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Shipbroker Clarksons in profit warning for 2016

Shipbroker Clarksons in profit warning for 2016

Shipbroking group Clarksons has warned of “materially lower” profits in 2016 compared to last year due to poor shipping and offshore markets.

In a trading update Clarkson noted its Clarksea index was down 30% in the first half of the year and the Baltic Dry Index (BDI) had fallen similarly sharply.

“This deterioration in freight rates reflects the increase in global economic uncertainty and the continuing imbalance between supply and demand in shipping and offshore,” it commented.

Meanwhile despite the higher oil price recently the offshore sector remained depressed and required sustained recovery. All of this hits revenues and commissions for the shipbroker.

“Overall transaction volumes within the broking division have continued to grow, but the fall in freight rates and asset values has both impacted revenues and driven the market to be spot focussed with little newbuilding activity,” it said.

Brexit has been positive for Clarkson in the sense that the stronger US dollar against sterling is positive in an industry that conducts its business in US dollars. However, overall Clarkson said it expected profits for 2016 to be “materially lower” than 2015.

For 2015 Clarksons reported a GBP31.8m net profit, in a year that saw it complete its merger with RS Platou.

Clarkson stressed its business remained “highly robust” as was, “evidenced by the significant growth in volumes within broking, sales growth in research, an encouraging mandate pipeline within the financial division and a strong balance sheet”.

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