LONDON (ShareCast) - (ShareCast News) - International provider of broking, consultancy, technical and other services Braemar Shipping Services issued a trading update on Monday, covering the period from 25 October to 23 January.
The London-listed company said its underlying operating profit before interest, acquisition related costs and tax for the year ended 28 February was now expected to be within the range of £3m to £3.5m.

That excluded a one off gain before tax from disposal of its interest in The Baltic Exchange of £1.7m, and one-off costs associated with restructuring of approximately £2.7m.

Braemar said that lower forecast was largely attributable to the technical division and - to a much lesser extent - the freight forwarding element of its logistics business.

"The shipbroking division, which is the largest part of the group generating over 40% of expected group revenue, has traded well, met its objectives and is on track to meet expectations for the year," the company's board said in a statement.

"However, the technical division has continued to underperform.

"The 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."

As a result, Braemar's board said it had 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 £6 million for the next financial year."

Within the company's smaller logistics division, the port agency business reportedly continued to perform strongly, although the freight forwarding business was affected by a reduction in market activity.

Overall, the logistics division's performance hds fallen, but the board said that will only have a small impact on the overall group results.

"The board's intention for the medium and longer term is to pay a dividend appropriately covered by earnings from underlying operations.

"It expects to recommend a final dividend for the current financial year of 5p which, together with the interim dividend of 9p paid in December 2016, will make a total for the year of 14p."

The group reported it had maintained a strong balance sheet, including a net cash position at 31 December of £1.7m - compared to net debt of £1.6m at 31 December 2015 - against an unused group debt facility of £30m.

"Braemar remains committed to the ongoing development of a diversified portfolio of broking and advisory businesses within its market sectors.

"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."

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