Clarksons posts highest ever profits and revenues as port congestion and strong energy demand lift shipbroker
- First-half revenues at the world’s largest shipbroker climbed by 40% to £266.7m
- Heavier levels of port congestion particularly helped the group’s broking arm
- Clarksons had raised interim dividend payments from 27p to 29p per share
Shipping firm Clarksons has hailed record revenues and profits as it benefited from soaring freight rates amid a shortage of vessels, and high oil and gas demand.
Revenues at the world’s largest shipbroker climbed by 40 per cent to £266.7million in the first six months of 2022, thanks to strong performances across all divisions of the business.
Heavier levels of port congestion particularly helped the group’s broking arm, as did an increase in oil and gas prices.
Windfall: The global shipping industry has seen profits soar by tens of billions of pounds during the Covid-19 pandemic as companies have hiked ocean container freight rates
The Ukraine war has driven many businesses and governments to seek essential goods like corn and wheat in further-flung places, thereby boosting dry bulk freight rates to their highest second-quarter figure in 14 years.
In addition, Clarksons said its products tanker earnings have been ‘strengthened considerably’ by the war due to rising refining margins and refinery output, as well as the longer distances travelled by ships transporting oil.
This helped to elevate the FTSE 250 company’s pre-tax earnings by over half to £42million and enabled it to raise interim dividend payments from 27p to 29p per share – the 20th successive year it has increased dividends.
The global shipping industry saw profits soar during the Covid-19 pandemic as companies hiked ocean container freight rates.
Last October, the Baltic Dry Index – a measure of the cost to transport raw materials like coal and iron ore – peaked at over 5,700, its highest level since the global financial crisis of 2007/08.
Lockdowns across the world, especially in China, home to many of the world’s busiest ports like Shanghai and Shenzhen, are partly behind the phenomenon.
But it has also been caused by a shortage of staff working on ships and at docks, resulting in delays delivering products, while some have accused shipping firms of price gouging.
Clarksons chief executive Andi Case said that the company had been sounding the alarm for many years about the impact of shipyard closures, weak ordering for new container ships and tighter ship financing would have on supply chain problems.
He expects the business will continue to benefit from the current situation for some time, with freight rates and asset values set to remain strong, and further gains coming from the move to renewable energy.
Case said: ‘The outlook for the business remains strong due to the structural supply shortage in the global shipping fleet, and we continue to benefit from our international footprint, leading market position, diverse offering and a deep understanding of the energy transition.’
Despite the robust results, Clarksons shares were down 3.9 per cent to £34.15 during the late afternoon on Monday, although their value has grown by almost 70 per cent in the past two years.