Clarkson Plc · LSE:CKN
Clarkson — FY2021 Earnings Presentation
41 slides from Clarkson's earnings presentation, Mar 7, 2022
Slide 1: Results presentation
Results presentation 31 December 2021 Andi Case & Jeff Woyda 7 March 2022
Slide 2: Agenda
Agenda 1 Financial results 2 Markets 3 Outlook Results Presentation | 31 December 2021 2 Andi Case & Jeff Woyda | 7 March 2022
Slide 3: Highlights
Highlights • Record year for underlying profit • Particularly strong performance in Broking and Financial Services • 19th consecutive year of dividend growth • Forward order book going into 2022 is significantly larger than at the same time last year • Robust balance sheet with increased free cash r
Slide 4: Financial results
Financial results Jeff Woyda Chief Financial Officer and Chief Operating Officer 4
Slide 5: Results summary
Results summary To 31 December 2021 2020 £m £m Revenue 443.3 358.2 +23.8% Underlying profit before taxation 69.4 44.7 +55.3% (Before exceptional items and acquisition related costs) Underlying earnings per share 165.6p 106.0p +56.2% (Before exceptional items and acquisition related costs) Results Pr
Slide 6: Results summary
Results summary To 31 December 2021 2020 £m £m Revenue 443.3 358.2 +23.8% Underlying profit before taxation 69.4 44.7 +55.3% (Before exceptional items and acquisition related costs) Exceptional items* - (60.6) Acquisition related costs (0.3) (0.5) Profit/(loss) before taxation 69.1 (16.4) (after exc
Slide 7: Segmental performance
Segmental performance Revenue, profit and margin Revenue Revenue Profit Profit Margin Margin 2021 2020 2021 2020 2021 2020 £m £m £m £m Broking 340.0 282.6 73.6 55.4 21.6% 19.6% Financial 56.0 33.9 13.3 2.5 23.8% 7.4% Support 29.6 24.9 3.3 1.7 11.1% 6.8% Research 17.7 16.8 6.1 5.6 34.5% 33.3% Results
Slide 8: USD v GBP Exchange Rate
USD v GBP Exchange Rate GBP 1 is worth the following in USD 2021 2020 Arithmetic average for the year 1.3760 1.2923 Spot rate at year end 1.3496 1.3669 Results Presentation | 31 December 2021 8 Andi Case & Jeff Woyda | 7 March 2022
Slide 9: Sea/ related IT costs
Sea/ related IT costs to 31 December 2021 2020 £m £m Items taken to income statement Non capitalized items (Sea/ only) (8.5) (5.4) Amortisation (1.4) (0.5) 2021 2020 £m £m Software-related intangible assets as at 1 January 15.6 9.8 Additions 2.8 6.3 Amortisation (1.4) (0.5) Software-related intangib
Slide 10: Sea/ by Maritech
Sea/ By Maritech Cargo volumes (MT) concluded through platform in the first 12 months EXECUTION 188,000 160,000 • Successfully launched the first freight trade negation platform backed by the industry and implemented by 5 out of the 10 largest mining 7,280,000 165,000 55,000 167,290,000 corporations
Slide 11: Sea/ by Maritech
Sea/ By Maritech INTELLIGENCE • Tracked and collected data for more than 166 million tons of cargo covering 11 million nautical miles and emitting 4.7 million tons of CO₂ • Introduced pre fixture carbon estimation capabilities within the Sea/ suite of products enabling our customers to assess carbon
Slide 12: Balance sheet
Balance sheet At 31 December 2018 2019 2020 2021 £m £m £m £m Tangible fixed assets 29.3 28.9 28.6 24.7 Intangible fixed assets (software only) 5.4 9.9 15.6 17.1 Investments (relating to convertible bonds) 6.7 6.7 5.5 0.7 Investments (other) 4.8 4.8 2.9 1.0 46.2 50.3 52.6 43.5 Working capital 18.9 14
Slide 13: Net available funds and free cash resources
Net available funds and free cash resources 31 December 31 December 2021 2020 £m £m Cash and cash equivalents 261.6 173.4 Interest-bearing loans and borrowing - (0.1) Current investment deposits 9.6 22.8 Net cash equivalents 271.2 196.1 Reserved for bonus (full cost) (148.9) (100.7) Net available fu
Slide 14: Movement in free cash resources
Movement in free cash resources 1 January 2021 to 31 December 2021 Results Presentation | 31 December 2021 14 Andi Case & Jeff Woyda | 7 March 2022
Slide 15: Forward Order Book (FOB)
Forward Order Book (FOB) For invoicing in the following year 2021 for 2022 2020 for 2021 US $m US $m Directors’ best estimate of deliverable FOB 165 116 Results Presentation | 31 December 2021 15 Andi Case & Jeff Woyda | 7 March 2022
Slide 16: Dividend history
Dividend history 19 years of progressive dividend 57 53 54 50 51 40 43 39 37 32 33 30 26 27 26 24 22 16 11 24 25 25 27 9 21 22 22 23 16 16 17 18 18 19 12 14 7 9 10 6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Interim Final Deferred 2019 final
Slide 17: Clarksons ESG
Clarksons ESG As the global leader in shipping, we believe it’s our role to support smarter, more sustainable trade across the maritime industry. We are committed to being a responsible business, working with our clients, people and communities to make a positive contribution to the world we live in
Slide 18: Our approach to reporting
Our approach to reporting We hold ourselves accountable for becoming a more sustainable business Gender Pay Gap Reporting EcoVardis Sustainability Reporting Published annually, this report sets out differences in mean and This sustainability assessment requires us to provide evidence of having media
Slide 19: Markets
Markets Andi Case Chief Executive Officer 19
Slide 20: Where are we in the cycle?
Where are we in the cycle? Timeline of each cycle not defined and varies Containers Weakening market Strong market Dry Bulk Offshore renewables (wind) Chemical/Specialised Tankers Recovering market Weak market LPG Offshore LNG Crude & Products Tankers Results Presentation | 31 December 2021 20 Andi
Slide 21: ClarkSea Shipping Index
ClarkSea Shipping Index 55 50 45 40 35 K $/day 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Average 16,879 15,316 10,679 19,125 30,980 27,569 24,622 33,061 32,660 11,331 15,491 12,315 9,577 10,263 11,743 14,410
Slide 22: World Seaborne Trade – Historic
World Seaborne Trade – Historic 13 13 12 12 11 11 10 10 9 9 8 8 Billion tonnes Billion people 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Major dry bulk
Slide 23: All Types Fleet Deliveries & Orderbook
All Types* Fleet Deliveries & Orderbook 4,000 3,500 3,000 2,500 No. of Vessels 2,000 1,500 1,000 500 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ Tanker Bulk Carrier Container Ship Gas Carrier
Slide 24: Orderbook as % of Global Fleet
Orderbook as % of Fleet 100% 20% 90% 18% Orderbook as % of fleet for individual sectors 80% 16% Orderbook as % of Global Fleet 70% 14% 60% 12% 50% 10% 40% 8% 30% 6% 20% 4% 10% 2% 0% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Feb-22 Dry Bulk (Dwt) Con
Slide 25: Demolition Trends
Demolition Trends 1,600 70 1,417 1,400 60 1,163 1,179 1,181 1,200 50 1,013 967 979 1,000 No. of Vessels 851 854 40 MM dwt 800 704 632 645 658 623 599 597 30 560 580 600 543 473 496 465 393 20 400 297 304 236 200 10 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2
Slide 26: Sector Fundamentals Outlook Comparison
Sector Fundamentals Outlook Comparison Demand Growth Fleet Growth (BN Tonne-Miles*, % Chg 2021–2023) (% Chg 2021–2023) LPG & Ammonia LPG & Ammonia 16.1% 9.9% LNG 17.5% LNG 12.2% Chemical / Specialised 8.7% Chemical / Specialised -0.3% Crude & Products 13.9% Crude & Products 2.2% Dry Bulk 6.1% Dry Bu
Slide 27: Green Transition – LNG Fuel Adoption
Green Transition – LNG Fuel has seen the biggest adoption across the Fleet Increasingly orders are for alternative fuels Existing Vessels already burning Alternative Fuels Orderbook to be burning Alternative Fuels (excl. LNG carriers (excl. LNG carriers) 80 140 70 120 60 100 Number of Units Number o
Slide 28: Manufacturing PMIs
Manufacturing PMIs Widespread fiscal stimulus in support of world steel demand and in turn drybulk raw materials Manufacturing PMIs in Big 4 Economies Selection of Commodity Prices 70 70 370 1000 65 65 320 900 60 60 800 270 Contraction | Expansion 55 55 700 USD/Ton 220 USD/ton 50 50 600 170 45 45 50
Slide 29: Russia And Ukraine's Maritime Role In Context
Russia And Ukraine’s Maritime Role In Context % Of Global Seaborne Exports (2021) Russian Fleet, % Of Global (GT) 3% 18% 16% 2.4% Russia Ukraine 14% 2.1% 12% 2% 10% 8% 1.2% 6% 1% 0.8% 4% 0.6% 2% 0% Chemicals Containers* Minor Bulk Iron Ore Grain LNG LPG Coal Oil Products Crude Oil Total Seaborne 0%
Slide 30: Russia & Ukraine Dry Bulk Exports
Russia & Ukraine Dry Bulk Exports Russia exported 430mt and Ukraine exported 125mt in 2021 Russia Main Dry Bulk Exports in 2021 (in Mt) Ukraine Main Dry Bulk Exports in 2021 (in Mt) Seaborne 35mt, EU & UK 30 mt 17mt to China • Immediate implications - Closure of Ukraine ports led to a loss in seabor
Slide 31: Russia/Ukraine Impact on the Tanker Market
Russia/Ukraine Impact on the Tanker Market 320,000 300,000 Short-term: 280,000 Immediate impact with several markets 260,000 240,000 seeing spikes in rates. 220,000 200,000 180,000 Medium-term and longer-term: 160,000 Strong potential for pivot away from 140,000 120,000 short-haul Russian oil trade
Slide 32: Container Shipping Market Trends
Container Shipping Market Trends Extraordinary all-time record box freight and vessel charter markets Containership Charter Rate Index Spot Container Freight Rate Index (SCFI) 6,000 450 400 5,000 350 4,000 300 250 3,000 200 150 2,000 100 1,000 50 0 0 Jan-11 Jan-21 Jan-10 Jan-12 Jan-13 Jan-14 Jan-15
Slide 33: Container Shipping Sector "Perfect Storm"
Container Shipping Sector “Perfect Storm” Combination of factors driving spectacular markets Rebounding Volumes “Disruption Upside” / Congestion Moderate Supply Growth Global Container Trade Boxships In Ports Globally, mTEU, 7 dma Containership Fleet Capacity Growth, % y-o-y 9.5 10% 16% Millions 14.
Slide 34: Strong Global Box Trade Growth
Strong Global Box Trade Growth Box trade volumes have rebounded to above pre-Covid levels Annual Growth, % TEU Global Volumes, Quarterly, mTEU Monthly Growth, % y-o-y & % vs 2019 15% 25% 48 % y-o-y Millions 20% % vs 2019 10% 46 15% 5% 44 10% 42 5% 0% 0% 40 -5% -5% 38 -10% -10% 36 -15% -15% 34 -20% 2
Slide 35: Containership Market Momentum Still Extremely Firm
Containership Market Momentum Still Extremely Firm Near-term outlook highly positive, prolonged “disruption upside” through 2022 Spot Box Freight Rates, SCFI Comprehensive Index Global Seaborne Container Trade 6,000 Index 16 mTEU Container freight still around 5,000 all-time record levels 15 4,000 1
Slide 36: Containership Supply-Demand Outlook
Containership Supply-Demand Outlook Outlook for 2022 very positive, pressures could evolve through 2023-24 Record markets driven by rapid 10% % y-o-y growth Trade (TEU-mile) Growth rebound in trade combined with major “disruption upside” Capacity Growth (Total) 8% 6% 4% 2% 0% -2% Pressure likely to
Slide 37: Offshore Recovery in Oil and Gas and Offshore Wind (I)
Offshore seeing recovery in traditional Oil and Gas and continued strong growth in Offshore Wind (I) Offshore E&P-spending turning (USDbn) Offshore rig count increasing again OSV rates improving (Clarksons OSV index) 200 550 250 500 200 150 450 150 100 400 100 50 350 50 300 0 0 2017 2018 2019 2020 2
Slide 38: Offshore Recovery in Oil and Gas and Offshore Wind (II)
Offshore seeing recovery in traditional Oil and Gas and continued strong growth in Offshore Wind (II) Subsea EPC backlog building (USDbn) Strong growth in Offshore Wind (GW) Strong Wind demand for Subsea O&G vessels 300 Subsea vessels in offshore wind 40 140 250 120 Offshore wind, cumulative, GW 30
Slide 39: Outlook
CLARKSON PLC — = — —— — CS Outlook
Slide 40: Outlook: Tailwinds vs Headwinds
Outlook Tailwinds vs Headwinds Headwinds…? Exchange rate Black Swan Sentiment USD vs Covid-19 - is it Uncertainty GBP,NOK… over Inflation War – how long and how deep Tailwinds Markets Company Supply side Regulation & Renewables Forward order Cash Progressive challenged Client GHG book generation div
Slide 41: Thank you
Thank you Commodity Quay St. Katharine Docks London, E1W 1BF UK www.clarksons.com