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Clarkson Expects Lower Profits Due to Depressed Conditions

Clarkson Expects Lower Profits Due to Depressed Conditions

Profits at Clarkson will be “materially lower” in 2016 than in full-year 2015 as a result of lower freight rates, quiet capital markets and weak investor confidence.
In its latest trading update, the company referenced the sharp drop seen in the Baltic Dry Index during the first quarter, when it tested its all-time lows.

Similarly, the Clarksea index had fallen a further 10% since the AGM on 6 May, the shipbroker said in a statement.

“The Clarksons business does however remain highly robust, evidenced by the significant growth in volumes within broking, sales growth in research, an encouraging mandate pipeline within the financial division and a strong balance sheet,” the company said.

The ship broker attributed the falls in those two gauges, which track freight rates, to increased economic uncertainty globally and an on-going imbalance between supply and demand in shipping and offshore.

A rise in the price of oil had driven some return of activity in offshore broking, but the offshore industry remained “depressed”, with the recovery needing to be sustained for some time before confidence could be expected to return and meaningful volumes started coming through.

Sterling´s recent weakness versus the US dollar, if maintained, would provide a “limited” boost to profits.

Lower freight rates and asset values had also led the market to be spot focused, according to Clarkson, which together with quiet capital markets and weak investor confidence led to reduced activity within the financial division.

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