Sovcomflot Navigates Back to Black

OAO Sovcomflot (SCF), Russia’s largest shipping company, has managed to accrue the net profit of USD 63.6 million for the first six months of 2014, a far cry from the 1H 2013 loss of USD 14.5 million, largely due to improved crude oil market dynamics during the first half of the year.

 SCF’s interim report has revealed that:

• Gross revenue (Freight and Hire) is up to USD 675.2 million in H1 2014 (H1 2013: USD 628.4 million);
• Time charter equivalent revenues increased16.7 per cent to USD 490.7 million in H1 2014 (H1 2013: USD 420.4 million);
• EBITDA increased 30.1 per cent to USD 251.7 million in H1 2014 (H1 2013: USD 193.4 million);
• Net profit is up to USD 63.6 million in H1 2014 (H1 2013: Net loss of USD 14.5 million);
• Further expansion of LNG fleet as Velikiy Novgorod, tri-fuel 170,200m³ Atlanticmax ice class LNG carrier delivered – first vessel of series specially designed for and employed under a long-term charter by Gazprom Group;
• VLCC SCF Shanghai (321,280 tonnes dwt) entered service on long-term time-charter agreement with PetroChina International;
• Arctic shuttle tanker Mikhail Ulyanov transported the first shipment of crude oil from Russia’s first offshore energy project on the Arctic shelf;
• Sovcomflot and France’s CGG established a new JV marine seismic company to focus on the growing 3D seismic market in the Arctic and sub-Arctic regions.

Sergey Frank, President and CEO of OAO Sovcomflot, said: “The tanker market remains challenging, with freight rates fluctuating near their historic lows during Q2 after a strong start to the year in Q1 from which Sovcomflot benefited from improved conditions within the crude oil segment in particular. With a stronger presence in the higher margin gas transportation and offshore markets the Group is able to report robust results for the first half, with solid growth in earnings.

Looking ahead, tanker market conditions remain volatile and so we are cautious about the market outlook for the full year. However, a significant and growing portion of Sovcomflot’s revenues comes from long-term charter contracts supporting industrial energy projects in the LNG transportation and offshore services sectors which will underpin our earnings going forward and these sectors continue to be key areas of focus in our long-term business strategy.”