Shipping company Clarksons has seen a drop in profits due to a reduction in commodity prices.
In an interim results statement released on Monday (August 17th), the firm has reported that pre-tax profits slipped to £10.8 million in the six months to the end of June. The figures are down from £14.1 million in the same period last year.
Commenting on the results, chief executive Andi Case explained that the data illustrates how easily the markets can change.
"The multi-cyclical and volatile nature of our markets has once again been demonstrated by the sudden shift in oil and other commodity prices," he said.
Commodity prices down
Over the last six months, the global shipping industry has a lot to contend with, particularly in regards to falling commodity prices. The Baltic Dry Index (BDI), which provides a gauge of shipping costs – has dropped to its lowest point in about 30 years. The market has also been dragged down by a combination of oversupply and a slowdown in "seaborne demand".
A decline in crude oil has also meant that offshore drilling has dropped to less than $50 (£32) a barrel – last summer a barrel of crude was around $115. Clarksons said the offshore oil industry was "in a more challenging state than seen in many years" and that "few listed players are prepared to increase exposure or to raise capital for new projects."
While the drop in oil prices is problematic for the firm, the lower fuel costs could also provide a benefit and contribute to "a more positive growth story."
The company explained in a statement: "There is a reason to believe that the market will have further upside, especially as the seasonal demand story impacts in the fourth quarter."
Earlier this year, Clarksons acquired Norwegian shipbrokers Platou for £280 million. Administrative costs during the period rose 29 per cent to £115.4 million in response to the merger. And the firm estimates it will see cost savings of £4 million a year in the long term.
Mr Case said he was "delighted" about the purchase and that the integration of the two businesses "has been going well".
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