- Record full year profit for 2024
- 22nd consecutive dividend hike
- Seeing lower freight rates and asset values
Global shipbroking leader Clarkson (CKN) sailed in with another year of record profits and proposed a 7% hike in the annual payout, giving rise to a 22nd consecutive year of dividend growth.
However, shares in the world’s biggest shipping services firm plunged 17% to £36.50 after the FTSE 250 company reported a slow start to the new year and flagged concerns over the global shipping market, with management warning the geopolitical outlook ‘remains uncertain as we enter 2025’.
Investors read geopolitical uncertainty as referring to US President Donald Trump’s tariffs and the threats of charges on Chinese-built, owned and operated vessels sailing into US ports.
PROFITABLE PROGRESS
A recent addition to Nick Train’s Finsbury Growth & Income Trust (FGT), Clarkson’s results for the year ended 31 December 2024 were impressive, showing a 6% jump in underlying pre-tax profit to £115.3 million on revenue up 3.4% to £661.4 million, driven by growth across the business.
Clarkson, which closed the year with a strong balance sheet and free cash resources of £216.3 million, declared a 7% increase in the total dividend to 109p, meaning it has now raised the shareholder reward for 22 years on the spin.
Chief executive Andi Case explained record earnings were delivered despite 2024 being another year of ‘disruption, complexity and opportunity for global shipping markets’.
He also warned: ‘The geopolitical outlook remains uncertain as we enter 2025, with ongoing regional conflicts and trade tensions creating uncertainty for markets reflected by freight rates and asset values currently lower than 2024. The resolution or continuation of these events during the year will provide potential headwinds and tailwinds to the group’s performance as we support our clients through this complexity.’
SECOND-HALF WEIGHTING
Case assured investors that irrespective of near-term headwinds, Clarkson remained committed to investing in the business to ‘ensure we maintain our market-leading position across all sectors’.
The company highlighted continued growth in its forward order book for 2025 and beyond, which provides good visibility of future earnings.
The order book for invoicing in 2025, as at the end of 2024, amounted to US$231 million, $14 million higher than at the beginning of 2024.
Case added: ‘The invoicing profile of this FOB, together with the expected uptick in spot revenues following a slow start to the year, means 2025 is expected to be second-half weighted, as it has been in most years.’
AJ Bell investment director Russ Mould commented: ‘Clarkson looks to be a victim of Donald Trump’s trade war before it has got fully underway. Uncertainty around tariffs has weighed on freight rates and asset values, creating headwinds for the shipping broker.
‘It’s also bad news for so-called star fund manager Nick Train who has suffered multiple years of underperformance with the Finsbury Growth & Income investment vehicle. Clarkson is one of the recent additions to the portfolio and today’s share price slump doesn’t put the investment off to a good start.’
Mould added: ‘Nick Train recently said timing the initiation of new holdings is always tricky but share price weakness in 2024 was a trigger for buying Clarkson. The shipping company’s latest warning will be unwelcome for Train but he’s no stranger to sitting out difficult periods for investments.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
