In a tanker freight market that experiences significant headwinds, net profit of Sovcomflot has declined by almost two thirds compared to Q1 2016.
According to Sovcomflot, despite some spot market segment TCE rates decreasing over 40 % year-on-year, its diversified fleet and bal[ds_preview]anced freight policy enabled the SCF Group to »outperform the peer group«.
TCE revenues for the quarter amounted to 274.4 mill. $ (Q1 2016: 290.8 mill. $). EBITDA was 161.2 mill. $ (Q1 2016: 193.6 mill. $). The group delivered a net profit for the quarter of 39.9 mill. $ (Q1 2016: 103.1 mill. $).
Commenting on the Q1 2017 results Sergey Frank, President and CEO of PAO Sovcomflot, 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.«
In the first quarter of the year, the company took delivery of the world’s first ice-breaking LNG tanker, »Christophe de Margerie« (Arc7 and 172,600m3 cargo capacity), which entered in long-term time-charter agreement with Yamal LNG.
A new ice-breaking platform supply vessel (IBSV) named »Gennadiy Nevelskoy« was delivered to serve the Sakhalin II project for 20 years under the long-term time-charter agreement with Sakhalin Energy Investment Company.
Sovcomflot ordered innovative LNG-fuelled 1A ice-class Aframax tankers to enable year-round export operations from the Russian Baltic. The vessels be the first LNG-fuelled Aframax tankers in the world and will come into operation starting from Q3 2018.
No refinancing needs for the rest of the year
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.
Nikolay Kolesnikov, Executive Vice President, Chief Financial Officer, 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 bn $ 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 ice-breaking 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.
