Shares in Clarkson, the world’s biggest shipbroker, lost a fifth of their value after it warned that weak global trade would cause a large fall in annual profit.
In an unscheduled trading update, Clarkson said the rates it could charge for shipping freight fell sharply in the first half of the year because of global economic uncertainty and a fall-off in trade. The statement did not mention the UK’s vote to leave the EU.
The Baltic dry index, which measures shipping rates, has dropped in recent months and came close to record lows in the first quarter of the year, Clarkson said. The group warned at its annual general meeting last month that trading was difficult and it has deteriorated further since.
Clarkson said: “Whilst recent strengthening of the US dollar against sterling, if sustained, will offer some limited enhancement to reported profits, the board nevertheless now anticipates … profits for 2016 will be materially lower than the full year 2015.”
The company’s main activity is arranging for businesses to charter ships to transport their goods. It also helps shipping companies raise finance and provides research and support services such as logistics and equipment.
Broking transactions have increased but freight rates and the value of ships have fallen, reducing activity in Clarkson’s financial division. The company said its business was resilient with a strong pipeline of financial business and a strong balance sheet.
Clarkson shares fell as much as 23% and were down 18% at £18.13 in late morning trading. The shares have fallen by more than a third in the past year as concerns have mounted about the prospects for world trade amid a slowdown in China, the world’s biggest consumer of raw materials transported by ship.
Colin Smith, an analyst at Clarkson’s house broker Panmure Gordon, cut his forecast for 2016 pretax profit by 21% to £43.1m. Clarkson made £50.5m profit last year.
Smith said: “Profits are under pressure, notwithstanding the strength of Clarkson’s underlying business performance. Shipping is a cyclical business, so the timing of recovery is uncertain but we believe it is prudent to assume that it is likely to be delayed into 2017.”
