Clarkson shares rise on better-than-expected earnings

Clarkson, the world’s biggest shipbroker, has reported a fall in pre-tax profit of 18 per cent to £18m for the first half, after issuing a profit warning in April this year.

Revenue from its business lines, which also include sale and purchase, chartering offshore rigs and investment bank services for the maritime industry, slipped 2.7 per cent to £152.6m. Basic earnings per share were down 16 per cent to 42.5p.

But the market has reacted positively, with Clarkson shares up 11 per cent to £28.60 in mid-morning trading, as the results were better than feared. Shares are still some way below the pre-profit-warning level of £31.05.

Acting chairman Ed Warner said: “In the first quarter we experienced depressed levels of sale and purchase activity, reduced rates within the tanker market and delays to financial transactions, compounded by the fall in the value of the US dollar.” But he pointed to “improved levels of trading in both sale and purchase and financial” in the second quarter.

Mr Warner said there would be no change to the full-year outlook following the profit warning.

Colin Smith, analyst at Panmure Gordon, credited the management with the second-quarter turnround and said there were signs that market conditions were growing more favourable. “What you had was a lot of historic ship orders being delivered to the market, and new capacity is what’s been depressing rates, but as that has been delivered, current orders remain low, so the market is tightening, helped by strong demand,” he said.

In its core broking division, Clarkson pointed to China’s Belt and Road Initiative, which is building infrastructure projects around the world, and its domestic stimulus packages as factors driving seaborne trade.

The shipbroker also warned about the danger of an escalation in the tariff war between the US and China, but said: “The impact of tariffs currently in force or proposed is estimated to be relatively limited, and global volume expansion is expected to remain healthy.”

The company said it was searching for a new non-executive director to become chairman in due course; current chairman James Hughes-Hallett is still recovering from an illness.