Clarksons posts highest-ever profits and earnings as port congestion and invasion of Ukraine boost ship brokerage
- Revenue from the world’s largest ship broker rose 40% to £266.7 million in the first half
- The increased congestion in the ports helped the group’s brokerage division in particular
- Clarksons had increased preliminary dividend payments from 27p to 29p per share
Clarksons shipping company has celebrated record revenue and profits as it benefited from rising freight rates amid a shortage of ships and the war in Ukraine.
Revenue for the world’s largest shipping broker rose 40 per cent to £266.7m in the first six months of 2022, on strong performances across its businesses.
Increased port congestion particularly helped the group’s brokerage business, as did a rise in oil and gas prices.
Windfall: The global shipping industry has seen profits surge by tens of billions of pounds during the Covid-19 pandemic as companies have increased sea container freight rates
Russia’s all-out invasion of Ukraine has prompted many companies and governments to seek essential commodities such as corn and wheat farther afield, pushing dry bulk freight rates to a 14-year high in the second quarter.
In addition, Clarksons said its product tanker revenues were “significantly boosted” by the war due to increasing refining margins and refining outputs, as well as the longer distances traveled by oil-carrying vessels.
That helped boost the FTSE 250 company’s pre-tax profit by more than half to £42m and allowed it to increase interim dividend payments from 27p to 29p per share – for the 20th year running with an increase in dividends.
The global shipping industry experienced a surge in profits during the Covid-19 pandemic as companies increased sea container freight rates.
Last October, the Baltic Dry Index – a measure of the cost of transporting commodities such as coal and iron ore – hit over 5,700, the highest level since the 2007-08 global financial crisis.
Lockdowns around the world, particularly in China, which is home to many of the world’s busiest ports such as Shanghai and Shenzhen, are partly behind this phenomenon.
But it has also been caused by a lack of staff on ships and in docks, causing delays in the delivery of products, while some shipping companies have accused price-gouging.
Clarkson CEO Andi Case said the company had for many years sounded the alarm about the impact that yard closures, low orders for new container ships and tighter ship financing would have on supply chain problems.
He expects the business to benefit from the current situation for some time to come, with continued high freight rates and assets and further gains from the switch to renewable energy.
Case said: ‘The prospects for the business remain good due to the structural supply shortages in the global shipping fleet and we continue to benefit from our international presence, our leading market position, our diverse offering and our deep understanding of the energy transition.’
Despite the robust results, Clarksons shares closed Monday down 3.2 percent at £34.40, despite its value having risen nearly 70 percent over the past two years.
