Shares in integrated shipping services provider Clarkson (CKN) jumped nearly 12% to £28.90 on 13 August despite a slide in profit half year profits. The company reported pre-tax profit of £18.0m for the six months to 30 June, down from £21.9m this time last year.

Sales declined from £156.8m to £152.6m over the same period.

But investors had been anticipating a sharp fall in profitability following a shock profit warning issued by Clarkson in April.

That reflected soft market conditions in shipping broker markets in the first quarter, according to analysts at broker Liberum.

TRADING IMPROVEMENT

Clarkson says trading has been challenging in shipping and offshore capital markets with the weaker US dollar also making an impact.

Yet talk of improvement in some markets is clearly bolstering investor confidence.

‘We should benefit in the second half of the year from these recent improvements and remain confident in the mid to long-term potential for the group,’ says chief executive Andi Case today.

Investors will be relieved that dividends have not been overly affected, the latest payout rising from 23p to 24p per share.

PROFIT GROWTH FORECAST IN 2019

Liberum’s Gerald Khoo is confident Clarkson will continue to deliver an improved performance and benefit from rebounding shipping markets, prompting a hike in the recommendation from ‘hold’ to ‘buy.’

He predicts a return to profit growth in 2019.

Panmure Gordon analyst Colin Smith is among the bulls as he forecasts dividend growth of over 10% per annum over the next three years.

Smith believes new sulphur regulations from the International Maritime Organisation in 2020 will benefit Clarkson by severely impacting fuel pricing and supply.


Issue Date: 13 Aug 2018