Clarkson shares plummet after record profits due to trade uncertainty

Shares in London-listed shipping company Clarkson have dropped by 21.7% despite the firm reporting record annual profits. The share price fell by 955p to £34.55 amid concerns over the impact of global trade tensions, regional conflicts, inflation, and sanctions. These factors are contributing to increased uncertainty in the shipping industry, said the company’s chief executive, Andi Case.

Clarkson achieved an underlying profit before tax of £115.3 million for 2024, marking a 6% increase year-on-year and its third consecutive year with profits exceeding £100 million. Sales rose by 3% to £661.4 million during the same period, with the company also raising its annual dividend by 7% to 109p, marking the 22nd consecutive year of dividend increases. Despite these strong financial results, concerns about the broader economic outlook weighed heavily on investor sentiment, pushing the share price down.

Challenges affecting global trade have impacted specific areas of Clarkson’s business. Disruptions in key trade routes, such as the Suez and Panama Canals, have added complexity to shipping and freight operations. While conditions at the Panama Canal showed improvement by the end of 2024, traffic through the Suez Canal remains low, which continues to present challenges for global freight movements. Additionally, factors such as weaker growth in the Chinese economy and rising tariffs have reduced confidence in the dry cargo sector, which deals with materials like coal and grain.

The redistribution of energy supply chains, driven by geopolitical events including Russia’s invasion of Ukraine, has significantly altered shipping patterns. Clarkson noted that this reallocation has resulted in the largest increase in tonne miles—a measure of freight transportation over distance—for 15 years, driving strong performance within the dry cargo and container sectors.

The container charter market saw exceptional growth over the past year, though Clarkson identified specific risks in this sector. Improvements in trading conditions in the Red Sea could lead to softer market conditions for containers as shipping flows normalise. While Clarkson’s broking division performed strongly, delivering a profit before tax of £122.6 million, its financial services division saw profits drop to £5.2 million from £6.6 million the previous year due to reduced investor risk appetite amid ongoing geopolitical uncertainties.

Despite the challenges, Clarkson emphasised its long-term resilience and ability to adapt to volatile market conditions. Andi Case highlighted the company’s history of navigating disruptions, stating that it remains well-positioned to support clients in restructuring trade flows and executing deals effectively as market clarity improves.