Whilst shipping and offshore markets have seen some good opportunities during 2015, overall there have been unprecedented challenges, so we are very pleased Clarksons has once again delivered a robust performance, Clarkson said, in its preliminary results for the twelve months ended 31 December 2015.
Clarksons further noted that, Key to this has been sticking to our strategy of ‘best in class’ service offer, underpinned by unique breadth, global reach and the expertise of our people. Without losing sight of the really important day-to-day service, difficult times often require new solutions. The integrated tool box now available to clients, combined with real execution expertise, has been key to these results and is also essential for the way forward.
According to Andi Case, Chief executive of Clarksons, “In what has been an incredibly challenging year across our markets, Clarksons has delivered a robust performance. Offshore has experienced the most challenging environment, whereas significant movements in commodity prices have changed trade flows, which in turn has created both positive and negative impacts to shipping demand as the volatility has played out. Throughout, our ‘best in class’ service offer, underpinned by unique breadth, global reach and the depth of expertise, has enabled us to not only be at the forefront of activity in the markets, but benefit from a flight to quality as operators look to work with the most experienced and creative solution providers in the industry.
“Once again, seaborne trade grew in 2015. However, the primary concern remains the oversupply of tonnage in a number of the shipping markets, combined with the additional challenge of debt and equity funding increasingly witnessed across the global shipping industry. The geo-political and macro-economic environment remains very uncertain and, as such, we do not anticipate any changes to our markets in the near term. However our business model has proven to be robust and the strategic advances we have made in 2015, coupled with our strong balance sheet, ensure that we are ‘fit for the future’. As we continue to see building blocks for the creation of healthier shipping markets, we feel best placed to capitalize on new opportunities.”
Clarksons completed the acquisition of RS Platou ASA (Platou), a leading international broker and investment bank, focused on the offshore and shipping markets On 2 February 2015.
According to Clarksons, through this acquisition Clarksons combined two leading businesses and highly experienced and proven management teams to create a fully integrated offer across shipping and offshore, broking and banking. The Clarksons' board firmly believes that this deal sets new standards in the broking industry. The integration of two businesses has continued at great pace over the course of the year and is now effectively complete.
Outlook
The challenges witnessed across the global shipping markets have continued into 2016. The macro-economic environment remains very uncertain and as such we do not anticipate any changes to our markets in the near term, Clarksons noted in its preliminary results for the twelve months ended 31 December 2015.
The broker further said, despite this backdrop, growth remains a central plank of our strategy. Market turbulence continues to drive a flight to quality which, as the market leader, we have benefited from. It has also encouraged the consolidation we have seen in the industry in recent years and of which we have been at the forefront. Over the course of 2015 we have taken significant strides to strengthen the fully integrated Clarksons’ offer with the very best people supported by valued research and unique technology, positioning our business for the long-term.
“ challenge and opportunity have been our watchwords in 2015. The global shipping and offshore markets have faced severe challenges throughout the course of the year as the shift in oil and other commodity prices, coupled with the macro-economic environment, gave rise to a consequential change in the demand/supply balance in many market sub-sectors. Whilst these dynamics have regularly made global news headlines in 2015 and their impact has undoubtedly been felt by all connected to the sector, we must remember that ours is an industry which has experienced unparalleled market volatility over the years. At Clarksons, our long-standing strategic focus on developing ‘best in class’ client service, coupled with our unique product breadth and global reach, has allowed us to face these headwinds again and continue to invest in our business, ensuring we are positioned for future opportunity in whichever marine market it shows, says Clarksons' Chief executive in his review.
He furhter noted that, despite the turbulent market environment, we have remained focused on our strategy for long-term growth and at the start of 2015 we were delighted to announce the completion of the transformational acquisition of RS Platou ASA (Platou) which has taken our capability and client offer to a new level. Both businesses are incredibly complementary with very little overlap in terms of service offer and geographic reach. The pace of integration has been good and over the course of the year we have successfully integrated our two businesses. Where each company had operations in the same city; Oslo, New York, Singapore and Dubai, we have brought together our teams into one office. We now have international reach across 20 countries through 46 offices, underpinning our ability to provide clients with invaluable global reach and insight at a local level.
As our business stands today our truly integrated service spans broking, financial, support and research in all the key global shipping and offshore sectors and across all areas of financing; public equity, private equity, debt capital markets, M&A, restructuring project finance and bank debt advisory. During the year we completed the rebranding of our broking and financial services operations as Clarksons Platou to reflect the strength of both brands in their respective marketplaces. This has further enhanced our ‘best in class’ position as we are now a market leader in each of our operations.
In the multi-cyclical shipping markets, this breadth of product offer is vital as our performance in 2015 has shown. The dry cargo markets have remained severely depressed, reflecting the slowdown in Chinese economic output, and the low oil price continues to put offshore operators under significant pressure. However, in contrast, the tankers, specialised products and gas markets have all performed well and the Clarksons teams have been at the forefront of market activity, once again taking increased market share.
As we highlighted over the course of the year, activity levels in the maritime capital markets have been negatively impacted. These markets became increasingly difficult in the second half of 2015 and volumes across Clarksons Platou Securities were substantially down on 2014. However, our teams have worked hard to maintain their leading positions for capital raising in the energy and maritime industries and completed a significant proportion of the corporate activity which took place in the sector. It is encouraging to see that even in these very difficult markets we have still been able to leverage our product portfolio and work closely with clients from our broking and support businesses, supporting them on the execution of their overall strategies.
Our strong client relationships have been built through many years of being the market-leading provider. In tighter, more difficult markets there is often a move to work with the teams who have the expertise, market understanding and placing power to execute in the most difficult of markets and can fully support clients across all their service requirements.
Research and analysis continue to play a crucial role in underpinning our full service client offer. We are the industry’s leading provider of data and market intelligence on the shipping and offshore industries and our trusted research team is by far the largest commercially-led unit in the maritime world. Despite the challenging markets, the increasing strength of our research business reflects the importance we and our clients place on this valuable market insight.
Our long-standing focus and investment in technology has also ensured that the wealth of information across our business can be shared globally, further strengthening the quality of the offer and services that we can provide to our clients on a local basis. This is evident throughout all of our offices where open plan design and technology infrastructure is designed to facilitate the sharing of knowledge and expertise across both our different business divisions and global network to ensure a totally integrated and consistent global offer.
We are a people business. The quality of the people in our business is exceptional and the integration of the Platou team has strengthened that further. The ‘Can Do’ attitude of our combined team, their professionalism, dedication, commitment and sheer determination has been remarkable and allowed us to seize opportunities even in difficult markets and I would like to thank each and every one of them for their hard work over the course of the year.
As we look forward to 2016, the market outlook remains supressed and the challenges in the dry cargo and offshore markets continue to dominate overall sentiment. However, our business model has proven to be robust and the strategic advances and investments we have continued to make ensure that we are ‘fit for the future’. As we continue to see building blocks for the creation of healthier shipping markets, we feel best placed to capitalise on new opportunities.”
Dry cargo – Clarksons View
The dry cargo market endured one of its most difficult years in 2015, experiencing lows not seen since the mid-1980s. The Baltic Dry Index (BDI) established a new all-time low in February 2015 which has since dropped further in 2016. Charter rates across all four main vessel segments hovered around cash operating costs, causing a substantial decline in fleet valuations and exerting pressure on shipowner balance sheets.
The main cause of the weakness has been the slowdown in industrial activity within China, which has had a pronounced impact on the seaborne trade of dry commodities. China represents nearly 40% of the major bulk trade of iron ore, coal and grain and accounts for two-thirds of the iron ore trade alone. In 2015 total global dry cargo trade is estimated to have remained flat with levels from 2014, a material change from the 5-7% growth rate seen during the previous four years.
The dry cargo fleet grew by a net 3% in 2015 after taking into account a relatively high 4-5% of scrapping. Charter rates remained at low levels, irrespective of this scrapping, as the lack of any demand growth meant additional newbuilding tonnage could not be absorbed, Clarksons says.
