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Growth continues for Sovcomflot in first half

Growth continues for Sovcomflot in first half
OAO Sovcomflot (SCF) has reported a net profit of $63.6m in the first half, reversing a loss of $14.5m in the same period last year.

The profit increase comes on a 7.4% increase in revenues to $675.2m from $628.4m in the first half of last year.

Sergey Frank, president and ceo of SCF, commented: "The tanker market remains challenging, with freight rates fluctuating near their historic lows during Q2 after a strong start to the year in Q1 from which Sovcomflot benefited from improved conditions within the crude oil segment in particular. With a stronger presence in the higher margin gas transportation and offshore markets, the Group is able to report robust results for the first half, with solid growth in earnings.

Crude oil transportation earnings rose 25.6% to $220.9m, with the group's gas transportation recording a 74% jump in revenue to $38.2m as the gas carrier market was firm and its fleet expanded.

LNG transportation is a priority for SCF and it has four LNG carriers, including one ice breaker, on order, all with long term charters in place on delivery with Gazprom, Shell or Yamal LNG.

Another key area is the offshore market, where revenues rose 12.4% to $109.8m. In April, SCF's arctic shuttle tanker Mikhail Ulyanov carried the first shipment of crude from Russia's first offshore project on the Arctic shelf.

Including joint ownership and subsidiaries, the SCF fleet totalled 153 ships at the end of the half, with eight vessels under construction.

"Looking ahead, tanker market conditions remain volatile and so we are cautious about the market outlook for the full year," added Frank. "However a significant and growing portion of Sovcomflot's revenues comes from long-term charter contracts supporting industrial energy projects in the LNG transportation and offshore services sectors, which will underpin our earnings going forward and these sectors continue to be key areas of focus in our long-term business strategy."