Russian energy shipping giant, PAO Sovcomflot (SCF Group) has reported a 149% increase in net profit for the first half of this year, compared to 1H19.
The 1H20 net profit was recorded as $951.3 mill, compared to $91 mill in the comparable six months of last year.
EBITDA was 54.7% higher at $578.6 mill, compared to $374 mill in 1H19, while overall revenue was almost 20% higher at $951.3 mill, compared to $794.1 mill.
In the LNGC sector, the operational highlights during the first half of this year included the Arc7 ‘Christophe de Margerie’ becoming the first large-capacity cargo vessel to transit the full length of the Northern Sea Route (NSR) eastbound in May, two months earlier than transits usually commence.
SCF Group also took delivery of ‘SCF La Perouse’, a 174,000 cu m Atlanticmax LNGC, which entered into a timecharter with Total. SCF has another two vessels in this series under construction, timechartered to Shell and scheduled for delivery this year.
In addition, SMART LNG, a joint venture between SCF and NOVATEK, ordered four Arc7s for the Arctic LNG 2 project from Zvezda Shipyard and its technology partner, Samsung Heavy Industries, with financing provided by VEB.RF.
Finally, using LNG as a primary fuel for a series of ‘Green Funnel’ Aframax crude oil tankers allowed a substantial reduction (14,229 tonnes) in CO2 emissions during the reporting period, compared with similar vessels powered by diesel oil.
Commenting on the 1H20 results, Igor Tonkovidov, SCF’s President and CEO, said: “SCF Group has achieved its operating and financial targets for the reporting period. For the first time in SCF Group’s history, EBITDA over the prior 12 months has exceeded $1 bill.
“An optimal balance of long- and short-term charter contracts, together with a rational geographic distribution of vessels, allowed SCF Group to fully capitalise on the freight market upswing.
“In the first half of the year, the energy shipping market dynamics were highly volatile. Along with the usual seasonal factor, the freight rates levels were impacted by exogenous non-market drivers as well as sharp price fluctuations in the oil market, caused by changes in the OPEC+ terms. In the short term, this has contributed to the increase in both spot and time charter rates, which has allowed the Group to grow its term contracts portfolio.
“Importantly, SCF Group also continued to steadily grow its industrial business portfolio, which provides a long-term fixed income stream not impacted by market fluctuations. Over 1H, SCF Group increased its timecharter revenues from gas and offshore operations by 10% to $342 mill. At the end of the reporting period, the Group’s had $12.8 bill in future contracted earnings and receivables, a record for the Group.
“SCF Group has taken timely measures to prevent the COVID-19 pandemic from significantly affecting its operations. We have ensured the health of our employees is protected, both at sea and onshore. Through digital transformation, SCF Group was able to maintain the stability of fleet operations and the continuity of our business processes during this difficult period. Further, the Group began implementing a large-scale programme to train crews for the new generation of Arctic LNG carriers, scheduled for delivery from 2023,” he said.
Sergey Frank, SCF’s Chairman of the Board, added: "The Board of Directors is satisfied with SCF Group’s performance in 1H20. The Group has fully achieved the goals set by the shareholder for the period and demonstrated solid financial performance for the fourth quarter in a row. We are pleased that, against the current operationally challenging environment, SCF Group steadily and consistently follows the development path outlined by the Strategy-2025, approved in May, 2019, successfully expanding its competencies in key strategic areas, such as LNG shipping in harsh climates and adopting new cleaner-burning fuels for large-capacity tanker operations.”
