Posted on: 19 August 2020
Braemar Shipping Services Plc (LSE: BMS), a leading international provider of shipbroking, financial advisory, logistics and engineering services to the shipping and energy industries, has mad the following trading statement ahead of its Annual General Meeting on August 19, which was held as a closed meeting due to the ongoing COVID-19 pandemic and current government advice.
Shipbroking
The Shipbroking Division has made a strong start to the current financial year having overcome the COVID-19 related operational challenges and downturn in global trade. This has been driven by the Tankers desk where the volatility in the oil markets in March and April led to high spot and long-term charter rates. Although this volatility has now subsided and rates have fallen back to more normal levels, other desks such as Sale and Purchase, Dry Cargo and the Braemar Atlantic Dry FFAs have steadily improved their performance as the coincidence of the oil market imbalance and the initial COVID-19 shocks to the global economy have eased.
The ongoing strategy of diversification and geographic expansion within the Shipbroking Division has continued with the recruitment of a product tankers team for the new Geneva office. The team of four has joined from Lightship Chartering and will strengthen the new office and overall global market coverage in product tanker broking. Overall revenues for the Division for the first five months of the year are running higher than management expectations and above the same period last year, with clear indications that the Division will meet management expectations for the full year.
Financial
The volatility in global markets has led to a number of opportunities for the Financial Division in areas of restructuring, recapitalisation and loan portfolio management. Retainer income has also been robust for the Division’s advisory services. In recent weeks, a number of significant success fees have been invoiced ensuring that the first half of the current financial year will be ahead of the previous year and in line with management expectations.
Logistics
The Logistics Division’s overall trading for the current financial year-to-date is in line with management expectations. The Freight Forwarding business has seen revenue shortfalls due to COVID-19-related slow-down in activity, but this has been offset by careful cost management. The Division elected not to take advantage of the UK furlough scheme and as a result has won some new business in recent months as activity has picked up. On the agency side, revenues have held up well and are in line with management expectations and the same period last year.
Engineering
The Strategic Review of the Engineering Division is nearing completion and Braemar will update the market as and when it is appropriate to do so.
Outlook
Overall, Braemar has continued to trade strongly since the beginning of the current financial year, despite the challenges caused by the COVID-19 outbreak on global trade. None of the Divisions have taken advantage of the UK furlough scheme and all employees have been productive servicing clients at a high level. The health and safety of employees remains a priority and Braemar is grateful for all of their hard work during this period.
In the absence of any further deterioration in market conditions, trading is expected to continue in line with previous management expectations.
