Charter backlog at record $13bn as profit rolls in for Sovcomflot



Russian owner says 12-month rolling Ebitda was more than $1bn for the first time ever

Russia's Sovcomflot (SCF Group) has logged big profits in the first six months as its charter backlog hit a record high.

The state-controlled tanker, LNG carrier and offshore vessel company said net earnings to 30 June were $226.4m, up from $91m in 2019.

Its 146 vessels brought in revenue of $951.3m, an increase from $794.1m the year before.

Ebitda was a huge $578.6m, against $374m in 2019.

Sovcomflot chief executive Igor Tonkovidov said: "For the first time in SCF Group’s history, Ebitda over the prior 12 months has exceeded $1bn."

He explained that an "optimal balance" of long and short-term charter contracts, together with "a rational geographic distribution of vessels", had allowed the company to fully capitalise on the freight market upswing.

Tonkovidov added that energy shipping market dynamics were highly volatile in the period.

"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," he said.

"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."

Big backlog

Its expanding industrial business portfolio also provides a long-term fixed income stream not impacted by market fluctuations.

At the end of the reporting period, the group had $12.8bn in future contracted earnings and receivables — a record level.

Tonkovidov also said the company had 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," he said. "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."

Chairman Sergey Frank added that the company steadily and consistently followed the development path outlined by its Strategy 2025 document, which was approved last year.

This involves expanding operations in key strategic areas, such as LNG shipping in harsh climates, and adopting new cleaner-burning fuels for large-capacity tanker operations.