SCF rides choppy waters

May 26 2017

Sovcomflot (SCF) has announced a vastly reduced net profit of $39.9 mill in the first quarter of this year, compared with $103.1 mill in 1Q16.

SCF said that tanker freight market experienced significant headwinds, with some spot market segment TCE rates down over 40% year-on-year. However, diversified fleet and balanced freight policy enabled the group to outperform its peers, SCF claimed.

TCE revenues were $274.4 mill, compared to $290.8 mill in 1Q16, while EBITDA fell to $161.2 mill in 1Q17, compared to $193.6 mill in the same period of 2016. 

During the quarter, SCF placed an order for the world’s first LNG-fuelled 1A Ice Class Aframaxes enabling year-round exports from the Russian Baltic. They are due to be delivered from 3Q18.

In addition, a $174 mill, 15-year credit facility was raised from Sberbank, to refinance two Arctic shuttle tankers -’Mikhail Ulyanov’ and ‘Kirill Lavrov’- servicing the Prirazlomnoye project

Commenting on the 1Q17 results, Sergey Frank, SCF president and CEO, said: “The first quarter saw a significant downturn in the global tanker market. Despite the challenges faced in the conventional market segment, Sovcomflot showed resilience and was able to outperform many of its peers. Our offshore business segment performed especially well and now represents over 40% of our operating profit.

“Meanwhile, our strategy implementation continued according to plan, backed by skilled, experienced seafarers and shore-personnel, that enable such vessels to reach their full potential. For this, I should like to thank all my colleagues for their expertise and continued dedication,” he said.

Nikolay Kolesnikov, executive vice president, CFO, added: “With the long-term nature of many of our charters, some being over 25 years in duration, Sovcomflot’s earnings and cash flow visibility is unprecedented for the industry. Indeed, overall contracted future revenues stood at nearly $8 bill at the quarter end.

“During the quarter, the Group successfully raised $174 mill of 15-year long-term debt from Sberbank, to refinance our two Arctic shuttle tankers ‘Mikhail Ulyanov’ and Kirill Lavrov.

“Final instalment payments for three icebreaking stand-by vessels for the Sakhalin 2 project scheduled for delivery until the end of the current year, have been fully funded with no envisaged cash outlay by the Group, nor does the Group face any refinancing needs for the rest of the year,” he said.  

Previous: Markets - VLCC earnings further depleted

Next: AMSC looking for Jones Act opportunities

Apr-May 2024

How TotalEnergies is decarbonising its shipping - Ardmore''s choice of VP technologies