite pandemic difficulties
- Dividend returned at 5p per share after no final payout for 2020
The pandemic brought rough seas to all industries, but shipping hascome out of a tough crossing with its sails intact. For shipbroker Braemar (BMS), its position in both the oil tanker and bulk cargo markets has meant its 2021 results show a company able to manage in difficult conditions.
When things looked most dire in an economic sense, cash was pouring in for the tanker industry as storage was the key issue in the global crude market. Now that industrial demand has recovered, dry bulk cargos are driving earnings.
Braemar saw rates on tankers rise to $300,000 (£212,696) a day when ‘contango’ (when the spot price is lower than the forward price) hit following the oil price crash in April 2020. This was unfortunately short-lived.
It was an intense period while it lasted. “In March, April, May last year, it was 18-hour days. We were booking deals left, right and centre,” said chief executive James Gundy to the Investors' Chronicle. “We saw the spot marketgoing towards $250,000, $300,000 a day and it fell down to $15,000 a day. The tanker market has not necessarily fully recovered yet.”
Gundy became chief executive in January after running the shipbroking division, which provided more than two-thirds of Braemar’s sales in the 12 months to 28 February.
The company’s full-year results do not reflect a massive collapse, partly because of the initial cash injection fromthe contango, but also because of the ramp-up in dry cargo shipping rates as China and then the rest of the world bounced back from the pandemic, and bulk cargo such as iron ore was needed in great quantities.
Braemar’s underlying operating profit for the period was £8.9m, compared with £11m the year before, and it brought back its dividend at 5p per share.
Debt was also cut back thanks to the £6m sale of part of its stake in consulting business AqualisBraemar, and net debt stands at £17.5m compared with £31m at the end of February 2020.
House broker FinnCap is forecasting a climb in adjusted EPS to 24.1p in 2022, from 21.2p in the prior year. Braemar is in a good position to benefit from the continued high demand for bulk products, but still has high oil and gas exposure, adding to volatility concerns. Hold at 249p.
| BRAEMAR SHIPPING SERVICES (BMS) | ||||
| ORD PRICE: | 249p | MARKET VALUE: | £ 78m | |
| TOUCH: | 248-250p | 12-MONTH HIGH: | 264p | 110p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 203p* | NET DEBT: | 28% | |
| Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 136 | 0.20 | -1.70 | 14.0 |
| 2018 | 133 | -1.50 | -9.70 | 15.0 |
| 2019 | 118 | -3.10 | -88.6 | 15.0 |
| 2020 (restated) | 118 | 6.27 | 12.9 | 5.00 |
| 2021 | 112 | 9.36 | 16.2 | 5.00 |
| % change | -5 | +49 | +26 | |
| Ex-div: | 24 Jun | |||
| Payment: | 30 Jul | |||
| *Includes intangible assets of £86m, or 275p per share | ||||
Last IC View: Hold, 219p, 28 Oct 2019
