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By John Helmer in Moscow

The Novorossiysk Shipping Company (Novoship) disappointed Moscow maritime analysts and the stock market today with FY 2007 financial results, just issued. Reported revenues totaled $615.3 million, 10% above the 2006 figure, but below consensus estimates and projections by transport analysts at Renaissance Capital and Finam. Net profit was reported at $207.9 million, up 37% on 2006. However, adjusting revenues, earnings, and profit for the sale of vessels from the Novoship fleet during the year, the adjusted Ebitda result comes in at $342.7 million, a gain of 8% year on year. Adjusted net profit is $182.7 million, up 8% also.

“The published financials slightly missed our expectations,” reported Finam, “largely due to adverse conditions in the freight market in 4Q 2007. The company’s 9M revenue increased by12% y-o-y, but revenue growth slowed to 9.7% for FY 2007. It is noteworthy that the published results do not paint the full picture of the shipper’s operating results and need to be adjusted for the company’s revenues from the sale of the fleet.” About $53 million was gained by Novoship on its fleet selloff last year.

The unadjusted Novoship figures materially helped lift state-owned Sovcomflot, which released its 2007 financial results early this month. Sovcomflot currently owns 97% of Novoship’s ordinary shares, and it has announced that it has consolidated its own results with those of Novoship for the past year. Including the fleet sale figure, Novoship contributed 50% to the consolidated revenue for Sovcomflot; 62% to the EBITDA and 53% to the consolidated net income. Rencap analyst Stanislav Gorozhankin forecasts a further shrinking of Novoship’s Ebitda this year owing to “an increase in shipping operating expenses [and] a decline in spot charter rates in 2007.”

The Moscow stock market reacted negatively to the Novoship report, cutting by 3% the price of Novoship preference shares, 17% of which are still outside Sovcomflot’s control. Sovcomflot is expected to annmounce a buyback of the remaining 3% of ordinary shares left in the market. They have been trading down since they peaked last October, and the price continued down on the financial release.

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