Global Turmoil To Hit Shipping Services Co. More This Year

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Clarkson Plc. (CKNHF:OTCMKTS; CKN:LSE) has been experiencing adverse effects of various geopolitical, trade and financial events and upheaval of late, the London-based shipping services provider told The Guardian recently.

"2025 has started with more uncertainty than most due to political change, ongoing regional conflicts, increased trade tensions, tariffs and sanctions, inflation, and changing monetary policy across global economies," Clarkson Chief Executive Officer Andi Case said.

The company's share price dropped 20% on March 11 to its lowest since early November 2024, the article pointed out. Clarkson trades on the main market of the London Stock Exchange and is a member of the Financial Times Stock Exchange 250 Index.

Clark noted that charter rates as well as sale and purchase activity have softened since the start of the year, reported Zeus Analyst Robin Byde in a March 14 research report. Some of the impact on Clarkson, according to The Guardian, is due to shipping companies lowering the rates they charge customers, out of fear that new tariffs will hurt their business. Part of this fee goes to Clarkson.

"The resolution or continuation of these events during the year will provide potential headwinds and tailwinds to the Group's performance as we support our clients through this complexity," Case said in a March 10 news release announcing Clarkson's 2024 results.

Providing Global Shipping Services

Founded in 1852 and now operating globally in 24 countries, Clarkson Plc provides a broad range of shipbroking services, on-hand logistical support, full investment banking capabilities, and sector research in all key shipping and offshore sectors, according to its website. (These company units are presented here in order of the most to least revenue generating.)

In its industry, Clarkson is "the clear market leader," and "best-in-class" with a dominant position in all but its financial unit, according to Byde. "Research is particularly impressive with 90% recurring revenue and about 40% operating margins."

The Zeus analyst wrote that Clarkson's fundamentals remain strong, and with a record level of free cash resources, it is well-positioned financially to expand inorganically.

Most recently, Clarkson reported its preliminary earnings for full-year 2024, ended Dec. 31. Pre-tax profit was a record £115.3 million (£115.3M), up 6% year over year (YOY) from £109.2M.

Earnings per share also was up YOY, by 4%, to £286.9 from £275.

The full-year dividend increased 7% YOY to £109, marking Clarkson's 22nd consecutive year of dividend growth.

The shipping services company ended 2024 with its forward order book for invoicing in 2025, totaling US$231M, up from US$217M the year before. Also, the company had record free cash resources of £216.3M, versus £175.4M at year-end 2023.

Forecast: Steady Growth to 2030

The shipbroking market is expected to grow steadily in size through at least 2029, according to The Business Research Co. in January 2025. Specifically, through this period, a 4.9% compound annual growth rate (CAGR) is projected, taking the market to US$1.77 billion (US$1.77B).

The projected CAGR for 2025 alone is 5.2%, which would expand the market to US$1.46B from US$1.39B. This would continue the market's strong growth trend leading up to 2025.

The Business' report ascribed the projected growth through 2029 to geopolitical events, environmental regulations, increasing demand for cargo logistics and maritime transportation services, and rising numbers of ship owners and third-party shipping agencies.

These projections are consistent with those of Zeus Analyst Byde, who asserted in his March 14 report that "shipping has its ups and downs but is a growth industry." He described near-term maritime markets as being "choppy," characterized by waning demand and market dislocation resulting from tariffs.

In the medium term, however, the analyst wrote, the fundamentals across most shipping segments remain strong due to ongoing capacity shortages. Contributors include recent years of fewer orders of bulkers, containers, and tankers, shipowners switching to alternative fuels, and the decommissioning of about 1,300 tankers and dry bulkers.

Ultimately, Byde highlighted, three factors drive shipbroker revenue, growing populations, expanding economics, and greater and more complex international trade, and in the medium term, "seaborne trade growth outstrips global gross domestic product."

"Quality Midcap Name" is a Buy

As for Clarkson's stock, Byde rates it Buy and has a target price on it that implies a 24% return. Now is the time to accumulate shares of this "quality midcap name," he wrote, because they "have sold off sharply, and we believe now fully price in any major slowdown in activity."

The Zeus analyst wrote that Clarkson's fundamentals remain strong, and with a record level of free cash resources, it is well-positioned financially to expand inorganically ("acquire businesses and broking teams, add new offices to the global footprint and invest in the SeaTech-enabled marketplace platform").

Overall, Clarkson boasts solid profit generation, 100% cash conversion, well-supported dividends, and a healthy forward order book, noted Byde.

However, following Clarkson's recent "cautious outlook statement," tied to comments made to The Guardian, Byde revised his 2025 forecasts for revenue and profit before tax (PBT) by 6% and 5%, to £648M and £109.4M, respectively. 

Expecting growth to resume in 2026, Byde maintained his £116M PFT estimate for next year.

Ownership and Share Structure

According to Refinitiv, 87 strategic entities own an aggregate of 10.71% of Clarkson. Similarly, 124 institutional investors hold 55.2%. The rest is in retail.

The company's Top 3 shareholders overall are Royal London Asset Management Ltd. with 4.92%, Fidelity Management and Research Co. with 4.85% and RS Platou ASA with 3.94%.

Clarkson has 30.78 million (30.78M) outstanding shares and 27.47M free float traded shares. Its market cap is £1.44B. Its 52-week range is 3,345−4,675p per share.