PAO Sovcomflot Q1 2015 Results – Strong start of the year due to improved tanker market

Company Profiles, Markets, Statistics — By on May 20, 2015 at 10:09 AM

SovcomflotQ1 2015 Results

(three month period to 31 March 2015)


Strong start of the year due to improved tanker market

Q1 2015 Highlights

  • Time charter equivalent (TCE) revenues increased 7.0 per cent to USD 289.5 million
  • EBITDA increased 16.2 per cent to USD 178.5 million
  • Net profit increased by 67.0 per cent to USD 97.0 million
  • LNG carrier SCF Melampus (170, 200 m3 capacity) delivered and starts long-term time charter to Shell
  • Sovcomflot awarded ‘Deal of the Year’ by Marine Money for the project financing of two new advanced design LNG carriers.

Commenting on the Group’s results Sergey Frank, President and CEO of Sovcomflot, said:

“Sovcomflot has made a very encouraging start to 2015, following five years of recession within the global tanker market. A strong performance from the crude and product tanker freight markets has built upon underlying profits generated from our increasing fixed income gas and offshore fleets. Timely fleet exposure to the oil product and crude spot markets, as well as maintaining our critical size to capture the volatility in those markets, has resulted in a significant rise in profits during the first quarter of 2015. Our oil products transportation segment, for example, increased profits by 85 per cent compared with the first quarter of 2014.

“Our robust strategy of providing new technically advanced vessels for long-term fixed income employment continues to deliver a profitable and sustainable income stream, which will underpin an enhanced performance for our business going forward. Based upon the very positive outlook for crude and oil products transportation going into Q2 2015, the Group can expect a significant uplift in its performance in 2015 compared with the previous year.”

Nikolay Kolesnikov, Executive Vice President, Chief Financial Officer, added:

“With a stable balance sheet and positive cash flow during the first quarter, supported by good earnings visibility, Sovcomflot is well positioned to continue delivering against its strategy and fulfilling the evolving needs of its clients. Sovcomflot’s credit ratings were affirmed at their current levels despite the downgrades in the reporting period of the sovereign rating, and the company maintained access to sources of long-term debt finance thus demonstrating resilience of its business model to adverse geopolitical conditions.” 

Q1 2015 Results

(three month period to 31 March 2015)

Sovcomflot (“SCF Group”) today announces its financial and operating results for the first quarter ended 31 March 2015.

Q1 2015 Financial Highlights

Financial Highlights(1 January – 31 March) USD millions

Q1 2015

Q1 2014

 

%

 

Gross revenue (freight & hire receivable)

359.0

365.1

-1.7

Time charter equivalent (TCE)*

289.5

270.6

+7.0

Profit on vessels’ tradingEBITDA**

198.4

178.5

177.3

153.6

+11.9

+16.2

Net profit

97.0

58.1

+67.0

* Time charter equivalent (TCE) represents shipping revenues less voyage expenses and is commonly used in the shipping industry to measure financial performance and to compare revenue generated from a voyage charter to revenue generated from a time charter

**Earnings before interest, tax, depreciation and amortization.

Gross revenue (freight and hire receivable) for the three month period ended 31 March 2015 declined slightly by 1.7 per cent to USD 359.0 million (Q1 2014: USD 365.1 million). Time charter equivalent revenue (TCE) rose by 7.0 per cent to USD 289.5 million (Q1 2014: USD 270.6 million). The profit on vessels’ trading improved by 11.9 per cent to reach USD 198.4 million (Q1 2014: USD 177.3 million).

Earnings before interest, tax, depreciation and amortization increased by 16.2 per cent to USD 178.5 million (Q1 2014: USD 153.6 million). Net profit for Q1 2015 improved by 67.0 per cent to USD 97.0 million (Q1 2014: USD 58.1 million).

Total assets at 31 March 2015 were USD 6, 749.7 million (31 March 2014: USD 6, 438.9 million) representing an increase of 4.8 per cent over Q1 2014. Borrowings increased by 5.4 per cent to USD 3, 183.1 million (Q1 2014: USD 3, 018.8 million), whilst the Group’s net debt ratio at 31 March 2015 remained stable at 46.7 per cent (31 March 2014: 46.4 per cent).

In March 2015, Sovcomflot was awarded ‘Deal of the Year’, in the project finance category, by the international ship finance publication Marine Money. This was in recognition of the financing agreement forthe construction of two new LNG carriers one of which being SCF Melampus, which was delivered in the first quarter of 2015. Sovcomflot has longstanding relations with the leading European banks behind this deal, and greatly values their long-term support and professional experience.

As at 31 March 2015, the Group had contracted future revenues of USD 8.7 billion (including joint ventures), which compares with USD 6.7 billion at the end of Q1 2014. A significant proportion of these long-term contracted revenues arise from major Russia’s industrial energy projects, involving LNG transportation and the servicing of offshore energy projects.

A copy of the full consolidated financial statements is available in the investor section of the Group’s website: www.scf-group.ru  

Q1 2014 Main Business Segment Highlights

Crude Oil Transportation

TCE revenues increased by 1.6 per cent to USD 136.9 million (Q1 2014: USD 134.7 million). The profit from vessels’ trading declined slightly by 0.7 per cent to USD 97.9 million (Q1 2014: USD 98.6 million).

Oil Products Transportation

This business segment was a significant beneficiary of the improved freight market environment. TCE revenues increased by 21.5 per cent to USD 64.5 million (Q1 2014: 53.1 million). Meanwhile the profit from vessels’ trading jumped by 85.3 per cent to USD 40.2 million (Q1 2014: USD 21.7 million).

Gas Transportation

TCE revenues for the period moved ahead by 44.5 per cent to USD 28.9 million (Q1 2014: USD 20.0 million). The profit on vessels’ trading increased by 52.1 per cent to USD 24.8 million (Q1 2014: USD 16.3 million).

During the quarter the Group took delivery of SCF Melampus, the third in a series of advanced design Atlanticmax LNG carriers, built under a partnership agreement with STX Offshore & Shipbuilding. The vessel has an Ice2 ice class rating and a 170, 200 m3cargo capacity, and is employed on a long-term time charter to Shell.

Offshore Development Services

TCE revenues increased by 1.6 per cent to USD 55.7 million (Q1 2014: USD 54.8 million), while profit on vessels’ trading was flat at USD 44.5 million (Q1 2014: USD 44.6 million). 

Fleet Summary

During Q1 2015, the Group took delivery of the LNG carrier SCF Melampus (170, 200 mcapacity) and no vessel disposals occurred. At the end of Q1 2015 there were nine vessels under construction for delivery up to March 2017, these comprised: two LNG carriers (one of which is a highly advanced design ‘Yamalmax’ Arc7 ice breaking vessel, 172, 600 mcapacity); four ice breaking supply/support vessels and three ice class shuttle tankers. All of these vessels, once delivered, will operate on long-term time charter arrangements to ‘blue chip’ energy companies and upstream energy projects pursued by international consortia.

As at 31 March 2015, Sovcomflot’s fleet (including vessels owned, chartered-in and in joint ownership with third parties) comprised 153 vessels (31 March 2014: 152 vessels) with a combined deadweight of some 12.78 million tonnes.

A detailed fleet list is available on the Group’s website (www.scf-group.com).

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