Gross revenue of Sovcomflot in 2017 grew by 3.4% to $1.43 billion
PAO Sovcomflot (SCF Group), one of the world leaders in energy shipping and marine services to offshore oil and gas upstream projects, has today reported its results for the full year to 31 December 2017.
2017 Full Year Financial Highlights
(IFRS audited accounts – year to 31 December 2017)
|
USD Millions |
2017
|
2016 |
% ∆ |
|
Gross revenue (Freight + hire) |
1,435.4 |
1,388.1 |
+3.4 |
|
Time charter equivalent revenue* |
1,058.0 |
1,142.2 |
(7.4) |
|
EBITDA** |
544.9 |
695.0 |
(21.4) |
|
Adjusted (loss)/profit*** |
10.1 |
263.0 |
(96.2) |
|
Net (loss)/profit |
(113.0) |
206.8 |
- |
According to the statement, 2017 proved to be one of the worst years for the conventional tanker market in the last quarter of a century, with similar conditions experienced to those seen in 2011 and 1992. Conventional tanker freight rates fell by almost 50 per cent year-on-year, reflecting an oversupply of speculative orders following the 2015 market spike, as well as the effect of sustained production cuts by OPEC and other oil producing nations and a backwardation in the oil trade. Set against this background, the Group’s time charter equivalent revenue declined by only 7.4 per cent, demonstrating the robust nature of its industrial-focused business model.
Over 2017, the Group continued to implement its strategy to expand the fixed income, industrial shipping segments of its business with Offshore Services and Gas Transportation increasing their revenues by 48.7 per cent and 17.4 per cent respectively. The total share of Group revenue from industrial shipping activities amounted to 51 per cent of its revenue base in 2017, enabling the Group to achieve a positive operating profit for the year.
In line with IFRS accounting standards, the Group recorded a non-monetary charge of USD 108 million in total, reflecting impairment of the fleet and non-operating costs regarding litigation in the English courts, relating to various transactions that took place during 2000 - 2004.
Profit before tax, when adjusted for the impairment reserve of the fleet and non-operating costs, amounted to USD 10.1 million in 2017, signifying that the Group remained profitable at an operating level despite the severe market conditions affecting its conventional fleet.
Sergey Frank, President and CEO of Sovcomflot commented:
“Despite the very strong headwinds seen in the conventional tanker markets over 2017, with freight rates down by almost 50 per cent reflecting one of the worst years in a quarter of a century, we continued to implement our core strategy of industrialising our business model. Sovcomflot’s growing industrial portfolio (offshore services and gas transportation) enabled us to remain profitable operationally. Our Offshore and Gas businesses saw time charter equivalent revenues increasing by 48.7 and 17.4 per cent respectively year-on-year, providing a welcome relief from the difficult conditions facing our conventional tankers. The robust nature of the Group’s business model has shown our ability to weather the low point of the shipping cycle”.
“In such a challenging year, I am especially grateful to all my colleagues at sea and ashore for their continued professionalism and dedication, and to our clients and partners around the world for their valued support. It’s especially important that, in this extremely challenging year, we continued our commitment to innovation by delivering to our clients some of the most advanced vessels ever constructed, which will contribute to their upstream projects and address some unique operational challenges in the harsh environments. Further, we achieved a significant milestone with the decision to power with LNG our new generation of ice class Aframax tankers, setting new standards for emissions and making the tanker industry greener”.
Evgeniy Ambrosov, Senior Executive Vice-President of Sovcomflot, commented:
“Last year we have delivered several pioneering new vessels, designed in close cooperation with our esteemed strategic charterers, which are destined to become one of the core elements of a unique logistics system for the transportation of hydrocarbons. One such example being the icebreaking LNG carrier Christophe de Margerie, purpose built to make LNG exports possible from the vast Arctic energy reserves of the Yamal Project in Northern Russia. The newest logistical and technical solutions have been tested by us from the beginning of this century on various successfully operating projects. Elsewhere, three highly sophisticated icebreaking platform supply vessels (IBSVs) were delivered during the year to serve the Sakhalin-2 Project, continuing our well-established long-term partnership with Sakhalin Energy Investment Company. Another state-of-the art Arctic shuttle tanker for the Novy Port project was delivered to the charterer Gazpromneft.”
Igor Tonkovidov, Executive Vice-President and Chief Operating / Chief Technical Officer of Sovcomflot said:
“Sovcomflot’s stays commited to shipping innovations which were further enhanced in 2017, with the Group taking the lead amongst tanker owners in delivering a cleaner and safer marine environment. We were delighted to sign an agreement with Shell for the supply of LNG to fuel a new generation of Aframax tankers. These so-called ‘Green Funnel’ vessels are being pioneered by Sovcomflot and our shipbuilding partners in Russia and South Korea. In 2017 we ordered six such tankers, for delivery between Q3 2018 and Q1 2019. These vessels were designed to exceed, rather than simply comply with, emissions legislation”.
Nikolay Kolesnikov, Executive Vice-President, Chief Financial Officer of Sovcomflot, commented:
“During 2017 we completed a series of financing deals amounting to USD 367 million in total, including a USD 150 million tap Eurobond issue, which was well oversubscribed and placed at one of the lowest yields for a global shipping company. Our ability to access competitively-priced domestic and international capital in all market conditions reflects the resilience of Sovcomflot’s industrial shipping model, which provides good earnings stability and visibility. At the end of the year, we had USD 8.1 billion of contracted future revenues, a major part of which comes from long-term industrial projects. The Group has maintained its credit ratings with all the three main international rating agencies in 2017 and into the current financial year.”
PAO Sovcomflot (SCF Group) is Russia’s largest shipping company and a world leader in the transportation of hydrocarbons by sea, as well the servicing of offshore oil and gas exploration and production. The company’s owned and chartered fleet includes 150 vessels with a total deadweight of more than 13.1 million tonnes. Half of the vessels have an ice class. Sovcomflot is involved in servicing large oil and gas projects in Russia and around the world: Sakhalin-1, Sakhalin-2, Varandey, Prirazlomnoye, Novy Port, Yamal LNG, and Tangguh (Indonesia).
The company is headquartered in Saint Petersburg, with offices in Moscow, Novorossiysk, Murmansk, Vladivostok, Yuzhno-Sakhalinsk, London, Limassol, and Dubai.
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