Better than expected resultspower shipbroker Clarkson (CKN) 7.9% ahead to £22.09, thanks to a 26% rise in underlying pre-tax profit to £25.1 million.

We highlighted the company's potential in our recent Industrial Transportation sector report when the shares traded at £20.64.

Despite a turbulent market backdrop, Clarkson has been consistently profitable and cash generative with chief executive Andi Case arguing that this has enabled the group 'to continue to invest in the business during these challenging times, thus ensuring that we are positioned for growth as activity in our markets resumes.'

Unquestionably, since the credit crunch of 2009 shipping has experienced some of its worst ever market conditions, with rates in the first half of 2013 often below operating costs and asset values reaching all-time lows in some sectors. This has inevitably led to significant distress within the industry.

Signs of nascent recovery were manifest in the markets' volatile growth in the second half of 2013 and the year ended with the ClarkSea index up 79% (from an all-time low) and seaborne trade, growing by a healthy 3.8%, close to the 50-year average.

Both revenues and forward visibility rose in the group's broking division with 2013 turnover coming in at $251 million compared to the previous year's $232.1 million. Forward orders in 2013 advanced to $100 million compared to 2012's $81 million.

Clarkson characterises 2013 as a 'transformative year' for its Capital Markets arm after the group participated and closed 20 transactions - included private equity, initial public offerings (IPOs), follow-on equity offerings, convertible bonds, high yield bonds and financial advisory assignments - raising a total of over US$3.9 billion compared to just four transactions in 2012.

The group continues to grow both organically and through judicious acquisitions; in 2013 Clarkson's head count exceeded 1,000 with an international office network covering 42 locations.

During the year, Clarkson Port Services (CPS) acquired the Aberdeen-based specialist tool supplier Gibb Tools with the deal bolstering the group's product service breadth and complementing CPS's existing port and agency and supply services.

The balance sheet also looked steady at the end of the year with net cash of £75 million on the books. Clarkson's dividend at 56p rose for the eleventh year in a row.

JP Morgan Cazenove has upgraded Clarkson to 'overweight' from 'neutral' with a December 2014 price target of £23.07.

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Issue Date: 10 Mar 2014