Shipping giant Clarkson release solid interims in difficult conditions

Clarkson PLC (LSE: CKN), one of the world’s largest shipping services groups, released interim results this morning, reporting revenue of £147.2m (+1.3% YoY), profit before tax of £17.5m (+62%), and underlying earnings per share of 52.9p.

The results show that the company, who play an intermediary role in the movement of commodities around the world, has fared relatively well in difficult market conditions for the global shipping industry, an industry exposed to cyclical volatility, and global economic and political uncertainty.

Investors reacted postively to the announcement, with CKN shares opening up nearly 9% in early trading:

Panmure Gordon welcomed the announcement in a note this morning, saying the result, which was 10% ahead of its 1H16 EPS forecast, was very positive:

“Clarkson reported underlying [PBT] … of £21.8m on revenue of £147.2m generating underlying EPS of 52.9p. That result was 10% ahead of our 1H16 EPS forecast and within 3% of the 1H15 result. Given how challenging the industry background has been, we regard that as a very positive result.”

CKN’s interim dividend was unchanged at 22p, but Panmure anticipate that Clarkson will increase FY16 dividend to 64p (+2p YoY), giving a yield of 2.9%:

“Net funds available to shareholders increased YoY to £46.7m (1H15 £41.3m) and Clarkson stands to receive approximately £12.6m in dividend and sale receipts from the disposal of its interest in the Baltic Exchange in 2H16.”

Difficult Conditions

Although results fell slightly YoY, Panmure said it expected shareholders will be pleased with the performance considering the shipping industry has struggled in the past few years:

“Although results fell marginally YoY, for a bottom of the cycle performance these results bode well once the recovery in shipping gets underway.”

City broker Liberum, who initiate coverage on the company this morning, said the results showed they were “swimming against the shipping tide”.

CEO Andi Case, said: 

"The global shipping industry is experiencing the most challenging rate environment seen in many years which, as previously highlighted, has inevitably impacted the Group's performance for the first six months of 2016.

In the short-term we believe our markets will remain highly challenged, reflecting the ongoing supply demand imbalance with the resultant low levels of newbuilding contracts and a prevalence of spot business continuing to limit forward visibility of earnings. However, we believe industry operators and investors will look to these difficult trading conditions to seek solutions and exploit areas of opportunity and Clarksons' full service client offer, underpinned by our geographic reach, will continue to ensure we are at the forefront of all activity.”