Restructuring costs impact Braemar interims; dividend maintained

Shipbroking and service provider Braemar has reported an underlying operating profit of £1.4m for its first half to August 31st, down from £7.1m in the same period last year. A one-off restructuring cost of £1.8m was partially responsible for the decline. Revenue in H1 was £70.2m, compared with £79.6m in the same period last year. The interim dividend has been kept unchanged at 9.0p a share, despite underlying EPS falling to 3.9p, from 18.6p in H1 2015.

Braemar noted that the shipbroking division had achieved “a resilient performance in volatile conditions”. The company said that transaction volumes had improved and that shipbroking was “well placed for any upturn as it arises”.

The total shipbroking forward book as of August 31st 2016 was about $46m, of which about $22m relates to the second half of 2016/17.

A sustained weaker sterling exchange rate against the US dollar will benefit earnings, “although the full beneficial impact will not be evident until the next financial year due to our rolling hedging policy.”

The technical division has suffered from “industry-wide activity reductions, especially in oil and gas exploration”. Braemar said that it had implemented a programme of management change and business restructuring “to realign the division to current market conditions”. The division booked an operating loss of £2.0m for the half, including £1.5m of restructuring costs.

The logistics division had “won a number of significant new contracts”.

Braemar chairman David Moorhouse  said that Braemar’s divisions had “worked hard in the challenging markets that we face and our senior management teams are taking difficult actions where needed to restructure our businesses to address this economic climate.”

He also noted that the board expected the underlying financial performance for the full year “to be in line with current market expectations following the actions we are taking to make structural changes within the Group”.

Braemar said that it does not believe that demand for its services will be materially impacted by the forthcoming Brexit process or any associated market volatility. “However there may be secondary economic effects that are currently difficult to foresee. Britain’s intention to withdraw from the EU does not currently affect our long term growth and diversification strategy.”