Braemar reports record results

(May 15 2009)

Last Monday, UK listed shipping services group Braemar reported the best set of annual results in its history.

Pre-tax profit before amortisation was up by 14% to £17.3 mill (2008: £15.2 mill), while pre-tax profit soared by 10% to £16.2 mill (2008: £14.7 mill). Cash generated from operating activities was £21 mill (2008: £21.2 mill).
Cash at 28th February 2009, the end of Braemar’s financial year, was £25.2 mill (29th Feb 2008: £21.6 mill).

The Final dividend paid was 15.5p per share (up 3%) and for the full fiscal year was 24p (2008: 23p) up 4%.

During the year, Braemar increased its diversification policy by adding to its marine services portfolio resulting in the non-broking side of the business accounting for 25% of the group’s operating profits, before amortisation and central costs.

The estimated forward orderbook deliverable in 2009/10 stood at £29 mill ($42 mill, compared to the 2008 fiscal year forward orderbook of £27 mill ($53 mill).
Braemar’s traditional shipbroking arm enjoyed a very strong first half in buoyant markets. However, this situation rapidly changed from August 2008 with the onset of the credit crisis and global recession.

Global trade experienced a significant slowdown in the final calendar quarter of 2008, since when there has been a stabilisation in shipping rates at pre-boom levels. More recently the reduction in oil demand has led to a fall in the demand for tankers.

While there are renegotiations and cancellations taking place of some charters and newbuildings in the wider market place, to date Braemar claimed that its forward order book has not suffered significantly. The group said that it was set to expand the shipbroking office network overseas.
Braemar’s deepsea tanker chartering department continued to grow market share during the year and in combination with the strong freight rates of 2008, the department produced a significant increase in revenue over the financial year.

However, since the beginning of its fiscal year (1st March, 2009), the rates in all sectors have fallen dramatically due to lower demand for crude oil and products as a result of the global economic downturn.

In the LNG sector, Braemar said that it had secured additional consultancy contracts, as well as an increase in broking short-term period and spot shipments. As in the other tanker markets, the overall volumes transported have reduced, but the utilisation of surplus LNG tonnage is expected as and when the larger projects are completed over the next 24 months.

The specialised tanker sections continued to grow their fixing volumes and Braemar is now operating tonnage on the spot markets and under significant oil company contracts throughout northwest and continental Europe. Petrochemical gas and LPG shipping rates remained consistent during the past year but the excess tonnage in relation to the requirement has diminished the returns for the owners and operators alike.

Braemar took a further step to expand its market position in the VLGC sector by establishing Braemar LPG Connect as a gas product broking business. Together with dedicated VLGC brokers, volumes were expected to grow in this segment.

Source: Tanker Operator