Overall results for Sovcomflot Group
Key operating performance indicators improved in 2018 compared to 2017, despite the high volatility in the tanker markets and a sharp fall in freight rates. The main reason for that were measures taken to increase fleet performance, including renewal and modernisation of the fleet, a balanced freight policy, which ensures the effective use of the fleet in different phases of the tanker market, and cooperation with high-profile customers.
Time charter equivalent (TCE) revenue in 2018 increased by 1.6% compared to 2017, to US$1,074.7 million under IFRS against US$1,058 million in 2017. The Net earnings from vessels’ trading of the Group also increased (by 9.2%), to US$ 697.5 million.
Sovcomflot Group cooperates with both foreign and Russian customers. In the reporting year the Group continued to meet Russian foreign trade requirements: its vessels participated in transportation of oil and petroleum products from different Russian ports, including Novorossiysk, Murmansk, Primorsk, Ust-Luga, Prigorodnoye, and others. In addition, the Group’s vessels were used as floating storage units to facilitate the transhipment of export oil and petroleum products from river tanker vessels to sea tankers.
In 2018 the Group carried over 54 million tonnes of Russian export and transit cargo exported through Russia. This cargo accounts for 40.1% of the total cargo transported by the Group’s vessels in 2018 (against 49% in 2017).
Fleet performance indicators by lines of business
The Group’s key operating performance indicators by main operating segments exhibited differently directed dynamics in 2018 — negative in conventional segments and positive in industrial segments.
The commissioning of new tonnage and further development of industrial projects had a positive impact on the Company’s results.
The decrease in TCE revenues and Net earnings from vessels’ trading in the segment of crude oil and petroleum products transportation was due to the negative impact of a decline in freight rates in the global freight market.
The increase in TCE revenues in the segment of offshore services was driven by the commissioning of new vessels.
The increase in TCE revenues in the segment of liquefied gas transportation occurred mainly due to the fact that the Company commenced servicing a new industrial project in 2017 and continued operations under the project in 2018.
In the "Others" segment, which in 2018 included two bulkers and two seismic research vessels, revenues declined by 27% compared to 2017, resulting in a loss from vessels’ trading of US$18.9 million. This result was due to unfavourable conditions in the global offshore seismic exploration market and the impact of certain other factors.