Braemar Shipping shares hit as oil and gas headwinds knock profits
Braemar's share price plummeted over 16 per cent today after the shipping firm revealed spiralling restructuring costs are threatening to wipe out operating profits.
The London-listed firm revised its operating profit before interest down to between £3m and £3.5m. On top of this, the firm is facing a bill of £2.7m to put the business on an even keel.
Nevertheless, Braemar's sale of its interest in the Baltic Exchange, netting it £1.7m, is likely to mean the group will keep its head above the water.
Read more: RBS sets sail to £235m of loans
Employing 1,000 people across 70 locations, Braemar is grappling with the impact of weakness in the oil and gas sector on its technical engineering division. It said this was worse than previously expected and had led to "a marked deterioration in replacement work".
Accordingly, we have significantly expanded the management actions originally announced in August 2016 to realign the business.
In its interim results statement in October, Braemar revealed earnings had flopped and a restructuring programme had begun.
Sources close to the company told City A.M. that mitigating actions to stem the tide were being performed by an in-house team.
Read more: Aggreko revenues fail to light up as US oil downturn weighs on firm
In October, annualised cost-savings were expected to be around £3m. The firm said today it expects the savings more than double, jumping to £6m per year.
The firm added: "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."