Sovcomflot’s H1 2016 net profit down 23.3%, y-o-y, to $165.9 mln
Sovcomflot says its IFRS net profit for the six month ending June 30, 2016 declined by 23.3%, year-on-year, to $165.9 mln. In the reported period, gross revenue fell by 9.2% to $680.2 mln, EBITDA – by 1.9% to $385.8 mln.
The statement also marks the following highlights: successful issue of USD 750 million, 5.375 per cent coupon, seven-year term unsecured Eurobonds; USD 260 million long-term loan agreement signed with VTB Bank in June; Five new vessels launched: pioneering 172,600 m3 capacity ice breaking LNG carrier (Arc7 ice class) for Yamal LNG project (January), three new Arctic shuttle tankers for Novy Port project (February, April, June), and a new ice-breaking supply vessel to serve Sakhalin-2 project (June).
Commenting on the Group’s performance Sergey Frank, President and CEO of PAO Sovcomflot, said: “From January to July, there was a notable downswing in the global tanker market, with spot rates in certain market segments dropping by one third year-on-year, which has affected the financial performance of the entire industry.”
“Analysts foresaw this downturn, so, as part of its Development Strategy, Sovcomflot has focused its efforts on diversifying its business by beefing up its portfolio of long-term industrial projects with a fixed high rate of return. Participation in projects such as Sakhalin-1, Sakhalin-2, Varandey, Prirazlomnoye, Novy Port, and Yamal LNG will guarantee a reliable source of constant income for Sovcomflot even in times of market uncertainty and ensure the stable employment of a significant proportion of our fleet. As of 31 July 2016, future contracted revenue stood at USD 8.2 billion.”
Nikolay Kolesnikov, Executive Vice President, Chief Financial Officer, commented: “Despite the tanker market downturn which has seen rates decline by 30% in some market segments, Sovcomflot’s net profit adjusted for non-operating revenues decreased by only 5.8 per cent. This matches the Group’s performance dynamics during 1H2016. Sovcomflot was able to enhance its debt repayment profile significantly following a highly successful unsecured USD 750 million Eurobond issue. The funds raised were used to refinance the Group’s debut Eurobonds issued in 2010.”
“The success of the Eurobond issue gave Moody’s sufficient grounds to upgrade the Group’s corporate rating from Ba2 to Ba1. Together with a new long-term loan agreement signed with VTB Bank, the amount of external debt financing raised by Sovcomflot during 1H2016 exceeded USD 1 billion, and SCF’s contracted shipbuilding programme is now fully financed.”
Business segment highlights when it comes to Crude Oil Transportation: Time charter equivalent (TCE) revenues in the first half (H1) ended 30 June 2016 were USD 266.2 million (H1 2015: USD 280.5 million); Oil Products Transportation: Time charter equivalent (TCE) revenues in the first half (H1) ended 30 June 2016 were USD 105.7 million (H1 2015: USD 126.6 million); Gas Transportation: Time charter equivalent (TCE) revenues in the first half (H1) ended 30 June 2016 were USD 72.6 million, a notable increase on the previous first half period (H1 2015: USD 63.6 million); Offshore Development Services: Time charter equivalent (TCE) revenues in the first half (H1) ended 30 June 2016 were USD 115.1 million (H1 2015: USD 114.4 million); Other: Time charter equivalent (TCE) revenues in the first half (H1) ended 30 June 2016 were USD 16.9 million (H1 2015: USD 32.5 million).
As at 30 June 2016, Sovcomflot’s fleet (including vessels owned, chartered-in, and in joint ownership with third parties) comprised 140 vessels with a combined deadweight of approximately 12.3 million tonnes. At this time, there were eight vessels under construction (one Arc7 ice-breaking LNG carrier of 172,600 m3 capacity, one multifunctional ice breaking (“MIB”) supply vessel, three MIB standby vessels, and three ice-class shuttle tankers).