Clarkson rallies following shipping crisis
SHIPBROKER Clarkson is beginning to see a lull in the storm that has battered the shipping industry for years.
The FTSE 250 company posted a rise in revenue and profits in the six months to June 30, and Andi Case, the chief executive, said there were at last signs that the market could be improving.
“Between 85pc and 95pc of all goods travel by sea, but the market has suffered from a fundamental oversupply of ships for years,” said Mr Case.
The industry has been hit by a surplus of ships chasing too few cargoes, driving down shipping prices, while the low oil price has also subdued demand for oil tankers.
“That saturation of the market is now turning into a more normal oversupply, meaning that conditions are starting to ease. We’ve seen some shipyards going bankrupt in a sign that the oversupply is beginning to end.”
Mr Case, who became chief executive in 2008, said the industry had strong fundamentals, with the dependence on shipping for international trade meaning the sector’s growth is closely correlated with global GDP fluctuations.
“Demand is growing as population grows,” he said. “In 1990, 0.8 tonnes of goods per person were transported by sea. Now that figure is 1.5 tonnes per person, and the world population continues to rise – but the issue is that the shipping market is quick to react to any oversupply.”
In the first half of the year, Clarkson – the world’s largest shipbroker – reported headline revenues up 6.5pc to £156.8m and pre-tax profit 12.4pc better at £24.5m. The broking business, which represents the bulk of the company’s revenue, saw sales rise £2.5m to £118m, generating an underlying profit of £21m, 8.8pc higher on last time round. Mr Case said that while the improved margin was “a reflection of improving volumes”, he added that Clarkson’s size has allowed it to keep investing through the downturn.
This investment means that the company’s research now covers 30 billion datapoints, including tracking commercial vessels every 15 minutes, giving it what the chief executive called “a very granular insight into exactly what is going on in the industry”.
London is currently seen as the global hub for the shipping industry, and Mr Case said that Brexit was unlikely to affect this. “Apart from the
Investment has given Clarkson ‘a very granular insight into exactly what is going on in the industry’
currency impact there has been nothing from Brexit,” he said. “Any changes to the maritime cluster in the UK will be for other reasons – the non-doms tax, for example, had a bigger impact, as shipowners went elsewhere, and we are also seeing other shipping centres offering incentives to attract business, such as lower taxes.”
Clarkson suffered a 26pc shareholder revolt at its annual meeting over Mr Case’s £3.7m remuneration, but he batted away questions about his pay, adding: “I am proud of my record here.”
Shares ended up 2pc at £26.95.