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Sovcomflot Reports Strong 2019 Earnings

  • Business & Finance

Russian shipping major Sovcomflot (SCF Group) managed to return to profit in 2019 – the first year of implementation of the company’s new strategy.

The company reported a net profit of USD 225.4 million in 2019, compared to a net loss of USD 45.6 million seen a year earlier.

Revenues rose by 9.6 percent to USD 1.67 billion in 2019 from USD 1.52 billion posted in 2018.

In addition, EBITDA saw an increase of 41.7 percent and stood at USD 823 million in 2019, against USD 580.7 million recorded in 2018.

“In the first year of implementation of our new strategy 2019-2025, Sovcomflot significantly exceeded the KPI targets set for 2019 and strengthened its position in the market segments that are of strategic importance for the company, looking into the future,” Sergey Frank, Chairman of the Board of Directors of Sovcomflot, commented.

“The strategy approved by the Board of Directors for the period to 2025 will see us maintaining our focus on expanding the portfolio of large-scale and long-term industrial projects, many of which are of great importance for the country’s economy,” Igor Tonkovidov, President and CEO of Sovcomflot, said.

“We will continue to place a strong emphasis on our technical capabilities and operations in challenging environments… Successful implementation of these plans will further enhance SCF’s business stability and the sustainability of our financial results.”

During the year, the company took delivery of four newbuilds — three “Green Funnel” LNG-fueled Aframax crude oil tankers and an Arctic MR shuttle tanker.

Korolev Prospect, a “Green Funnel” crude oil tanker, became the first vessel to cross the entire length of the Northern Sea Route using only cleaner-burning LNG as a fuel.

“Results from the first year of successful operation of SCF’s ‘Green Funnel’ tankers saw the use of LNG as a primary fuel enabling a significant (up to 30%) reduction of carbon dioxide (CO2) emissions to the atmosphere, which exceeded the forecasted indicators. 2019 has seen us pioneer the introduction of cleaner-burning LNG fuel for transporting crude oil in high latitudes,” Sergey Popravko, Executive Vice President and Chief Operating Officer of Sovcomflot, explained.

“At the same time, we continue to study the possibility of introducing other alternative technologies that have the potential to further reduce the environmental impact of our operations,” he continued.

What is more, Sovcomflot signed during 2019 shipbuilding contracts for the construction of two Aframax crude oil shuttle tankers for the Sakhalin-1 project with deliveries in early 2022 backed by ten and fifteen-year period time charters.

The company also inked long-term charters with Novatek for three next-generation LNG-fueled MR product carriers being built at Zvezda. In September 2019, Sovcomflot and Novatek established Smart LNG, a joint venture that will own and operate a fleet of LNG carriers to provide year-round LNG transportation for Novatek’s projects.

At the end of 2019, Sovcomflot’s fleet comprised 147 owned and chartered vessels — including vessels in joint ownership with third parties — exceeded 12.8 million tonnes dwt in total.

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