Braemar (LON:BMS) reported full-year revenue of £135.6 million for FY2026, down 4% from the prior year, as weaker chartering rates weighed on performance, particularly in the first half. The shipbroking and investment advisory group said underlying operating profit fell 21% to £13.2 million, while underlying earnings per share declined 23% to 24.23 pence.
Group CEO James Gundy, who is stepping down from the role and will be succeeded by CFO Grant Foley, said the company has been “totally transformed” over the past five years. He pointed to revenue growth from £83.7 million in FY2021 to £135.6 million, reduced debt, a broader office footprint and a more diversified revenue mix.
“We’ve brought it back... to very much the basic model,” Gundy said, adding that Braemar now has a business it “fully understand[s].” He said the company has expanded from 14 offices to 19, including recent expansion in the U.S. and an office in Cape Town, South Africa.
Revenue pressures offset by diversification
Foley said the decline in revenue was “really driven by weaker chartering rates,” especially in tankers during the first half. Chartering revenue fell 16% from the prior year, with tanker revenue £9.6 million lower. However, activity improved in the second half, with revenue rising 12% from the first half to the second half.
Investment advisory revenue, which includes sale and purchase and corporate finance, increased by £2 million, or 6%, as asset values remained strong for much of the year. Risk advisory, which includes Braemar’s securities business, rose 29% to £28.8 million. Foley said that growth was driven by higher volatility and the launch of the company’s U.K. Organised Trading Facility.
Foley said the results illustrated the benefits of Braemar’s diversified revenue streams, noting that in U.S. dollar terms, revenue was down only 1%. He said sterling movements affected reported revenue because much of the company’s revenue is dollar-denominated.
Operating expenses fell by £2.7 million, mainly due to lower bonus costs tied to lower revenue. Foley said the company continued to invest in key hires, while travel and entertainment costs declined. Office costs rose £1.2 million because surplus space in Braemar’s London head office, previously sublet, is now vacant, though the company is seeking to sublet it again.
Dividend held steady as cash flow remains positive
Braemar reported operating cash flow of £12.1 million. Net debt at year-end was £2.9 million, broadly in line with the company’s typical working capital cycle, and Foley said the group returned to a net cash position shortly after year-end in March.
The board recommended a final dividend of 4.5 pence per share, bringing the full-year dividend to 7 pence per share, unchanged from the prior year and in line with Braemar’s capital allocation framework.
During the year, the company paid £1.6 million in dividends, completed a £2 million share buyback and purchased £4.1 million of shares for its employee share ownership plan. It also paid £2.6 million to settle outstanding convertible loan notes and paid £1.9 million related to a provision for an independent investigation.
Forward order book improves after year-end
Braemar’s forward order book stood at $72.5 million at year-end, down from the prior year due to a lower chartering forward order book. Foley said it had grown since year-end to just under $78 million at the end of April.
Gundy said the company’s revenue mix has become more balanced since FY2021. He said chartering accounted for 55% of the business, compared with 24% for sale and purchase and finance and 21% for securities. In FY2021, securities represented 4% of the business, he said.
The company also reported revenue per head of £350,000, up from £233,000 in FY2021.
Middle East disruption creates shifting trade routes
Foley discussed the impact of conflict in the Middle East, including reduced tanker traffic through the Strait of Hormuz. He said tanker passages through the strait had fallen sharply after hostilities began, while rates on affected routes rose significantly. However, he cautioned that those rates were not a true measure because “you can’t actually fix a ship” when ships are not moving through the route.
Foley said Braemar has seen more activity shift toward the U.S. Gulf, with new routes serving cargoes that historically would have moved out of the Middle East. He said the company’s diversified platform and strong U.S. business meant the revenue impact in the first two months of the new financial year had been broadly neutral.
“What we’re losing on the fixtures that we would have been seeing in the Middle East, we’re gaining on what we’re servicing and fixing in the U.S.,” Foley said.
Looking ahead, Foley said a reopening of the strait could create opportunities as commercial and strategic oil reserves are replenished and ships may be positioned in the wrong locations. He added that if shipowners remain cautious about using the strait, longer voyages and altered trading patterns could increase freight costs.
Gundy said Braemar’s internal shipping indices showed that markets remained strong across shipping segments. He said the dry cargo outlook looked “very strong,” with less direct exposure to the Middle East conflict than tankers.
CEO transition and FY2030 growth target
Foley, who will become CEO when Gundy steps down, said Braemar made progress on the strategic framework launched last year. The company hired 16 senior brokers, exceeding its target of 10, and opened its first office in Africa. Braemar also centralized claims functions, added 24/7 coverage and appointed a global head of tanker operations.
The company did not complete an acquisition during the year, despite evaluating several opportunities. Foley said Braemar remains disciplined and will pursue transactions only if they are complementary and create shareholder value.
For the new financial year, Braemar is targeting 10 additional broker hires, plans to establish a new securities desk and is embedding artificial intelligence in areas where it can improve productivity. Foley also said the company has received approval to open an office in the Dubai International Financial Centre and expects approval for its European OTF in the first half of the financial year.
Braemar reiterated its target of reaching £200 million in revenue by FY2030. Foley said the path to that target is expected to come from both organic hiring and acquisitions in a fragmented market.
In the question-and-answer session, management said it was making progress on appointing a new head of finance, with a short list in place. Asked about market speculation regarding potential takeover interest from ICAP, Gundy said the company had only heard rumors and noted that Braemar’s shares were undervalued relative to management’s view of the business.
Gundy closed the call by saying the company had delivered “a very robust set of figures” and had become “a completely different business” from five years ago. Foley thanked Gundy for his tenure as CEO and said he was “very excited” to take over the role while continuing to work with him in the business.
About Braemar (LON:BMS)
Braemar provides expert advice in shipping investment, chartering, and risk management to enable its clients to secure sustainable returns and mitigate risk in the volatile world of shipping. Our experienced brokers work in tandem with specialist professionals to form teams tailored to our customers' needs, and provide an integrated service supported by a collaborative culture. For more information, including our investor presentation, please visit www.braemar.com.
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