Shipbroking giant Clarksons has reported a dip in first-half profit compared to the performance seen at the same stage in a record-setting 2023.
London-listed Clarksons told the city this morning underlying pre-tax earnings reached £51.5m ($60.07m) in the opening six months of 2024, against the £53.1m booked at the same stage 12 months ago.
Andi Case, chief executive of Clarksons, said the results were strong.
He added: “The profile and further development of the forward order book, level of new business being transacted and pipeline for the second half, means that we have confidence that we will be second half weighted and deliver full year results in line with the board’s expectations.”
Shares in the shipbroking giant tumbled in early trading on a day of extreme turbulence in global equities, following selloffs in the US and Asia fuelled by weak marcoeconomic data.
Clarksons stock dropped to a low of 3,500 pence after the results were released, before quickly recovering to 4,115 pence a little after 9 am in London – down 5.84% on the day.
Sources said the fall, on small trading volumes, was related to the global sell-off rather than any company specific matters.
Gerald Khoo, an analyst at Panmure Liberum, Clarksons in-house broker, said the results where in line with his forecasts, with the “modest decline in profits was against the tough comparative of a record” first half of last year. “The slight drop in profits year-on-year was as anticipated,” he added.
Case said During the last 12 months Clarksons had made significant investment in new hires to further enhance our market-leading teams, expand the products that we broker and strengthen our global presence.
“Key hires include both revenue-generating staff and operational and support roles, all of which will enable us to further scale the business and better service our clients,” he said.
“The impact of these hires will evolve in the coming months as many join from senior positions following long periods of notice and garden leave.”
Overall revenue rang in at £310.1m against the £321.1m recorded in the same period of 2023, a period backed by strong energy shipping markets and sale and purchase activity.
The world’s largest shipbroker has raised its dividend for each of the last 21 years.
For the first half, investors will collect a payment of 32 pence, compared with 30 pence in the opening half of 2023.
In the past, Clarksons has often paid out more to shareholders in the second half of the year.
Clarksons has set profit records for the past three years and told investors during its last trading update in May that results from its shipbroking business would be stronger in the second half of the year.
Today, Clarksons said its shipbroking division, the largest contributor to its profitability, saw profit hit £53.4m with revenue coming in at £247.7m.
This time last year shipbroking profit sat at £58.2m on revenue of £257.2m.
Case said: “The broking division has had another successful first half, with strong performances across all major segments. Both spot and forward business transacted is ahead of the same period last year.
“Whilst reported divisional profit is slightly lower compared to the first half of 2023, performance is expected to be second half weighted owing to the invoicing profile of the forward order book.”
Case explained energy-related markets, including tankers, gases and specialised products, continued to perform well, supported by both concerns around energy security and an increase in tonne-miles caused by disruption through key shipping routes.
“The sale and purchase team also saw good activity in both newbuilding and secondhand transactions as clients reviewed their fleet requirements,” he added.
“Offshore markets strengthened in the first half of 2024 with both drilling and field development activities increasing further from levels seen during 2023.”
Clarksons also noted its green transition team had been very active first half of the year, to support clients with insights and guidance on decarbonisation strategies, operational emissions reduction, fleet renewal and policy coherence.
In May’s trading update, Clarksons warned its financial division was being impacted by challenging conditions in the capital markets and some headwinds for its real estate arm.
The division booked a profit of £1.2m for the period, compared with £5.0m 12 months previously.
Case said: “Within the project finance segment, shipping and offshore activities performed well, although our real estate project finance activities continue to be significantly impacted by the higher interest rate environment.”
The investment banking team was busy and executed a number of deals over the period, Case added.
“Revenue from both commissions on secondary trading and corporate finance, was lower than in the first half of last year, driven mainly by weaker activity in the equity capital markets,” he added.
“There was however strength in the debt capital markets, where revenues on transactions executed increased, and some consistency in the M&A markets. We go into the second half with a solid and encouraging pipeline, which as ever is subject to market conditions.”
Clarksons Research was known to have enjoyed a strong start to the year, following the May trading update.
“The Research division performed strongly in the first half of 2024,” Case said.
“We are constantly innovating and investing in the capabilities of our team, our products and the data and insights we provide. Demand for this expertise continues to grow.”
Profit from the business rang in at £4.6m against the £3.7m seen at this stage in 2023.
Clarksons finished the first half with a cash pile of £178.4m. This compares with £175.4m at the close of 2023.
This morning. Clarksons also announced the appointment of a new board member, Bloomberg executive Constantin Cotzias.
Clarksons, which has received scrutiny around its executive pay for the past few years, said he has also been appointed to the audit and risk committee.
Laurence Hollingworth, Chair of Clarksons, said: “He brings a strong understanding of financial markets, data, technology and experience in growing data-focused businesses. We believe that his knowledge and skills will be invaluable as we continue to grow the business."
Cotzias is global head of external affairs, the chair of Bloomberg Tradebook and a director of Bloomberg Multilateral Trading Facility.
