Shipbroker shares fly on Iran war windfall
Shares in Clarksons climbed as much as nine per cent on Monday, after the ship broker revealed a record performance in the first half of the year and told shareholders to expect full-year results “materially ahead” of expectations.
Pre-tax profit at the shipping juggernaut was 39 per cent higher than the same period last year, it said, while earnings per share rose by 50 per cent thanks to the market volatility unleashed by the Iran war.
The group’s board also hiked its dividend from 33p to 35p, in a move that marks the 24th consecutive year of it raising shareholder payouts.
The FTSE 250 constituent, which as well as broking large shipping deals has fast-growing consultancy and trading arms, said it could “look forward with confidence” regardless of geopolitical developments thanks to the breadth of its services.
“Clarksons delivered a record first half performance, reflecting both the investment into our underlying business and the exceptional volatility caused by the disruption to global trade from global conflict including the situation in the Strait of Hormuz,” boss Andi Case said. “We expect the full year performance of the group to be materially ahead of market expectations.”
Clarksons gets new finance chief amid pay scrutiny
Shipbroking is one of several industries to have enjoyed bumper trading this year thanks to the protracted conflict in the Middle East. Traffic leaving the vital Strait of Hormuz shipping lane, through which a fifth of global oil and gas supplies transited before the onset of the war, remains highly sporadic, while Red Sea trade has also been under threat by the Iran-backed Houthi militia.
Clarksons’ core shipbroking and investment banking divisions enjoyed record trading after ships were forced to re-route and make longer voyages. A supply shortage of vessels also bolstered earnings, given dozens remain stranded in the Persian Gulf. The twin tailwinds have allowed the group to earn considerably higher commission than in previous years.
Panmure Liberum analyst Gerald Khoo said the shipbroker had “far surpassed” its estimates, “helped by favourable market conditions”.
“We believe it is also reaping the rewards of past investments in capability, capitalising on its broad-based market leadership and wide geographic footprint,” he added.
As part of the same announcement, the FTSE 250 firm also confirmed veteran chief financial officer Jeff Woyda had been replaced by BP’s shipping finance chief, Niamh Staunton after a near two-decade stint.
Staunton will inherit a highly unorthodox remuneration scheme, which includes an uncapped bonus policy that means Case has earned more than £65m in the past decade. The policy has provoked several shareholder revolts at the company’s annual general meeting – and in March, proxy advisers Institutional Shareholder Services (ISS) and PIRC urged investors to vote down the framework, which ISS said had allowed Case to be paid seven times that of his peers.
Clarksons has previously said the pay package is “established practice in shipbroking”, and that it had helped the group become the undisputed market leader globally.