Challenging Tanker Market Impacts Sovcomflot’s Earnings

  • Business & Finance

The Russian shipping major Sovcomflot has seen its net profit for the third quarter of 2016 drop by 36.2 percent to USD 52.1 million from USD 81.6 million reported in the same quarter a year earlier.

The company’s gross revenue for the period was down to USD 359.1 million from USD 386.2 million seen in the third quarter of 2015, representing a decrease of 7 percent.

“Despite the tanker market conditions being challenging in the third quarter, with spot rates under notable pressure – for the key tanker classes, the rates have dropped by more than a half year-on-year – Sovcomflot achieved good results for the period,” Sergey Frank, President and CEO of PAO Sovcomflot, said.

“We have consolidated further our leading positions in several segments of the global energy shipping market, and have also expanded our long-term time-charter portfolio,” Frank added.

During the third quarter ended September 30, 2016, the shipping firm finalized the acquisition of nine ice-class tankers of MR, LRII, and Aframax classes following a successful bid at auction of assets of Primorsk International Shipping Ltd (PRISCO).

“During the third quarter, we also remained alert to opportunities to add vessels to our fleet that represent a good strategic fit. Over the period we acquired eleven modern and well maintained vessels, that help enhance the overall performance of our fleet and contribute to achieving SCF’s strategic goals,” Frank said.

Additionally, the company concluded long-term credit facilities with several international banks in the third quarter for a total amount of USD 252 million, to complete a series of debt fundraisings totalling USD 1.26 billion, enabling Sovcomflot’s capex requirements to be fully covered.

SCF’s net profit for the first nine months of 2016 was at USD 218.1 million, compared to a net profit of USD 297.9 million reported in the same period in 2015, representing a drop of 26.8 percent, while its gross revenue decreased by 8.5 percent to USD 1.03 billion from USD 1.13 billion recorded a year earlier.

Over the first nine months of 2016, SCF said that five new vessels were launched, including pioneering 172,600 m3 capacity ice breaking LNG carrier (Arc7 ice class) for Yamal LNG project in January, three new Arctic shuttle tankers for Novy Port project in February, April, June, and a new ice-breaking supply vessel to serve Sakhalin-2 project in June.

Sovcomflot, a company involved in the transportation of crude oil, petroleum products, and liquefied gas, as well as servicing offshore upstream oil and gas installations and equipment, has a fleet of 153 vessels with a total deadweight of 13 million tonnes.

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