Sovcomflot Returns to Black as Tankers Hint Recovery

Christophe de MargerieIllustration; Image Courtesy: President of Russia/CC 4.0 license

Russian shipping company Sovcomflot managed to return to the black in the third quarter ended September 30, 2018, amid signs of a better balance in the tanker market.

Namely, the company reported a net profit of USD 0.3 million for the period, against a loss of USD 22 million seen in the same quarter a year earlier.

Sovcomflot’s revenue increased by 13.1 percent to USD 396.4 million for the third quarter of 2018, compared to USD 350.5 million reported in the same quarter of 2017. Time-charter equivalent (TCE) revenue was slightly up at USD 262.6 million, rising by 2.9 percent from USD 255.2 million year-on-year.

“During the reporting period, the tanker freight markets remained in a depressed state as vessel supply continued to outstrip vessel demand. Signs of a better balance have emerged more recently following longer term oil price recovery and worldwide fleet removals over 2H 2017 and 1H 2018,” the company said.

These factors, in part, led to the start of a recovery in freight levels in the conventional tanker fleet towards the end of the third quarter of 2018 and in the large crude vessel segments in particular. The improvement has continued into the fourth quarter of the year and has resulted in a healthy increase in earnings across the group’s crude carrying vessels, an improvement that is forecast to hold steady in the near term and into the first quarter of 2019.

“The green shoots of recovery in the conventional tanker market, and in the larger crude sector in particular, are encouraging for the fourth quarter of 2018 and may bring a welcome earnings boost on top of that provided by the Gas and Offshore divisions,” Sergey Frank, President & CEO of PAO Sovcomflot, said.

During the first nine months of 2018, the company completed financing and refinancing transactions amounting to USD 424 million in total, including a USD 106 million long-term facility with Sberbank, to finance an Arctic shuttle tanker, and a USD 252 million long-term facility with international banks to finance six Green Funnel Aframax tankers.

SCF’s long-term offshore and gas businesses increased their TCE revenues by 17.7 per cent and 14.5 per cent respectively in the nine month period, compared with the first nine months of 2017.

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