TORM plc interim results for the nine months ended 30 September 2018
November 15 2018 - 3:14AM
TORM plc interim results for the nine months ended 30 September
2018
“The product tanker market reached historically low levels in
the third quarter impacted by a decrease in demand growth and
shorter sailing distances. I am nonetheless pleased that TORM
continues to perform well in a difficult market,” says Executive
Director Jacob Meldgaard and continues: “We believe product tanker
freight rates have bottomed out in the third quarter, and in the
fourth quarter we have experienced firmer product tanker freight
rates driven by increasing export activity in the US Gulf and a
stronger crude tanker market. We maintain an optimistic view of the
long-term prospects of the product tanker market. As preparation
for the IMO 2020 sulfur directive, we are pleased to have
established a joint venture with ME Production, a leading scrubber
manufacturer, and Guangzhou Shipyard International that will allow
us to secure availability of high-quality scrubbers at attractive
prices.”
- EBITDA for the third quarter of 2018 was USD 14.7m (2017, same
period: USD 37.0m). The loss before tax amounted to USD 24.5m
(2017, same period: USD -3.9m). Cash flow from operating activities
was positive at USD 18.3m in the third quarter of 2018 (2017, same
period: USD 17.5m) and loss per share (EPS) was 34 cents (2017,
same period: -7 cents). Return on Invested Capital (RoIC) was -4.3%
(2017, same period: 1.6%).
- In the third quarter of 2018, TORM achieved TCE rates of
USD/day 10,598 (2017, same period: USD/day 14,279). The product
tanker market has remained soft throughout the third quarter of
2018, with MR benchmark freight rates reaching all-time
historically low levels. The market was positively impacted by
record high refinery runs at the start of the third quarter, but
negatively impacted by the effects of decrease in year-on-year
demand growth, lower sailing distances and a continued
cannibalization from newbuilding crude tankers going after clean
cargos on their maiden voyages before commencing transportation of
dirty cargos.
- As of 30 September 2018, 22% of the remaining total earning
days in 2018 were covered at an average rate of USD/day 15,164. As
of 12 November 2018, 61% of the total earning days in the fourth
quarter of 2018 were covered at USD/day 13,278.
- During the third quarter of 2018, TORM entered into agreements
to sell two older vessels: the MR vessel TORM Neches (built in
2000) and the Handysize vessel TORM Ohio (built in 2001). In
October 2018, TORM has entered into an agreement to sell the MR
vessel TORM Clara (built in 2000). The three vessels were sold for
a total consideration of USD 20m, and a total debt of USD 12m is
expected to be repaid in connection with the vessel sales. The
vessels are all expected to be delivered to their new owners during
the fourth quarter of 2018. In July 2018, TORM redelivered the
chartered LR2 vessel TORM Marie to its owner after the expiration
of the charter period. As of 30 September 2018, including the three
vessels for which a sale has been agreed, TORM’s fleet consists of
74 owned vessels, three chartered vessels and ten vessels on order.
On 15 October 2018, TORM took delivery of the last LR2 newbuilding,
TORM Hilde.
- Based on broker valuations, TORM’s fleet including newbuildings
had a market value of USD 1,661m as of 30 September 2018. Compared
to broker valuations as of 30 June 2018, the market value of the
fleet decreased by USD 14m (~1%), in line with the fleet
depreciation rate.
- On 9 November 2018, TORM announced the establishment of a joint
venture with ME Production, a leading scrubber manufacturer, and
Guangzhou Shipyard International (GSI), which is part of the China
State Shipbuilding Corporation group. The joint venture, ME
Production China, will manufacture and install scrubbers in China
and deliver them to a range of maritime industry customers for both
newbuildings and retrofitted vessels. TORM holds an ownership stake
of 27.5% in the new joint venture. In connection with the
establishment, TORM has ordered a total of 16 scrubbers with ME
Production China and signed a letter of intent for additional 18
scrubbers with the new joint venture. With these orders, TORM has
committed to install scrubbers on 21 vessels and potentially up to
39 vessels or roughly half of TORM’s fleet. During the third
quarter of 2018, TORM has successfully conducted its first retrofit
scrubber installation on the MR ice-class vessel TORM Lene, and on
15 October 2018 TORM took delivery of the first newbuilding
outfitted with a scrubber, the LR2 vessel TORM Hilde. These two
vessels are expected to provide valuable operational insight in
advance of the remaining scrubber installations planned for 2019
and the first half of 2020.
- As of 30 September 2018, TORM’s available liquidity was USD
425m consisting of USD 163m in cash and USD 262m in undrawn credit
facilities. As of 30 September 2018, net interest-bearing debt
amounted to USD 597m and TORM's net loan-to-value (LTV) ratio was
54%.
- The book value of the fleet was USD 1,424m as of 30 September
2018 excluding outstanding installments on the newbuildings of USD
296m. The outstanding installments include payments for scrubbers
related to these vessels. As of 30 September 2018, TORM’s order
book stood at ten newbuildings: one LR2, two LR1s and seven MRs.
The LR2 vessel was delivered on 15 October 2018, and the LR1s and
the MRs are expected to be delivered in 2019 through the first
quarter of 2020.
- Based on broker valuations as of 30 September 2018, TORM’s Net
Asset Value (NAV) excluding charter commitments was estimated at
USD 826m. This corresponds to a NAV/share of USD 11.2 or DKK 72.0.
TORM’s book equity amounted to USD 859m as of 30 September 2018.
This corresponds to a book equity/share of USD 11.6 or DKK 74.5.
During the third quarter of 2018, TORM has upon request from
certain warrantholders cancelled 126,874 warrants. TORM now has
4,711,953 warrants outstanding.
CONFERENCE CALLTORM will be hosting a
conference call for investors and financial analysts at 9:00 am
Eastern Time / 3:00 pm Central European Time. Those wishing to
listen to the call should dial +45 8071 8097 (+1 866 966 1396 for
USA connections) at least 10 minutes prior to the start of the call
to ensure connection and using 2193596 as conference ID. The
presentation can be downloaded from
https://investors.torm.com/.
CONTACT |
TORM plc |
Jacob Meldgaard, Executive Director, tel.: +45 3917 9200 |
Birchin Court, 20 Birchin Lane |
Christian Søgaard-Christensen, CFO, tel.: +45 3917 9200 |
London, EC3V 9DU, United Kingdom |
|
Tel.: +44 203 713 4560 |
|
www.torm.com |
ABOUT TORM TORM is one of the world’s leading
carriers of refined oil products. The Company operates a fleet of
approximately 80 modern vessels with a strong commitment to safety,
environmental responsibility and customer service. TORM was founded
in 1889. The Company conducts business worldwide. TORM’s shares are
listed on NASDAQ Copenhagen and NASDAQ New York (tickers: TRMD A
and TRMD). For further information, please visit www.torm.com.
SAFE HARBOR STATEMENTS AS TO THE FUTUREMatters
discussed in this release may constitute forward-looking
statements. Forward-looking statements reflect our current views
with respect to future events and financial performance and may
include statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions and
statements other than statements of historical facts. The words
“believe,” “anticipate,” “intend,” “estimate,” “forecast,”
“project,” “plan,” “potential,” “may,” “should,” “expect,”
“pending” and similar expressions generally identify
forward-looking statements.
The forward-looking statements in this release are based upon
various assumptions, many of which are based, in turn, upon further
assumptions, including without limitation, management’s examination
of historical operating trends, data contained in our records and
other data available from third parties. Although the Company
believes that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant
uncertainties and contingencies that are difficult or impossible to
predict and are beyond our control, the Company cannot guarantee
that it will achieve or accomplish these expectations, beliefs or
projections.
Important factors that, in our view, could cause actual results
to differ materially from those discussed in the forward-looking
statements include the strength of the world economy and
currencies, changes in charter hire rates and vessel values,
changes in demand for “ton miles” of oil carried by oil tankers,
the effect of changes in OPEC’s petroleum production levels and
worldwide oil consumption and storage, changes in demand that may
affect attitudes of time charterers to scheduled and unscheduled
dry-docking, changes in TORM’s operating expenses, including bunker
prices, dry-docking and insurance costs, changes in the regulation
of shipping operations, including requirements for double hull
tankers or actions taken by regulatory authorities, potential
liability from pending or future litigation, domestic and
international political conditions, potential disruption of
shipping routes due to accidents, political events or acts by
terrorists.
In light of these risks and uncertainties, you should not place
undue reliance on forward-looking statements contained in this
release because they are statements about events that are not
certain to occur as described or at all. These forward-looking
statements are not guarantees of our future performance, and actual
results and future developments may vary materially from those
projected in the forward-looking statements.
Except to the extent required by applicable law or regulation,
the Company undertakes no obligation to release publicly any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events.
- 17-2018 - TORM plc interim results for the nine months ended 30
September 2018 - UK
- Q3 Report 2018
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