RUS

Sovcomflot profit soars in Q3

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Tradewinds

Russian state owner boosted by buoyant tanker markets and two new LNG carriers.

Russian state shipowner Sovcomflot (SCF) has posted a big jump in third quarter earnings as tanker markets strengthened.

The company said net profit to 30 September was $82.5m, compared to $45.5m a year ago.

Revenue from its 143 ships grew to $388.6m from $384.1m as two new LNG carriers were delivered and began long-term charters to Shell.
CEO Sergey Frank called the results “strong”, adding: “This has been possible through a combination of positive underlying tanker market conditions, and the group’s proven business model that continues to serve us well.

“We continue to improve the efficiency of our operations, and firmly believe that our significant industrial shipping activities are a source of strength and stability going forward.”

He remains optimistic about growth prospects for both crude and products tankers into 2016 and 2017, despite the uncertain geopolitical and economic outlook.
Most markets should enjoy favourable supply-demand fundamentals, he said.
CFO Nikolai Kolesnikov said the result had lowered the owner’s leverage to 44%.

“This success owes much to Sovcomflot’s commercial team which has followed a highly effective freight policy, ensuring robustness during the industry downturn yet providing the necessary flexibility during the current market recovery,” he added.

Tankers in the ascendant

Nine-month operating profit for crude tankers increased 70.9% to $190m, with products carriers up nearly fivefold at $68.2m.
Gas carrier earnings rose 75.3% to $62.4m, while its offshore shipping services posted flat profit despite small revenue growth in tough markets.
“The group’s business has benefited from the long-term nature of its charter arrangements for both shuttle tankers and its ice-breaking supply vessels,” SCF said.

IPO still planned

A partial privatisation through an IPO remains on the cards for SCF, but no definitive timetable has been put in place.
Kolesnikov told TradeWinds that the company was in “good shape” after markets turned in its favour.
But he added there were still "geopolitical clouds" hanging over the industry.
“We would prefer the skies to clear,” he said.

Eight ships worth $1.27bn are on order, including an Arctic LNG vessel and three shuttle tankers.
They will be delivered between June 2016 and April 2017 and are all fixed to oil majors on long-term deals.

SCF is currently happy with the age profile of its tanker fleet, Kolesnikov said, and has no immediate plans to head back to yards.
He added that further orders are something that it will consider in time, just like every other company, to take advantage of the latest efficient ship engines and designs.
But SCF prefers to let market demand be the driver for new orders, he added.