Russia's leading tanker group Sovcomflot plunged to a net loss of $393 million in the first quarter, blaming the slump on new Western sanctions that have led to operational problems, lower revenues and some vessels sitting idle.
Sovcomflot's financial pressures show the impact of sanctions on Moscow over the war in Ukraine at a time when Russia's economy is weakening and exporters are cutting back on rail shipments.
Western countries imposed sanctions on Sovcomflot and its fleet in 2024 to try and reduce Russia's revenue from oil sales that can finance its military.
In January, the United States added new Sovcomflot vessels to the list of sanctioned assets and withdrew a U.S. licence, granted last year, that had allowed some vessels in its fleet to operate despite sanctions.
Sovcomflot, which reported a 49% year-on-year drop in first-quarter revenue to $278.5 million, said the January sanctions had made a particularly substantial impact, creating additional commercial and operational difficulties.
"The intensification of Western sanctions has made it more difficult to operate the fleet and led to lower revenues and downtime for some sanctioned vessels," Sovcomflot said in a statement.
Sovcomflot's earnings before interest, tax, depreciation and amortisation (EBITDA) fell almost 69% year-on-year to $105 million. Sovcomflot considers the sanctions to be illegal.
The bulk of the net loss was marked as a non-cash loss under depreciation and amortisation, referring to ships being revalued.
As all Sovcomflot's business is calculated in foreign currency, there were also foreign exchange losses due to the rouble's strengthening, said an industry analyst who declined to be named as they are not authorised to speak to media.
"The results are bad, of course, but not terrible," the analyst said, adding that the revenue loss suggested Sovcomflot has raised the discounts it offers on transportation rates.
The tightened U.S. sanctions, imposed by Joe Biden's administration, had briefly disrupted Russia's flourishing oil trade with China and India.
Moscow's efforts to circumvent shipping sanctions last week saw Russia send a fighter jet into NATO airspace over the Baltic Sea during an attempt to stop a Russian-bound oil tanker thought to be part of Moscow's "shadow fleet".
(Reuters/Reporting by Gleb Stolyarov and Alexander Marrow; editing by David Evans, Tomasz Janowski and Louise Heavens)
