Better Tanker Rates Push Sovcomflot to Profit in 4Q

Sovcomflot, Christophe de MargerieImage Courtesy: President of Russia/CC 4.0 license

Russia’s shipping company Sovcomflot returned to black in the fourth quarter of 2018, driven by improving tanker rates.

For the quarter ended December 31, 2018, the company’s profit reached USD 11.9 million, bouncing back from a loss of USD 106.2 million reported in the same period a year earlier. EBITDA surged by 21.2 percent to USD 166.1 million in the quarter, up from USD 137.1 million.

Gross revenue was up by 10.4 percent to USD 413.4 million, compared to USD 374.7 million reported in the fourth quarter of 2017, while time charter equivalent revenue grew by 10.6 percent to USD 300.7 million from USD 272 million year-on-year.

Although 2018 proved to be a second consecutive challenging year for the tanker industry, with trading conditions remaining extremely difficult and the spot rates well below their historical averages, there was a visible rebound in freight rates in the Q4. The change reflected a balancing between tanker supply and demand, following a sustained period of tanker fleet removals and an increase in crude oil demand from Asian refiners in particular.

For the full year 2018, the company managed to shrink its net loss to USD 45.6 million, compared to a net loss of USD 113 million reported in 2017. Full year revenue was up by 5.9 percent to USD 1.51 billion from a revenue of USD 1.43 billion seen in the previous year.

“Looking forward, we remain firmly committed to growing our industrial businesses and this will be central to SCF Group strategy through to 2025. Whilst our conventional tanker fleet swung into profit in Q4 2018, it was insufficient to offset the impact of the dire tanker markets experienced by the industry as a whole in the first half of the year. The outlook for 2019 remains positive and our performance in Q1 2019 has exceeded expectations,” Sergey Frank, President and CEO of Sovcomflot, said.

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