Clarksons Sees Recovery in Global Commodity Shipping Market

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(Image Courtesy: Ace Quantum)

Shipbroker Clarkson has called the start of a “recovery” across its long-depressed market for hiring out ships to transport commodities across the world, as it also reported a healthy set of annual results.

Revenues at Clarkson rose 6 per cent to £324m in 2017. Its pre-tax profits dipped 5 per cent to £45m, although this reflected its one-off sale in 2016 of a stake in maritime trading house Baltic Exchange. Excluding this, as well as a writedown related to Clarkson’s 2014 purchase of Norwegian competitor Platou, underlying pre-tax profits increased 12 per cent to £50.2m.

The shipping market, which entered the doldrums in 2011-2012 as China’s infrastructure-led GDP growth slowed and the appetite for commodities reduced, was now showing “early indicators of recovery” Clarkson’s chairman James Hughes-Hallett said.

The Baltic Dry index — which measures the price of hiring ships that transport goods such as metal ores, steel, grains and cement — rose 42 per cent in 2017.

Hughes-Hallett said he remained “cautious about the near term direction of the industry”.

One issue for Clarkson, which makes the majority of its profits from fees for broking shipping contracts, is clients’ and ship owners’ preference for hiring vessels on a “spot” basis. This means they are booking ships for one-off deliveries. Shipbrokers have more visibility on future earnings if clients are instead booking “time charter” deals for a whole tanker for several years, which they tend to do when there is a shortage of vessels.

Clarkson’s forward order book for such long-term bookings is running at $93m for 2018, the broker said on Monday, down from $112m last year.

“We start 2018, as we did 2017, with lower forward visibility of earnings from a lower forward order book,” chief executive Andi Case said.

He added that the rates clients were paying for “spot” orders “have been improving”, however, which “during 2017 more than offset the lower forward order book brought forward.”

Clarksons also announced a dividend of 73p per share, up from 65p last year.

(Source: Financial Times)

Sea News, March 13