Braemar Shipping Services PLC on Monday forecast a big drop in underlying operating profit year-on-year, as underperformance in its Technical division continued to hit group results.
Shares in Braemar were down 16% at 245.70 pence Monday, among the worst performers on AIM, having dropped to 218.00p earlier in the morning. The stock is down 23% in 2017 to date.
The company, which provides services for the shipping, marine, energy, offshore and insurance industries, said it now expects its underlying operating profit before interest, acquisition costs and tax to be between GBP3.0 million and GBP3.5 million for its financial year to the end of February.
In the prior year to the end of February 2016, Braemar reported an underlying operating profit before one-off and acquisition costs of GBP13.8 million.
On Tuesday, Braemar said its expected operating profit for its current year excludes a one-off gain before tax from the sale of its stake in the Baltic Exchange of GBP1.7 million, and one-off costs related to restructuring of GBP2.7 million.
Braemar attributed the weaker underlying performance to its Technical division, which has continued to be hit by weakness in the oil and gas sectors, which has worsened further than Braemar originally anticipated “impacting the division in several ways not least a marked deterioration in replacement work”.
Braemar said it has “significantly expanded” the actions it is taking to realign this business with a wide-ranging restructuring programme. It expects to make annualised cost savings of over GBP6 million for the next financial year as a result of this restructuring.
Meanwhile, Braemar’s Shipbroking division which makes up around 40% of revenue, traded well and is on track to meet expectations for the year.
Braemar said it expects to recommend a final dividend of 5p, taking its total dividend for the year to 14p, nearly halved from the 26p it paid the prior year.
Source: Alliance News