Blockbuster results from Clarkson’s broking division have helped the group finish the first half of 2022 with record profit for the period.
The results came in spite of the challenges to markets posed by Russia’s war in Ukraine and disruptions to seaborne trade.
“The broking teams delivered a very strong first half, with standout performances in the dry cargo, sale and purchase and tanker markets as sustained volumes and rates buoyed profits,” Clarksons said in its interim report for 2022.
“Ongoing supply chain disruption as a result of the Covid-19 pandemic, including continued high levels of port congestion, reduced vessel speeds and the onset of the war in Ukraine, further disrupted seaborne trade.”
Divisional profit from Clarkson’s broking division, which totalled £47m for the first six months, was up by 55% compared with the same period in 2021.
Chairman Laurence Hollingworth said shipbroking was “the standout sector” for the group in the first half.
“As a result of the trading performance of the business, cash momentum that has followed and our confidence in the outlook, the board has declared an increased interim dividend of 29p per share,” Hollingworth commented.
The payment is up by 2p, compared with the first six months of 2021.
“It is notable that the company enters its 20th consecutive year of dividend increases,” he added.
Looking ahead, Clarksons is optimistic as supply continues to be outpaced by demand.
Andi Case, Clarksons’ CEO, said: “The outlook for the business remains strong due to the structural supply shortage in the global shipping fleet and we continue to benefit from our international footprint, leading market position, diverse offering and a deep understanding of the energy transition.”
Clarksons’ underlying profit before tax was £42.2m for the first half of 2022, with earnings per share of 98.9p.
This is up from £27.5m in the same period last year, when it booked 64p earnings per share.
Demand story
“We have spoken for several years about the challenges arising from a changing supply/demand balance, where a shortage of supply of overall tonnage, due to years of low newbuilding ordering, yard closures and tightness of ship finance, would lead to rising freight rates as increased demand outstrips supply,” Clarksons said in its report.
“Additionally, as expected, we are now seeing the impact of this shortage of tonnage exacerbated by the demands and complex nature of the green transition and regulation.
”The dislocation of trade and disruption brought about by the war in Ukraine and the lingering impact from the pandemic has further added to the shortage of supply and the higher rate environment.”
Clarksons said it thinks the current geo-political situation will accelerate strategic investment into renewables by governments and businesses, which will aim to become less reliant on fossil fuels.
Global demand for cheap sources of energy has stimulated demand for oil and oil-related services, which Clarksons said helped its offshore division during the first half.
But it has also driven demand for advice and support on how clients can transition to using greener energy sources and how to navigate the “highly complex” transitional period, in which consumers and corporates are demanding low-carbon transport services.
There also remains low visibility of which alternative marine fuels will be the most commercially viable in the long run, Clarksons said.
Divisional results
The financial division managed to produce a slight increase in profit, despite challenging capital markets in the wake of Russia’s invasion of Ukraine.
The division recorded £5.7m profit on revenue of £27.6m in the first half, compared with a profit of £5.3m in the same period last year and revenue of £24.7m.
Clarksons said its project finance teams had closed “a number of deals” in both the real estate and shipping sectors during the first six months this year.
It added that its securities team also concluded a range of transactions and “have a good pipeline of activity for the second half that we expect to be supported by the underlying fundamentals of shipping, commodities, renewables and offshore energy”.
Revenue from Clarksons’ research division increased by £1m year on year to £9.6m during the first half of 2022. This helped the division’s profit increase 10% to £3.4m during the period.
