Braemar Shipping Services has unveiled a four-year plan to double the size of its core shipbroking business.
The London-listed company said on Wednesday that it will target growth through organic expansion and "value-added acquisitions".
The board believes that consolidation is likely in the shipbroking space over the next few years.
"Scale is increasingly important within the industry, which in turn will increase our market share, diversify our revenue stream and build on what is already a global brand within the shipbroking world," the company said.
Braemar revealed the new strategy as it announced net profit of £11.4m ($15.5m) in the six months to 31 August, up from £1.1m a year earlier.
Debt reduction paying off
Chief executive James Gundy said the focus has been on simplifying the structure and reducing debt, which in turn allows the group to concentrate on its core business.
"The board believes that building scale will further strengthen our client base, counterparties, employees and shareholders, as well as allowing us to reduce the impact of cyclical markets," he added.
Revenue from continuing operations was up 11% to £47.4m, while operating earnings grew 23% to £6.9m.
The forward orderbook has grown by 28% year on year to $55.5m, mainly through newbuilding and bulk carrier deals.
Net debt has been cut by 23% to £14.7m.
The interim dividend of £0.02 per share reflects strong cash flow and confidence in the business, Braemar said.
Chairman Nigel Payne said the new expansion plan is a result of strategic development work carried out this year.
"Buoyant shipping markets, a strong market share and a strong forward orderbook position us well to grow at an accelerated pace," he added.
"In addition to expanding the reach of its existing service lines, we will seek to recruit additional brokers covering not only existing products and geographies, but also new supplementary markets."
Targets in sight
Braemar has already identified several potential complementary takeover targets.
"As a publicly listed market leader, we can take advantage of the likely consolidation in the shipbroking market," Payne said.
Further investment will be needed in business support infrastructure and technology to support growth, he added.
Braemar will also launch a new website to "communicate" its new objectives.
The group said revenue and profit for the full year should exceed the previous 12 months.
"Strong trading within shipbroking, especially dry cargo, sale and purchase, and securities, looks set to continue in the second half of the financial year, as the demand for the dry bulk sector and container capacity remains high," Braemar said.
The UK shop believes resurgent interest in the shipping industry from both a lending and equity investment point of view has meant that the financial division, Braemar Naves, is trading well ahead of last year.
Big financial deals done
Naves completed two significant transactions in the first six months, with a third expected to be tied up before the end of the financial year.
Last year, there was an unprecedented surge in deep-sea tanker rates, fuelled by contango storage demand.
In 2021, this has unwound, together with a huge cut-back in oil demand due to the Covid-19 pandemic, the broker said.
"As the world starts to move back to normality, and exports of oil increase, we believe that a consequent increase in deep-sea tanker rates is likely and that Braemar is in an ideal position to take full advantage," it added.
