Braemar Shipping Services (BSS) saw more than £10million wiped off its market value today after it said profits for its current trading year were likely to be lower than expected.
BSS, whose operations include technical, logistics and shipbroking divisions, including a presence in Aberdeen, said it was suffering the impact of weak oil and gas markets.
Underlying operating profits before interest, acquisition-related costs and tax for the year to February 28 are now expected to be within the range of £3million to £3.5million.
This excludes a one-off, pre-tax gain of £1.7million from the disposal of BSS’s stake in maritime transportation market data specialist The Baltic Exchange and restructuring costs of about £2.7million.
“This lower forecast is largely attributable to the technical division and, to a much lesser extent, the freight forwarding element of our logistics business,” BSS said in a trading update for October 25 to January 23.
The shipbroking division, which is the largest part of the group, generating more than 40% of total revenue, has “traded well, met its objectives and is on track to meet expectations for the year”, the update added.
But the technical division has continued to underperform,” the London-based firm said, adding: “Previously outlined weakness in the oil and gas sectors has worsened further than the board originally anticipated, impacting the division in several ways – not least a marked deterioration in replacement work.
“Accordingly, we have significantly expanded the management actions originally announced in August 2016 to realign the business.
“This wide-ranging restructuring programme to significantly change the management and operating structure of the division is now substantially complete and has resulted in significant reductions in its ongoing cost base.
“It is expected that the annualised cost savings will be in excess of £6million for the next financial year.
“The group believes that despite an extremely challenging year the decisive actions taken during recent times, in particular in the technical Division, will ensure that it is efficiently structured and well-positioned for the future.”
BSS said it had a strong balance sheet, including net cash holdings of £1.7million as of December 31. This was compared with net debt of £1.6million at the end of 2015.
Recommended for you
