Shipbrokers could have faced a moment of terror in these times of the coronavirus ­pandemic, falling trade volumes and a slump in new ship orders. Disrupted supply chains, the meltdown in the oil markets and strained capital markets during the past five months ­created a trading environment even more tumultuous than the global financial crisis more than a decade ago.

But market dislocation has a special place in the heart of those in the shipping business. When markets panic, there is always a lucrative trade to be made. This week, Clarksons proved just that.

Despite the upheaval, the world’s largest shipbroking and consultancy group reported a rise in profits for the first half of the year, with its core broking operation performing particularly strongly.

That gave it the confidence not only to pay out a maintained interim dividend of 25 pence ($0.33) per share.

The results were robust enough for its board to justify paying the 53-pence final dividend that had been deferred in March as concern spread about the impact of the pandemic.

Shares trade up

Unsurprisingly, shareholders loved the news. Clarksons’ shares were trading up 250 pence or 12% at 2,350 pence in London at midday on Monday.

Clarksons is understandably keen to boast that it has now delivered 17 years of consecutive dividend growth. That is impressive for any business, but in shipping it surely must rank as good as any publicly quoted company associated with this industry.

That record hasn’t been achieved without a few arguments along the way.

Repeated shareholder revolts — particularly over the terms of pay for chief executive Andi Case and finance boss Jeff Woyda — have needed two formal boardroom reviews of the company’s remuneration policy.

Chairman Bill Thomas, who received a knighthood at the beginning of the year, has admitted the ­contracts do not “conform to current market norms” and will change as and when new executive leaders are appointed.

Even after this week’s rise, Clarksons’ share price is 25% below its 3,135-pence high for the last year, although 21% above its low of 1,936 pence.

Sustainable growth

Nevertheless, Case and Woyda can claim credit for leading the sustainable and profitable expansion of the group over the past decade-and-a-half from being merely one of the biggest shipbrokers to becoming the dominant force in the market.

Recent expansion, including the modest acquisition of Spanish products broker Martankers, has lifted its staff numbers to more than 1,600 in 53 offices. It claims to be either the number one or two in all the markets it works in.

Clarksons’ success has been about a focus on building core market strength while not being afraid to cut those businesses that either fail to deliver or face ­sectoral decline.

Its shipbroking division lifted profit 35% in the first half on the back of the strength of the tanker and gas markets, while its research division increased profit by more than 10%.

New technology

Money is continuing to be invested in its Sea/ online trading and information platform, with a capital ­markets day that was delayed due to coronavirus set to showcase the technology.

Although the newbuilding market remains depres­sed, Clarksons has been successful in broking deals for new ships that will use alternative fuels. Although only 3% of the current fleet does not use oil for propulsion, such ships account for 23% of the orderbook.

Case said Clarksons was proud to have played a ­significant role in a number of these initiatives. TradeWinds has previously cited Clarksons’ reported involvement in Project Ambition to build a series of dual-fuelled capesizes.

However, Clarksons’ finance division made a loss in the first half due to the dearth of money market activity, and it is cutting costs following a review conducted at the end of 2019. Likewise, its port services division faces cost cuts to redress a fall in profits.

The net result of this disciplined approach saw the group’s free cash rise to £88.8m at the mid-year from £68.7m six months earlier. If it wanted to take out a rival, it has more than enough firepower, although a share deal would probably be preferred by shareholders.

Thomas, who was appointed chairman in February 2019, concedes that the second half of 2020 will be ­difficult as the full impact of the Covid-19 crisis is felt. But shareholders can be confident that the group’s strength in depth will limit the impact.