5th Aug 2024 10:40
(Alliance News) - The drop in first-half profit reported by Clarkson PLC on Monday was as expected, analysts said, given the tough comparative provided by last year's record performance.
The London-based shipping and off-shore services provider said pretax profit fell 4.0% to GBP50.1 million in the six months that ended June 30 from GBP52.2 million a year before.
Revenue declined 3.4% to GBP310.1 million from GBP321.1 million.
Clarkson raised its interim dividend by 6.7% to 32 pence per share from 30p last year, representing the 22nd consecutive year of progressive dividends.
Free cash resources stood at GBP178.4 million, up 39% from GBP128.2 million.
Chief Executive Officer Andi Case said: "Supply and demand dynamics both remain favourable, and we expect to start seeing a positive impact from our recent hires in the second half of the year and into 2025.
Profit from the Broking, Financial and Research segments were down year-on-year, although the forward order book is due to deliver better performance in the second half, Clarkson said.
Support profit rose 18% during the recent half, primarily as a result of February's GBP2.0 million acquisition of Trauma & Resuscitation Services Ltd.
The acquisition expanded the Support segment's offering to the oil and gas, marine, and renewable energy sectors through the provision of advanced first aid training.
Clarkson expects its 2024 financial performance to be weighted towards the second half which has "already started well" in line with management's expectations.
Looking ahead, Clarkson said the green transition will remain a key focus for the business, as clients increasingly require support and advice while driving forward their decarbonisation efforts.
Panmure Liberum analyst Gerald Khoo said the slight drop in profit year-on-year was "as anticipated", with a tough comparative provided by last year's record first-half performance.
"The Broking and Financial divisions were short of our expectations, but this was balanced by outperformance relative to our forecasts at the Support and Research divisions, lower central costs than we had anticipated and better than expected interest income," Khoo commented.
Khoo made negligible changes to pretax profit estimates, but raised EPS estimates by 3% for 2024 and by 2% for 2025 due to a lower tax rate assumption.
However, Khoo considers the balance of risks to estimates to be on the upside.
Khoo retains a 'buy' rating on Clarkson despite a 52% increase in the share price over the past year.
"We consider this re-rating to be more than deserved, but still see upside potential, with Clarkson's leading market position in a structural growth market, favourable medium-term shipping industry fundamentals and the long-term value potential in the group's digital activities not reflected in the rating."
Khoo has an unchanged target price of 5,200p based on a discounted cash flow valuation.
Clarkson shares were down 10% to 3,915.80 pence each in London on Monday morning.
Panmure Liberum is corporate broker to Clarkson.
By Jeremy Cutler, Alliance News reporter
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