Braemar Shipping Services (LSE:BMS) PLC hiked its dividend 80% and said demand for its shipbroking services in the past five months has been “exceptionally strong”.
The group issued two statements: one of annual results for the year to February that showed revenue from continuing operations increasing 21% to £101.3mln, underlying operating profit climbing 31% to £10.1mln and profit before tax jumping 66% to £8.5mln, and the other being a trading update for the start of the new financial year.
Braemar said it expects the current year’s underlying operating profit to be at least £20mln, as the “growing scale and breadth of its broking operations” have led to increased activity levels, with an extra benefit from the strong dollar. The board's previous expectations were for £12mln of underlying operating profit.
Activity has been particularly strong in the derivatives, sale and purchase, and corporate finance markets.
“We are now beginning to see the benefits of streamlining the group and focusing on our core shipbroking activities,” said chief executive James Gundy.
“Braemar is leaner and stronger than it was just a few years ago. Our growth strategy is delivering results and we are extending our global reach. We look forward to the future with ambition and a high degree of confidence.”
For the past year, the board recommended a final dividend of 7p per share, which was said to reflect the strong cashflow and confidence in the business, making a total dividend for the year of 9p per share, up from 5p the previous time.
The forward order book has increased by 15% to US$50mln.
Braemar said it is seeing elevated numbers of new shipbuilding orders, principally in the container and gas carrier sectors, meaning capacity at many shipyards is now unavailable well into 2025.
“For shipowners in other sectors this is making it challenging for them to renew their fleets and they're turning instead to the second-hand market. These dual factors have created significant opportunities for our sale and purchase desk, and they have capitalised on them,” the company said.
“Over the next couple of years, these factors are likely to prove positive for our chartering desks too, as reduced ability to replace retiring ships is expected to constrict vessel supply and consequently create a higher floor on future charter rates.”
Following its slimmed down focus, investments in people, technology and new offices, the board said it looked forward to “another strong year of trading as these benefits continue to compound”.