Braemar Shipping (BMS) endured “challenging market conditions” in the first half of FY2018. Sales for shipbroking, the group’s largest business, remained broadly flat, although operating profits fell due to softening tanker markets and a weaker trading environment for the offshore division. But management is now seeing some improvements for tankers; and the dry cargo segment should benefit from new senior hires.
6
Braemar’s bosses anticipate a better second half, driven partly by the restructuring of its technical business. Revenue there fell to £19.8m from £21.7m, but underlying operating losses narrowed slightly after successful cost-saving initiatives.The engineering segment has a strong pipeline in place: chief executive James Kidwell highlighted a contract with Wood Group in the Gulf of Mexico, together with likely commercial opportunities arising from the implementation of the 2020 Sulphur Cap on global shipping.
Post period-end, the group acquired NAVES Corporate Finance GmbH for a maximum consideration of €35m (£31.2m). NAVES, an advisory business focused on the maritime industry, will form a new division within Braemar. Shareholders can look forward to a five-month contribution at FY2018, which should be significant given it generated revenue and net profit of €7.46m and €2.13m, respectively, during 2016.
Analysts at Stockdale forecast pre-tax profit of £8.4m and EPS of 22.6p for the year to February 2018, up significantly from £3.2m and 8.8p in 2016.
| BRAEMAR SHIPPING (BMS) | ||||
| ORD PRICE: | 290p | MARKET VALUE: | £88.7m | |
| TOUCH: | 289-300p | 12-MONTH HIGH: | 337p | LOW: 220p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 317p* | NET CASH: | £6.4m | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 70.2 | 0.15 | 0.38 | 9.0 |
| 2017 | 66.6 | 0.28 | 0.18 | 5.0 |
| % change | -5 | +88 | -53 | -44 |
| Ex-div: | 2 Nov | |||
| Payment: | 15 Dec | |||
| *Includes intangible assets of £79.8m, or 261p a share | ||||
