Third quarter report 2015

| Source: TORM A/S TORM A/S

“TORM’s strong operational platform has delivered the highest product tanker freight rates since 2008 and a positive EBITDA of USD 96m in the third quarter of 2015. TORM has demonstrated its financial and strategic flexibility with the exit from bulk to become a pure-play product tanker company, the acquisition of three MR vessels and two new financing agreements in the third quarter of 2015,” says CEO Jacob Meldgaard and adds: “With our proven track record and a large fleet on the water, TORM is well-positioned to take advantage of the promising supply and demand fundamentals in the market.”
  • On 13 July 2015, TORM successfully completed the restructuring (“Restructuring”) including the contribution of 31 vessels by OCM (Gibraltar) Njord Midco Ltd. (“Njord”). In connection with the Restructuring TORM has published a listing prospectus, elected a new Board of Directors and mandated a reverse stock split that was completed at a consolidation ratio of 1,500:1 on 24 September 2015 (cf. company announcements no. 19, 23, 29 and 31). Due to reverse acquisition accounting the consolidated financial results reflect the activities for Njord only for 2014 and the period from 1 January 2015 until 13 July 2015, whereas the remaining period of 2015 will reflect the combined activity of TORM and Njord. This quarterly report also contains pro forma figures for Q1-Q3 of 2014 and 2015 (see page 12 for further details).
     
  • The reported EBITDA for the third quarter of 2015 was USD 96m and the pro forma EBITDA was USD 105m (2014, same period, pro forma: USD 26m). The reported profit before tax for the third quarter of 2015 was USD 65m and the pro forma profit before tax was USD 81m (2014, same period, pro forma:USD -4m). Reported cash flow from operating activities was positive with USD 78m in the third quarter of 2015. Reported earnings per share (EPS) for the third quarter of 2015 was USD 1.1 and pro forma EPS was USD 1.3 (USD -0.1). Pro forma EPS for the first nine months equaled USD 2.6 (USD -0.2).  
     
  • During the third quarter of 2015, the product tanker market reached its highest level since 2008 primarily due to continued high refinery utilization supporting demand for transportation of refined products. TORM’s largest segment, MRs, achieved spot rates of USD/day 24,599 in the third quarter of 2015, which is up by 77% year-on-year. The Tanker segment reported a gross profit of USD 104m in the third quarter of 2015.
     
  • During the third quarter of 2015, TORM purchased three modern second-hand MR vessels (TORM Loke (2007), TORM Atlantic (2010) and TORM Astrid (2012)) with expected delivery in October and November 2015 for a total consideration of USD 80m.
     
  • As the final step in the planned wind-down of TORM’s bulk activities, the two Panamax vessels TORM Anholt and TORM Bornholm were sold during the third quarter of 2015. There is no P&L effect from the sale. The vessels have been delivered to the new owners and TORM no longer operates any owned or T/C-in vessels in the bulk segment. In the third quarter of 2015, TORM’s bulk segment reported a gross result of USD -1m.
     
  • The book value of the fleet was USD 1,422m as of 30 September 2015 excl. outstanding installments on the newbuildings of USD 109m. Based on broker valuations, TORM’s product tanker fleet including newbuildings had a market value of USD 1,659m as of 30 September 2015. Compared to the broker values of the combined TORM and Njord product tanker fleet as of 30 June 2015, the value has increased by USD 77m (~5%).
     
  • Net interest-bearing debt amounted to USD 534m as at 30 September 2015. During the third quarter of 2015, TORM has secured undrawn financing of USD 67m from Danish Ship Finance for the first three newbuildings and undrawn financing of USD 26m from Danske Bank for the purchase of two out of the three second-hand MR vessels mentioned above.
     
  • TORM had undrawn credit facilities and cash of approx. USD 338m at the end of the third quarter of 2015. Outstanding CAPEX relating to the order book and vessel purchases amounted to USD 189m.
     
  • Equity amounted to USD 947m as at 30 September 2015, equivalent to USD 14.8 per share (DKK 99 per share), excluding treasury shares and outstanding warrants, giving TORM an equity ratio of 54%.
     
  • For the full year 2015, TORM has narrowed the EBITDA interval to a positive EBITDA in the range of USD 200 -220m and a profit before tax in the range of USD 115 – 135m. On a pro forma basis TORMs full year guidance equals an EBITDA in the range of USD 310 - 330m and a profit before tax in the range of USD 185 – 205m. As 5,632 earning days in 2015 are unfixed as at 30 September 2015, a change in freight rates of USD/day 1,000 will impact the profit before tax by USD 6m.

 

Conference call   Contact TORM A/S
TORM will be hosting a conference call for financial analysts and investors at 3 pm CEST today. Please dial in 10 minutes before the conference is due to start on +45 3271 4607 (from Europe) or +1 877 491 0064 (from the USA). The presentation can be downloaded from www.torm.com.   Tuborg Havnevej 18, DK-2900 Hellerup, Denmark
Tel.: +45 3917 9200 / Fax: +45 3917 9393, www.torm.com
DK-VAT: 22460218
Jacob Meldgaard, CEO, tel.: +45 3917 9200
Mads Peter Zacho, CFO, tel.: +45 3917 9200
Christian Søgaard-Christensen, IR, tel.: +45 3076 1288

 


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 and is headquartered in Copenhagen, Denmark. TORM’s shares are listed on Nasdaq Copenhagen (ticker: TORM A). For further information, please visit www.torm.com.
 
Safe Harbor statements as to the future
Matters 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 Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions 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 which 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. 
Forward-looking statements are based on management’s current evaluation, and TORM is only under an obligation to update and change required by law.

 

Attachments

34-2015 - Q3 report TORM - US.pdf