Russian state shipping company Sovcomflot (SCF Group) believes Western sanctions could hurt revenue this year, following a weaker first-quarter profit.

CEO Igor Tonkovidov told a St Petersburg economic forum that the measures and changing market conditions were affecting its business.

“The company is under relentless sanctions pressure, which makes it difficult to work,” the Interfax news agency quoted Tonkovidov as saying. “In addition, the market has changed, which has affected the level of competition and the level of freight rates.”

And he told Reuters: “There are always problems because of sanctions, in all areas. It definitely makes operations more difficult.”

Net profit from the tanker and LNG carrier fleet to 31 March was down at $216m, from $241.1m in the fourth quarter of 2023.

Revenue dipped to $545.8m, versus $558.4m, a statement said.

Operating costs were stable at $103.6m, but depreciation rose to $111.3m from $98.7m.

Cash stood at $1.25bn, with net debt finishing the quarter at $234m.

“The company demonstrated stable financial results due to the high level of provision of the fleet with long-term contracts, as well as the continued high market conditions of the tanker market,” Sovcomflot said.

‘Unfriendly countries’

“The limiting factor in the company’s work in the reporting period was the introduction of new sanctions from unfriendly countries. The company continues to systematically work to overcome emerging challenges,” the owner added.

The group said it is committed to paying dividends for 2023 at 50% of adjusted annual profit.

The board has recommended paying RUB 26.8bn ($300m) to shareholders of the Moscow-listed shipowner on top of interim payments already made, bringing the total for last year to RUB 41.8bn.

In April, the owner revealed a massive profit for 2023 as Western measures against the country’s oil exports boosted tanker rates.

Accounts posted to the Russian-language section of the crude carrier and LNG vessel player’s website showed net earnings of $942m last year.

This was up from $385.2m in 2022, the owner said in a statement.

This was its first annual results statement since the war in Ukraine began in 2022.

Last month, the company continued a reorganisation of its fleet after 14 tankers were sanctioned by the US in February.

The shipowner transferred 12 of these vessels to the Russian Register of Ships, switching from the Indian Register of Ships, according to their websites.

Sovcomflot has already had to find new insurers due to sanctions.

And in April it moved four sanctioned tankers from the Gabon flag to Russia, as well as renaming them.