Clarkson PLC: A Global Leader in Shipping
Clarkson PLC is not your usual shipping company as it is a shipping company that does not actually ship anything. Its bread and butter is its ship brokerage business, where it is undoubtedly the biggest and top player in the industry.
Overview
Ticker: CKN
Market cap: £1.213 billion
Share price: £40.45 / 4,045 pence
Founded: 1852
Headquarters: London, England, United Kingdom
(Data accurate as of 27/05/2024)
Breakdown
A majority of Clarkson’s revenue and profit is derived from its shipbroking business, however, they have significantly smaller but growing financial, support, and research divisions.
Source: Clarkson plc’s 2023 Annual Report
Shipbroking
In the global shipping industry, there are two major players: (1) ship owners and operators who have ships to transport cargo, and (2) charterers who have cargo to be transported but who do not have the ships to transport the cargo. A majority of Clarkson’s brokerage business is as simple as Clarkson acting as an intermediary that connects the cargo to be transported with the ships to transport it.
Clarkson’s brokerage is comprehensive. They do not merely cover a single niche or part of the shipping sector. Their brokerage business spans various vessels. They cover:
Dry Cargo – These are ships where the cargo is solid (non-liquid) commodities like grain or mined raw materials.
Container – This is the most popular form of transporting goods globally. These ships carry containers which in turn contain all sorts of goods.
Gas, LNG, and Tankers – These ships are designed to carry liquid cargo, for example, crude oil and gas.
Specialised Products – Clarkson does broking for specialised products, for example, agricultural chemicals.
Offshore Vessels – This includes offshore support vessels, and drilling equipment. Clarkson views and is approaching the offshore renewables sector (for example, offshore wind) as a market to diversify into beyond traditional shipping.
Clarkson’s brokerage services go beyond merely finding cargo space with available vessels. Their brokerage also:
Connects ship owners seeking to sell their vessels with potential buyers.
Through their brokerage provide freight derivative products to shipping companies and institutions
Clarkson is the biggest fish in the vessel brokerage pond. No one matches their volume across all the niches within the shipping sector on a global scale. We foresee their scale and breadth growing as the world continually globalises, and the demand for offshore energy and imported goods rises which in turn requires more vessels which Clarkson can help broker.
Other divisions
Clarkson’s other divisions are small compared to their brokerage. Combined, they make up less than 25% of its revenue or underlying profit before taxation. Nonetheless, these divisions are worth touching on, as each of them is growing their revenues and profit year on year.
Financial
Clarkson has a financial division that offers investment banking, project finance, and asset finance services, enabling their clients in the maritime industry to access capital.
Support
Clarkson provides vessel agency, project logistics, vessel chartering, freight forwarding, warehousing, crew travel, and industrial supplies to ship owners, operators, and charterers. These services are at hand 24/7 and available globally.
Research
The sheer breadth of Clarkson’s brokerage has given it access to a massive amount of data. It is this data that forms the bedrock of its research business, where it provides data and insights on shipping and trade to companies. These companies use these insights to help inform their decision making.
Management
The CEO, Andrew Case, owns USD $30m worth of stock (amounting to circa 1.9% of the company). South Sea Investing is satisfied that this skin in the game means he has an incentive for Clarkson’s continued success. There is some controversy (mostly stoked by the FT) about his salary being £550k annually in addition to significant bonuses, e.g. £ 4.7m plus stock in 2021, however, since Andrew’s appointment Clarkson’s share price has more than quadrupled, and its revenue and profit have similarly both grown significantly since then, I believe this justifies his remuneration. If he continues to obtain the good results that he has previously, and Clarkson continues to go from strength to strength under his leadership, then this is a small price to pay.
Quick look at the numbers
With a net income of £83.8m in 2023 (after subtracting profits attributable to non-controlling interests), Clarkson has a PE ratio of 15. Its gross profit and net income have been increasing year-on-year since 2020, and it has great profit margins of around 96%. The margins and PE here are attractive.
However, it has a PEG ratio of above 1 at about 1.5, which suggests the company is not growing fast enough to justify its current valuation.
Currently, the writer gives Clarkson plc a HOLD rating.
Other write-ups
Another (more concise and better) writeup on Clarkson PLC, written by Special Situation Investing, can be accessed here. I would highly recommend giving this a read.
In an AGM Trading Statement on 1 May 2025, it was announced that 2025 results would be impacted by the macro environment (i.e US tariffs), with underlying profit before tax expected to be down from the last financial year.
Luckily, I saw the RNS before the market opened, and managed to close the position and come out roughly even before the share price dropped to where it is now. Position closed.
This stock probably will recover, but it is unlikely I will be jumping back into this stock under this US presidency unless US foreign policy changes.