Clarkson Hits Record 2023 Global Disruption as Shipbroker Counts 20 Years of Consecutive Dividend Increases
- Clarkson revealed that his pre-tax earnings rose by £40 million to £100.1 million last year.
- The Ukraine conflict and high oil and gas prices have kept freight rates high
- Freight rates declined towards the end of 2022 as port disruption eased
Clarkson posted another record annual performance and declared its 20th straight year of dividend growth, after global trade disruption kept freight rates high.
The world’s largest shipping service provider revealed that its pre-tax profit rose by £40 million to £100.1 million last year, thanks mainly to a strong result from its brokerage division.
Since Covid-related restrictions began to be eased around the world, freight rates have skyrocketed amid major port congestion caused by a rising demand for goods and a shortage of vessels.
Blockages: Shipping rates have skyrocketed around the world amid major port congestion caused by a rising demand for goods and a shortage of vessels.
clarkson shares they rose 6.1 per cent, or 200 pence, to £35.05 on Monday morning, making it the second-best performer in the FTSE 250 Index behind Aston Martin Lagonda.
The company’s share price has grown by about a quarter in the past two years.
Russia’s large-scale invasion of the Ukraine and the consequent rise in oil and gas prices, which were already rising due to post-Covid demand, have kept product transportation costs high.
Due to the conflict, many vessels have had to pick up certain bulk commodities such as grain and coal, as well as oil or liquefied natural gas, from much further afield or take longer voyages for security reasons.
This led the ClarkSea Index, a daily weighted average rate of earnings for ships and a major shipping metric, up 30 percent to a record $37,253 per day.
Although freight rates fell towards the end of 2022 as port disruptions eased and the container trade came under increased pressure, Clarkson still managed to increase total revenue by more than a third to £603.8m.
Having paid a provisional payment of 29 pence per share to investors in September, the group has recommended a final dividend of 64 pence per share, meaning it has now reached two decades of successive dividend increases.
Against a backdrop of heightened economic uncertainty, Clarkson told investors on Monday that “chronic underinvestment” and the need to decarbonise the shipping industry should further fuel growth.
Chief Executive Andi Case said: “While the global geopolitical outlook for 2023 and beyond remains uncertain, the green transition is driving significant activity in our industry.”
“This, coupled with a supply-demand balance that will create significant supply-side constraints that support the market, and our strong order book going forward, gives us confidence in Clarksons’ prospects.”
Gerald Khoo, an analyst at broker Liberum, said the long-term decline in shipyard volumes has been exacerbated by tight bank financing, contributing to a shortage of dry bulk and tanker orders.
Capacity is being further reduced by environmental legislation causing some ships to retire early as many financiers are unwilling to finance retrofitting of older vessels.
