Clarkson sinks as shipping firm warns over profits amid choppy waters
A weaker dollar and lower freight rates within the tanker market took their toll.
Shares in Clarkson tumbled on Monday as the shipping services giant warned over profits after being blown off course by a “challenging environment”.
The FTSE 250 firm said that profits for both the first half and the full year are “anticipated to be materially below those of last year”.
Clarkson blamed choppy conditions in shipping and offshore capital markets, which resulted in transactions being pushed back.
This was compounded by a “quiet period” in sale and purchase activity for the group, the firm said in a stock market announcement.
A weaker dollar and lower freight rates within the tanker market also took their toll.
Shares were down over 23% in morning trade.
“Together these have resulted in a financial performance that is below that previously expected by the board.
“Consequently, whilst it is still too early to determine the exact impact, profits for both the first half and the full year are now anticipated to be materially below those of last year,” Clarkson said.
Last year, the firm booked a half year pre-tax profit of £21.9 million and £45.5 million for the full year.
In August 2017, Clarkson had flagged a “significant increase” in spot broking revenues and rising dry cargo rates, helping to offset lower revenues from its forward order book.
The group said at the time it was “optimistic” that the company was now in a position to capitalise on the upturn in the shipping market “when it occurs”.
Michael Hewson, chief market analyst at CMC Markets UK, said: “Lower freight rates doesn’t tally with optimism over the health of the global economy, though over capacity in the industry has also been a key factor.
“The announcement is all the more surprising because it turns on its head an announcement in March that management were optimistic over a recovery in the shipping market.
“There is the possibility that recent tensions over trade have dented this recovery as customers delay making key decisions.”