Continuing to build momentum: trading well ahead of last year, interim dividend planned
Posted on: 22 September 2021
Braemar Shipping Services Plc (LSE: BMS), a leading international shipbroker and provider of expert advice in shipping investment, chartering, risk management and logistics services, is pleased to make the following trading update relating to trading for the six months to 31 August 2021.
The new management team is encouraged by the performance of the Group in the first half of the year, where trading has been well ahead of the same period last year. The Board is pleased to see its recent investment in people to increase the strength and diversity of services offered to clients paying dividends. Following the upgrade to market forecasts and the adoption of a progressive dividend policy that followed its full year results announcement, the Group continues to trade well and is now modestly ahead of those upgraded expectations.
The Shipbroking Division had a strong first half of the year and has benefitted from the investment in recent years to build the Dry Cargo and Securities desks, which have both achieved a good trading performance. The Sale and Purchase desk has also been very active on the back of the buoyant dry bulk and container markets. As anticipated the Tanker market continues to be affected by the pandemic-related weaker demand for oil, in comparison with the exceptional conditions seen in the previous year that were driven by demand for storage capacity. Overall revenue and profits for the period were higher than in the comparative period last year.
The strong trading in Sale and Purchase, Dry Cargo and Securities looks set to continue in the second half of the year as the demand for dry bulk and container capacity remains high. Whilst the tanker market remains flat, there are already indications that demand will strengthen as global demand for oil increases. The forward order book has increased in the first half of the year and is expected to close the half year at $56m compared to the $43m seen at the beginning of the period. Revenue and profits for the full year look set to exceed the previous year and meet current expectations.
The resurgent interest in the shipping industry from both a lending and equity investment point of view has meant that the Financial Division, Braemar Naves, had a successful first half of the year. Several restructuring opportunities and one significant leasing transaction in the container market were closed during the period, and revenue will consequently be significantly higher than in the first half of last year. Whilst the nature of the corporate finance work that is done by Braemar Naves means that revenues can be unpredictable, current activity levels point to a strong year as a whole.
The Logistics Division, Cory Brothers, had a strong first half of the year, particularly from its Freight Forwarding activities. The pressure on container space and Brexit-related import/export complexities has led to greater demand for its services with a consequent increase in revenue and profits compared to the same period last year. Trading has also been good on the Port Agency side and, overall, the Division is expected to continue trading ahead of last year and in line with our expectations.
The planned joint venture for Cory Brothers with Vertom Agencies is progressing well and is expected to be concluded during the second half of the financial year. Once completed Braemar will have disposed of the current Cory Brothers legal entities in exchange for a significant minority stake in a much larger European port agency business. In anticipation of this transaction completing, those assets are likely to be classified as ‘held for sale’ in this year’s interim results and then the joint venture interest will be accounted for as an associate following completion.
The Group has traded well since the beginning of the current financial year and will deliver interim results well ahead of the interim period last year and modestly ahead of the upgraded expectations. The board continues to look forward with confidence as it sets about delivering on its growth strategy and expects to announce an interim dividend with the interim results for the period to 31 August 2021 which will be released to the market in early November 2021.