UK shipbroker Braemar is looking ahead with confidence, after logging a bigger annual profit and upgrading the current year’s forecast following an “exceptionally strong” start.
Net earnings in the 12 months to 28 February were £13.9m ($16.3m), up from £4.5m a year earlier. Revenue grew to £101.3m from £83.7m.
Chief executive James Gundy said: “I am delighted with our strong trading performance this year. We are now beginning to see the benefits of streamlining the group and focusing on our core shipbroking activities.”
He described the broker as leaner and stronger than it was a few years ago, adding: “Our growth strategy is delivering results and we are extending our global reach. We look forward to the future with ambition and a high degree of confidence.”
Braemar noted a strong rise in transaction volumes across its shipbroking services.
Activity has been particularly high in the derivatives, sale and purchase, and corporate finance markets, it said.
The high level of container ship and LNG carrier ordering has left yard slots unavailable well into 2025 in many cases.
“For shipowners in other sectors this is making it challenging for them to renew their fleets and they’re turning instead to the secondhand market,” Braemar said.
“These dual factors have created significant opportunities for our S&P desk, and they have capitalised on them.”
Busiest in recent memory?
The past 12 months have been “one of the busiest periods of asset play in recent memory”, the broker argued.
Over the next couple of years, these factors are likely to prove positive for its chartering desks too, as reduced ability to replace retiring ships is expected to constrict vessel supply and consequently create a higher floor for future charter rates.
“We expect secondhand activity and prices to remain elevated for the dry cargo and container sectors,” the broker said.
“Due to the lack of newbuilding capacity, even in a weak tanker market we are still seeing an increase in secondhand values in this sector. On top of that we are seeing one of the strongest ship recycling markets, which has been to the advantage of our demolition team.”
Trading during the first five months of this year was “exceptionally strong”.
Bigger profit is on the way
The company expects to record not less than £20m of underlying operating profit for the year to 28 February 2023, against £10.1m in the year announced on Tuesday, which was higher than its own estimates.
The strength of the US dollar is expected to contribute about £5m to this.
There was a 15% increase in the forward order book to $50m over the year ended in February.
Net bank debt was cut by £17.2m in March following the sale of logistics company Cory Brothers.
The dividend for the period will be £0.07 per share.
The results were delayed twice from May and July due to auditors needing more time to review the accuracy of certain foreign exchange and other balance sheet reserve accounts.
“Some errors, largely historic, in accounting for the Naves acquisition, the foreign exchange gain on the AqualisBraemar share disposal and the balance sheet classification of certain other reserves have been identified and corrected,” the company said.
