Slide 1: Q2 2019 Results Teleconference
15 AUGUST 2019 Q2 2019 RESULTS TELECONFERENCE 1
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT 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
Slide 3: Today's Presenter
TODAY’S PRESENTER Jacob Meldgaard ▪ Executive Director in TORM plc ▪ CEO of TORM A/S since April 2010 and Head of Tanker Division since 2015 ▪ Chairman of the Board of Danish Shipping and member of the Board of Danish Ship Finance ▪ Previously Executive Vice President of the Danish shipping company
Slide 4: Q2 2019 Highlights
Q2 2019 HIGHLIGHTS • EBITDA of USD 40.6m in Q2 and USD 102.1m in H1 and Profit before tax of USD 5.2m in Q2 and USD 28.7m in H1 • RoIC of 3.9% in Q2 and 6.2% in H1 and Earnings per share of 7 US cents in Q2 and 38 US cents in H1 • Net Asset Value estimated at USD 897m as of 30 June 2019, correspondi
Slide 5: Elevated refinery maintenance ahead of IMO 2020 driving softer rates
ELEVATED REFINERY MAINTENANCE AHEAD OF IMO 2020 DRIVING SOFTER RATES Q2 2019 USD/day • Particularly heavy refinery maintenance in Asia (+47% y-o-y) limited westbound diesel movements • Naphtha flows from the West to the East were under pressure due to petrochemical maintenance and competition from L
Slide 6: Heavy and prolonged spring refinery maintenance coupled with unplanned outages
HEAVY AND PROLONGED SPRING REFINERY MAINTENANCE COUPLED WITH A SERIES OF UNPLANNED OUTAGES Global CDU maintenance and unplanned outages* Mb/d • Spring maintenance (coupled with unplanned outages) ahead of IMO 2020 has been heavier and longer than in recent years (y-o-y, +17% in Q1 and +23% in Q2) •
Slide 7: Middle East refinery capacity additions set to increase significantly in 2021
MIDDLE EAST REFINERY CAPACITY ADDITIONS SET TO INCREASE SIGNIFICANTLY IN 2021 Middle East refinery capacity net additions (m b/d) Forecasted Realized 0.82 0.84 0.47 0.18 0.12 0.12 0.06 0.12 -0.03 2015 2016 2017 2018 2019F 2020F 2021F • As oil product demand increases, the ton-mile demand is positive
Slide 8: IMO 2020 sulfur cap will potentially lead to ~5% incremental growth in product tanker trade
IMO 2020 SULFUR CAP WILL POTENTIALLY LEAD TO ~5% INCREMENTAL GROWTH IN THE PRODUCT TANKER TRADE Global consumption of marine bunkers* Distillates M b/d Additional compliant fuels* VLSFO 6 HSFO 5 4 Potential TORM’s current new trade estimate of for clean product tankers additional diesel demand 3 2 1
Slide 9: Both medium-haul regional trade and long-haul trade supported by IMO 2020
BOTH MEDIUM-HAUL REGIONAL TRADE AND LONG-HAUL TRADE WILL BE SUPPORTED BY THE IMO 2020 REGULATION Examples of trade routes enforced by the IMO 2020 sulfur regulation • Increased flexibility to produce additional diesel in net exporting regions and refinery expansion support long-haul and medium-haul
Slide 10: IMO 2020 sulfur regulation expected to kick in towards end of Q3 2019
THE IMO 2020 SULFUR REGULATION IS EXPECTED TO KICK IN TOWARDS THE END OF THE THIRD QUARTER OF 2019 Q3 2019 Q4 2019 Prepare vessels for implementation • TORM plans to preparations (plans, documentation, etc.) gradually change TORM bunkers on board vessels during the Bunker planning and replenishment
Slide 11: Product tanker order book continues to shrink
PRODUCT TANKER ORDER BOOK CONTINUES TO SHRINK Product tanker order book as percentage of the fleet M dwt • The product tanker order book to fleet ratio is at a historically low level of 7.4% (10% for MRs, 3% for LR1s and 8% for LR2s) • In H1 2019, the product tanker fleet grew by 2.8% with 4.3% grow
Slide 12: Medium to long-term market drivers remain positive
MEDIUM TO LONG-TERM MARKET DRIVERS REMAIN POSITIVE Key medium to long-term market drivers • Global oil demand growth remains positive albeit slower than in previous years • Global CPP stockpiles have returned to normal levels • Refinery capacity addition in the Middle East potentially increasing sai
Slide 13: TORM commercially outperforms peers in its key MR segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT High (incl. TORM) Low (incl. TORM) Peer avg. (excl. TORM) TORM 30,000 Q2 2019 performance: 25,000 • TORM: USD/day 15,163 • Peer average: USD/day 13,327 MR reported TCE, USD/day 20,000 15,000 10,000 5,000 - Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Slide 14: Fully integrated business model with competitive cost structure
FULLY INTEGRATED BUSINESS MODEL WITH COMPETITIVE COST STRUCTURE Significant reduction in OPEX TORM has trimmed administration expenses OPEX per day (yearly, weighted avg. in USD/day) Admin. expenses (quarterly avg. in USDm) Compared to 2014, -15% 2008 TORM has reduced 7,655 2009 the annual OPEX 7,19
Slide 15: Spot-orientation provides significant operating leverage
SPOT-ORIENTATION PROVIDES SIGNIFICANT OPERATING LEVERAGE Unfixed days # of days as of 30 June 2019 LR2 LR1 MR Handy (% of total days) 28,894 (97%) 30,064 (100%) 3,589 4,231 3,274 3,265 11,855 (89%) 1,544 20,246 20,753 1,161 8,335 816 1,785 1,815 2019 2020 2021 Illustrative change in cash flow genera
Slide 16: Well-positioned to service future capex commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS CAPEX and liquidity as of 30 June 2019 USDm CAPEX commitments Available liquidity Retrofit scrubbers Newbuildings incl. scrubber 4 x S&Ls on 2011-built MRs (new debt) 99 466 2011-built MR vessels 2 x S&Ls (net of debt repayment) 66 367 33 81 304 3
Slide 17: Net asset value estimated at USD 897m
NET ASSET VALUE ESTIMATED AT USD 897M 30 June 2019 figures, USDm Net LTV of 51% 1,736 720 897 271 43 4 106 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 51% ensuring a strong capital structure • Net Asset Va
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