Sanctions led to losses: Russian tanker group "Sovcomflot" lost almost $400 million
Kyiv • UNN
Due to Western sanctions in 2024, the Russian oil giant "Sovcomflot" suffered losses of $393 million. The company's revenues almost halved.
Russian oil giant Sovcomflot reported a net loss of $393 million. The reason was the Western sanctions imposed in 2024, which caused a drop in revenue by almost half, idle vessels and serious operational difficulties.
This is reported by UNN with a reference to Reuters.
According to the publication, Western countries imposed sanctions against Sovcomflot and its fleet in 2024 in an attempt to reduce Russia's revenues from oil sales, which could finance its military needs. In January, the United States added new Sovcomflot vessels to the list of sanctioned assets and revoked a U.S. license issued last year that allowed some of the fleet's vessels to operate despite the sanctions.
Sovcomflot reported a 49% year-on-year drop in revenue for the first quarter of 2024 to $278.5 million and said the January sanctions had a particularly significant impact, creating additional commercial and operational challenges.
The tightening of Western sanctions has complicated the operation of the fleet and led to lower revenues and downtime for some sanctioned vessels,
Sovcomflot's earnings before interest, taxes, depreciation and amortization (EBITDA) fell by almost 69% year-on-year to $105 million. Sovcomflot considers the sanctions illegal.
The bulk of the net loss was marked as a non-cash depreciation loss relating to the revaluation of vessels.
Since all of Sovcomflot's business is settled in foreign currency, there were also losses from exchange rate differences due to the strengthening of the ruble,
The results are, of course, bad, but not terrible,
Let's add
The new US sanctions, announced by the Joe Biden administration, hit the company's vessels particularly hard in January 2024, when a license was revoked that allowed part of the fleet to service contracts despite the sanctions. This temporarily disrupted trade between Russia, China and India - key partners of the Kremlin in the energy market.
Sovcomflot officially considers the sanctions illegal, but is forced to adapt to the new reality, which still hits its profitability and stability.