Braemar (BMS) shares fell 8 per cent after the shipping services company slashed its dividend and said it expects underlying profit to contract again this year.
Management concluded that its dividend policy “has not generated increased equity value to shareholders” as it announced a 46 per cent cut in its annual payout to 7p per share. Cash will be put towards a £2mn share buyback programme.
Shipping markets have been struggling with trade and tariff headwinds which have hit rates. Braemar downgraded guidance in March and the results were in line with revised expectations.
Chartering revenue, which includes sales from tankers, dry cargo and offshore energy services, fell 14 per cent to £89.4mn. The company pointed to rising tanker rates from their lows in the second half but warned that chartering activity in the new financial year has been soft.
The investment advisory arm fared better, as revenue there rose 17 per cent to £30.2mn. Risk advisory revenue was down 3 per cent to £22.3mn.
Underlying operating profit fell by 7 per cent to £16.7mn, and the board now expects a profit of £13mn-£14mn this year on an uncertain macro landscape and a weaker US dollar. Despite market challenges, the margin was flat at 11.8 per cent.
Short-term volatility should be considered against the wider trading context at Braemar, given that the company’s 2025 profit posting was up almost 90 per cent on 2021. And the resilient order book of $82.2mn (£61mn), in line with last year, helps soothe concerns.
Braemar trades on an undemanding 9 times forward consensus earnings. Management is now aiming for annual revenue of £200mn by 2030 on a 15 per cent operating margin. Buy.
Last IC view: Buy, 268p, 6 Nov 2024