Shipping services group Clarksons (LON:CKN) raised its FY26 guidance after an ‘exceptional’ H1 thanks to strong trading conditions. The firm now expects earnings for the year to be ‘materially ahead of market expectations’.
‘Exceptional’ H1 trading
For the six months to June, Clarksons posted a 39% increase in revenue to £413 million. Underlying pre-tax profit increased 56% to £61.5 million, while underlying EPS (earnings per share) increased 50% to 147.6p.
CEO Andi Case commented: ‘Clarksons delivered a record first half performance, reflecting both the investment into our underlying business and the exceptional volatility caused by the disruption to global trade from conflict including the situation in the Strait of Hormuz. We expect the full year performance of the group to be materially ahead of market expectations.’
The closure of the Strait of Hormuz drove a surge in freight rates and hedging activity as clients rushed to manage price and freight exposure. This was followed by a period of dislocation as ships were out of position and supply chains were disrupted.
Clarkson’s broking division reported its strongest ever H1 results as freight rates soared, expecially in energy markets. At the same time, demand for chartering and risk management solutions jumped as clients sought to offset market volatility.
Clarkson is another great example of a high-quality mid-cap company with global reach just going about its business. It seldom grabs the headlines, but it’s a consistent performer and shareholders have done very nicely out of it.
It’s almost a hedge on rising geopolitical uncertainty, as when tensions rise so does demand for its broking services, which it enhanced with the Link acquisition. Unfortunately, like most hedges these days, it’s no longer as cheap as it was.
As we said previously, we’re not tempted to chase the stock even though it will receive earnings upgrades. However, it would be on our watchlist in the event of a general pullback in markets similar to early 2025.
