Braemar Shipping Services expects earnings to be impacted by the Covid-19 outbreak but is continuing to plot expansion.
In a trading update, the UK shipbroker said shipbroking operations had been strong in the second six months of the financial year ended 29 February, with results expected to be broadly in line with market expectations.
But Braemar warned that shipping markets have seen "significant falls" in charter rates since the start of 2020, particularly for the larger tanker and bulker sizes, due to reduced imports volumes in China.
"Until the spread of Covid-19 shows signs of slowing, forecasts for economic growth and global trade are widely expected to continue to fall," the company added.
"Braemar expects this will have an effect on earnings for the first quarter of the year ending 28 February 2021 in the shipbroking division."
The broker said the welfare of all its staff and stakeholders is of "paramount importance", and it will maintain vigilance when it comes to managing travel and any other activities that could heighten risks to their well-being.
The firm added that it is monitoring the situation closely, and is keeping its dividend payment under review.
Expansion still planned
The outbreak is not halting expansion plans in Europe, however, with the company announcing its intention to open new offices in Athens and Geneva.
The company told TradeWinds that both new bases will open imminently.
The Athens office will focus on sale and purchase, with six staff, including two from financial arm Braemar Naves.
The Swiss base will focus on dry bulk broking, with two to three employees.
It is planned to grow both offices in the future.
The company said: "Long term prospects for growth continue to be positive."
Executive chairman Ron Series said: "I am pleased with the shipbroking performance last year but note that there is work to be done in improving the performance of the logistics and engineering divisions.
"Whilst the current outlook is uncertain due to the coronavirus impact, I believe that we are well positioned to benefit from a return to normal trading conditions."
Strong tanker markets in the quarter have boosted its forward order book to $43m at the end of the year, 15% higher than at the end of its half-year.
Strategic reviews underway
Advisory fees continued to grow at Braemar Naves, although there were fewer transaction-based success fees in the year than had been previously anticipated.
Cory Brothers, the shipbroker's logistics unit, traded in line with the previous year.
Braemar said a review of strategic options is being carried out to grow the business, including potential acquisitions.
Engineering company Wavespec, however, logged continuing losses, with delays to the progress of LNG storage technology and further delays to projects tied to China due to ongoing trade negotiations with the US.
"The board is therefore reassessing the carrying value of Wavespec’s assets and will address all possible alternatives to improve its performance," Braemar said.
Full results for the year to 29 February will be released in May.
