Sovcomflot has posted financial results for 2017 according to the IFRS accounting standards.
The group’s gross revenue increased 3.4% up to $1.4 bn, time charter equivalent revenue declined 7.4% to $1.06 bn, EBITDA was down 21.4% to $544.9 mn.
Net loss made $113 mn compared to net profit of $206.8 mn in 2016. Profit before tax, when adjusted for the impairment reserve of the fleet and non-operating costs, amounted to $10.1 mn compared to $263 mn in 2016.
“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”, said the Group in its statement.
Sovcomflot 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.
“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”, commented Sergey Frank, President and CEO of Sovcomflot.
“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”, said Nikolay Kolesnikov, Executive Vice-President, Chief Financial Officer of Sovcomflot.