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Clarkson buoyed by broking boom

Higher shipping rates and market-leading sector positions helped deliver a record performance
August 8, 2022
  • Green transition products aiding growth
  • Strong net cash position

Clarkson (CKN) posted significant revenue growth across its business as supply shortages and port congestion pushed up freight rates. While the company’s jump in profits was expected after last month’s trading update, investors will be pleased by the confirmation of yet another increase in the dividend.

Chief executive Andi Case told Investors’ Chronicle that Clarkson’s offshore business is benefiting from both a longer-term move towards renewables and from more demand for oil due to the energy crisis.

Broking revenue was the standout performer, with sales up by almost half to £211mn, boosted by high volumes and freight rates, and notable growth in the dry cargo, sale and purchase, and tanker markets. Financial sales grew by 12 per cent to £28mn, support by 30 per cent to £18mn, and research by 12 per cent to £9.6mn. All in all, it was a solid period for the top line.

Management is bullish that beneficial supply-demand dynamics for Clarkson in shipping markets will continue. Freight rates rose as demand boomed during the pandemic, and congestion and capacity constraints at ports – such as on the US east coast and in China – along with Russia’s invasion of Ukraine have ensured that demand for services has remained ahead of supply. Despite increased economic concerns, Clarkson said end-June rates were just 5 per cent lower than April’s all-time highs.

Numis analysts said that “although a global slowdown has the potential to impact demand in the shipping sector, we still think supply-side dynamics are set to remain extremely favourable for Clarkson over the medium term”. The shares trade at 19 times the broker’s 2023 financial year earnings forecast, below the five-year average ratio of 21 times, according to FactSet. Buy.

Last IC View: Buy, 3,290p, 7 Mar 2022

CLARKSON (CKN)   
ORD PRICE:3,380pMARKET VALUE:£1.03bn
TOUCH:2,500p-3,380p12-MONTH HIGH:4,225pLOW: 2,765p
DIVIDEND YIELD:2.5%PE RATIO:17
NET ASSET VALUE:1,226p*NET CASH:£182mn
Half-year to 30 JunTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
202119027.363.527.0
202226742.098.529.0
% change+41+54+55+7
Ex-div:1 Sep   
Payment:16 Sep   
*Includes intangible assets of £183mn, or 598p a share