Sovcomflot Profit Down, Russia

Sovcomflot Profit Down

OAO Sovcomflot (SCF), Russia’s largest shipping company and a global leader in seaborne energy transportation and offshore services, today announced its financial and operating results for the second quarter and six months ended 30 June 2013.

Highlights:

  • Gross revenue (Freight and Hire) of USD 628.4 million for H1 2013 and USD 315.2 million for Q2 2013
  • Group EBITDA of USD 193.5 million for H1 2013 and USD 100.4 millon for Q2 2013
  • Adjusted net profit of USD 13.4 million for H1 2013 and USD 8.2 million for Q2 2013
  • Addition to the fleet of 4 new vessels with total deadweight of 0.3 million tonnes
  • Two new multifunctional icebreaking supply vessels Vitus Bering and Alexey Chirikov start operations at Sakhalin-1 project under long-term agreement with project operator Exxon Neftegas Ltd.
  • Preparations are finalized for the launch of shipments from the new LPG-terminal in the port of Ust-Luga, together with the charterer – Russia’s leading petrochemical holding company SIBUR. The shipments start is set up for Q3 2013 and will involve two Sovcomflot’s new LPG-carriers.
  • Sovcomflot, United Shipbuilding Corporation and Gazprom Marketing & Trading signed agreements to reserve construction slots for “Gaz Ice” LNG carrier series and promotion of Russian LNG content.
  • SCF Group was presented with Marine Money’s “2012 Deal of the Year Award” for USD 700 million 7 year credit facility secured with a club of international lenders in December 2012.

Commenting on the Group’s results Sergey Frank, President and CEO of OAO Sovcomflot, said: “The tanker shipping market remains extremely challenging, as we are effectively going through the fifth consecutive year of recession in the global shipping industry. In H1 2013 the Clarksea Tanker index was 8.4% lower than in H1 2012, marking another 20-year low. On the other hand, some “green shots” – in particular, a recent improvement product tanker rates – may indicate that the market has bottomed out. Given all this, we remain cautiously optimistic for 2014, and expect a slow recovery in the global tanker market to have begun by then in earnest. Sovcomflot also remains fully committed to our 2018 growth strategy, aimed at building a substantial presence in industrial shipping segments, such as LNG/LPG and upstream offshore services.”

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Gas Transportation

The Group operates a fleet of LNG and LPG carriers, comprising four wholly-owned vessels in total, with a further six vessels on order (additionally, four LNG carriers are owned jointly with third parties and are equity accounted for, as of this reporting period as per IFRS 11). This segment accounted for 5 per cent of TCE revenues in the first half of 2013 (USD 21.9 million in 2013 comparable to USD 19.9 million in H1 2012). In addition, the Group has an equity ownership position in another four LNG carriers operating under long-term contracts for the Sakhalin 2 and Tangguh projects which are equity accounted for as from 2013 with the adoption by the Group of new accounting standard IFRS 11.

During the period, SCF’s new state-of-the-art LNG carrier Velikiy Novgorod was launched from the shipyard of STX Offshore & Shipbuilding Co. Ltd. This vessel was ordered by OAO Sovcomflot to operate under a long-term agreement with Gazprom Global LNG. The vessel is an Ice2 (C1) Atlanticmax class gas carrier, with a cargo capacity of approximately 170,000 cubic meters. This makes her capable of transporting gas on a year-round basis from almost any existing LNG terminal in the world, including Russia’s first LNG project at Sakhalin-II.

Fleet Summary

As at 30 June 2013, the SCF Group fleet comprised 159 owned and chartered vessels (including vessels in joint ownership with third parties): 137 owned vessels, two chartered-in vessels, nine escort tugs which have been chartered-out on bareboat charter to an associate company – Rosnefteflot, and 4 LNG carriers and 9 LR1 product carriers in JV. The average age of tanker fleet is 7,8 years, compared with an industry average of 15,8 years.

Assets under construction at the period-end comprised 8 vessels, with a total deadweight of over one million tonnes. This includes: two VLCCs and six gas carriers (four ice-class LNG, Ice 1C, 170,000 cubic metres; two LPG carriers, Ice 1B, 20,550 cubic metres).

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LNG World News Staff, August 30, 2013