Clarksons chief executive Andi Case says he wants the headlines to be about the fact Clarksons has generated an “outstanding” result for the first six months of the year amid shipping markets that are a patchwork of everything from decent to mediocre.
Everything else is secondary for the shipbroking group, which booked net profit before tax of £52.2m ($66.4m) for the first six months of 2023 — its best-ever result for the first half of the year.
“I’m just really, really proud of the entire global team,” Case told TradeWinds on Monday. “It’s a mixed bag in terms of [freight] rate environment ... and yet we’ve produced yet another record set of results.
“We’ve increased the dividend ... which takes us into the 21st year of dividend growth, which is pretty spectacular in an industry that’s supposed to be cyclical and you can’t do that sort of thing, so we’re very confident in our strategy.
“We’re very confident in the direction of the business and excited for the next six months.”
The stars of the show in terms of pure numbers were the sale-and-purchase division and the tanker and energy sector-related business, but Case said he wanted to praise the group’s “hidden heroes”.
“I really feel that the performance sometimes of those guys whose rate environments aren’t peak but are still producing significant volume growth is absolutely worthy of significant note,” he told TradeWinds.
Chief financial officer Jeff Woyda said he was similarly proud.
“We’re a cash-generative business,” he said. “We’re growing our support, supply and services businesses and research has been on a very, very long run of constant growth in return revenue and the like, so with the cash generation, we’ve enabled the business to grow and to reinvest heavily in our people, in our technology, in our data, in our market intelligence and our spread of activities and geographic footprint.”
Clarksons’ results are expected to be slightly softer for the second half of the year, which is unusual given that the group usually sees a stronger start to the year, Case said.
Competition between broking shops remains “very fierce” and Case wants Clarksons to continue to be a ferocious competitor.
“We’re very, very clear: If you snooze, you lose,” he said. “There’s no free lunch or easy pickings within these markets.
“Every single one of our markets is a highly competitive space. And, you know, we have the utmost regard for our broking brethren.”
But the outbreak of war in Ukraine and the resulting trade sanctions on Russia has stirred a change in the needs and attitudes of Clarksons’ customers too.
Here, the group has honed its know-your-customer (KYC) processes, which have become something of a differentiator in the services it offers clients who cannot afford to fall foul of sanctions.
“I do believe that the world is growing up,” Case said. “We believe in digitalisation, we believe in compliance.
“We believe there’s a growing culture within our client base that they’re saying, ‘We need to understand how our business is conducted and who is conducting our business’.
“We believe that is a long-term trend, that is not going to change overnight, and we believe we’re at the professional end of our business.
“We’re the ones that, we believe, are pushing new ground and becoming the sort of flagbearer for a flight to quality of service providers. We want to be at the front of that storyline.
Clarksons reported increased net profit before tax of £52.2m ($66.4m) for the first half of this year, equivalent to 130.5p in earnings per share. This is up from £42m a year ago when Clarksons earned 98.5p per share.
Profit from Clarksons’ Broking division totalled £58.2m, up from £47m in the same period last year. The group said this reflects a margin of 22.6%, roughly flat with a year ago.
Revenue grew to £321.1m from £266.7m year on year.
The interim dividend rose by a penny to 30p per share, which means Clarksons is now in its 21st consecutive year of paying distributions to shareholders.
“What other companies do and don’t do is down to them. But I do believe the feedback we have and the support we have from customers in the efforts that we’re doing to make those strides, we believe, is well supported by the corporate clients that we have.”
Talk stirred in the market in July that Clarksons was thinking of acquiring rival shop Maersk Broker, but since then, the rumour mill has gone quiet.
Case declined to comment on the matter specifically, saying that the group does not comment on market speculation.
But Clarksons remains open-minded on the broader topic of mergers and acquisitions (M&A).
“During the last year, we made some acquisitions. And this year as well — this first six months — we made a couple of acquisitions so we’re not frightened of M&A,” Case said.
“Obviously the company is extremely well positioned in its cash position and we’re looking across the group at opportunities.”
Clarksons has ample firepower with free cash resources of £128.2m available for future investment at the end of June.
It acquired contract management platform Chinsay earlier this year, which has been integrated with Clarksons’ Sea platform. Clarksons’ digital arm Maritech also bought the MarDocs digital platform from Marcura Platform Solutions.
Clarksons Port Services also acquired Dutch logistics firm DHSS in February.
