PAO Sovcomflot (SCF Group), Russia’s largest shipping company, reported a net profit of USD 206.8 million for 2016, down by 42 pct from the previously booked USD 354.5 million in 2015 amid market volatility.

As explained by Sergey Frank, President and CEO of Sovcomflot, 2016 witnessed a material softening in demand that impacted negatively spot tanker freight rates, albeit with some respite in the final quarter.

“Sovcomflot strengthened its position as the world’s largest harsh environment tanker operator through the opportune acquisition of nine well-maintained tankers that became available as part of the PRISCO bankruptcy proceedings. Further, we built upon our leadership position in IBSVs with the acquisition two existing vessels and launched a new IBSV all committed to the Sakhalin II Project,” Frank added.

SCF Group’s gross revenue (freight and hire) stood at USD 1.3 billion also a decline from USD 1.4 billion from last time around prompted by the tanker spot market drop by more than 40 per cent and time charter market drop by up to 25 per cent.

The company ended the year with substantial future contracted revenues of USD 8.1 billion.

In 2016, the group completed a series of debt fund raising totalling USD 1.26 billion which covered fully Sovcomflot’s capex requirements. The deals include USD 512 million of long-term bank loans from Russian and international banks raised for the fleet renewal programme and for the refinancing of maturing debt. Additionally last summer SCF Group returned to the international debt capital markets with a new USD 750 million seven year Eurobond offering to finance a simultaneous tender offer for the group’s outstanding Eurobonds due in 2017.

The company’s results come on the back of Sovcomflot’s latest order for the construction of four 114,000 dwt Ice-Class IA Aframax tankers at South Korean yard Hyundai Samho Heavy Industries (HSHI).