Slide 1: Q1 2020 Results
14 MAY 2020 Q1 2020 RESULTS TORM
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: Agenda
AGENDA 1 Introduction to TORM and Q1 2020 highlights 2 Product tanker market overview and outlook 3 Financial metrics 4 Asset management & scrubber investments 3
Slide 4: Safety First
SAFETY FIRST • Safety is the top priority for TORM and an integral part of the One TORM platform • Safety is especially important during the COVID-19 pandemic • To safeguard employees during the COVID-19 pandemic, several precautionary measures were used, e.g. having all office-based employees worki
Slide 5: TORM at a Glance
TORM AT A GLANCE A world-leading product tanker company Fleet overview* 79 Owned 2 On order • A leading pure-play product tanker owner • Large commercial footprint with presence in all key product tanker segments 12 ⚫⚫⚫⚫⚫⚫⚫⚫⚫⚫ • Strong capital structure to support disciplined growth strategy LR2 +2
Slide 6: Q1 2020 Financial Highlights
Q1 2020 FINANCIAL HIGHLIGHTS 6
Slide 7: The Reference Company in the Product Tanker Segment
THE REFERENCE COMPANY IN THE PRODUCT TANKER SEGMENT TORM is a large-scale, tanker owner, TORM’s superior integrated active in all key product tanker operating platform includes segments in order to meet customer in-house technical and commercial management needs. as preferred by customers. Our produ
Slide 8: TORM Commercially Outperforms Peers in Its Key MR Segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT CORRESPONDING TO USD 19M IN Q1 2020 MR reported TCE, USD/day Q1 2020 performance: • TORM: USD/day 22,461 • Peer average: USD/day 18,821 TORM MR USD USD 14m USD 36m USD 19m USD 24m premium* 19m Note: Peer group is based on Ardmore, d’Amico (co
Slide 9: TORM's Commercial Capabilities Focused on Optimizing Geographical Positioning
TORM’S COMMERCIAL CAPABILITIES ARE FOCUSED ON OPTIMIZING GEOGRAPHICAL POSITIONING USD/day (%) 14,000 80 West outperformance Majority of TORM’s MRs West of Suez 12,000 10,000 70 8,000 6,000 60 4,000 2,000 0 50 -2,000 East outperformance Majority of TORM’s -4,000 MRs East of Suez 40 -6,000 -8,000 30 -
Slide 10: Fully Integrated Business Model with Competitive Cost Structure
FULLY INTEGRATED BUSINESS MODEL WITH COMPETITIVE COST STRUCTURE Significant reduction in OPEX OPEX per day (yearly, weighted avg. in USD/day) -20% 7,655 7,193 Compared to the full 6,771 6,673 6,389 6,371 6,089 year of 2014, TORM has reduced the OPEX cost base of approx. USD 44m on an annualized basi
Slide 11: TORM's Earnings Are Very Sensitive to Realization of Freight Rates
TORM’S EARNINGS ARE VERY SENSITIVE TO REALIZATION OF FREIGHT RATES Quarterly EBITDA Annualized EPS* Quarterly PBT Annualized figures* Quarterly EPS USDm 600 USD 3.0 / DKK 20.5 500 USD 0.8 / DKK 5.1 400 USD 0.6 / DKK 4.1 300 202 200 102 100 57 47 0 Full-year 2019 Q1 2020 (USD/day 16,526) (USD/day 23,
Slide 12: CSR Highlights
CSR HIGHLIGHTS TORM remains committed to taking an active GENDER DIVERSITY FUEL role in caring for communities and our EFFICIENCY environment. It is not just our shared duty, but our shared responsibility. Therefore, IMPROVEMENT TORM continues the work to combat carbon, IN THE SHORE-BASED sulfur and
Slide 13: Industry Cooperation and Transparency Are Key to TORM's CSR
INDUSTRY COOPERATION AND TRANSPARENCY ARE KEY TO TORM’S CORPORATE SOCIAL RESPONSIBILITY AND INDUSTRY INITIATIVES TORM is committed to support… UN Sustainable TORM supports the SDGs based on an assessment of our CSR activities Development Goals and areas of impact. UN Global TORM became signatory to
Slide 14: Highlights
HIGHLIGHTS Q1 FINANCIAL HIGHLIGHTS VESSEL INVESTMENTS During Q1 2020, TORM took delivery of two LR1 newbuildings and one MR newbuilding Ordered two LR2 newbuildings EBITDA of USD 102m TCE Q1 2020 of USD/day 23,643 After the quarter ended, TORM took delivery of one additional MR newbuilding Profit be
Slide 15: Equity Investment Highlights
EQUITY INVESTMENT HIGHLIGHTS 15
Slide 16: Agenda
AGENDA 1 Introduction to TORM and 2019 highlights 2 Product tanker market overview and outlook 3 Financial metrics 4 Asset management & scrubber investments 16
Slide 17: Operating in a Dynamic Environment
OPERATING IN A DYNAMIC ENVIRONMENT OPEC+ COVID-19 RUSSIA & SAUDI ARABIA CHANGING DAILY 17
Slide 18: Major Events Driving Product Tanker Freight Rates to All-Time High
NUMEROUS MAJOR EVENTS DRIVING PRODUCT TANKER FREIGHT RATES TO AN ALL-TIME HIGH LR2 (TC1) TORM MR (spot) USD/day MR (avg) TORM MR covered Q2 2020 as of 11 May 2020 170,000 Q1 2020 80,000 • Panama Canal delays 75,000 • Maintenance at Middle East export-oriented refineries • High product exports from C
Slide 19: COVID-19 Has Tightened Tonnage Supply and Led to Market Inefficiencies
THE COVID-19 PANDEMIC HAS TIGHTENED TONNAGE SUPPLY AND LED TO MARKET INEFFICIENCIES Fundamental effects on demand and supply from the COVID-19 MR rates have been strong despite COVID-19 Short-term Medium-term • Increased product exports in • Potential economic stimulus in China and other countries U
Slide 20: COVID-19 Demand Destruction Led to Oversupply of Oil Products
COVID-19 INDUCED DEMAND DESTRUCTION HAS LED TO AN UNPRECEDENTED OVERSUPPLY OF OIL PRODUCTS • The COVID-19 pandemic has Pre-COVID-19 led to an unprecedented oil Jan 2020 demand destruction • Refinery runs have been Refined product lagging declines in demand, stocks build leading to unprecedented inve
Slide 21: Contango in Oil Prices Supports Floating Storage
CONTANGO IN OIL PRICES SUPPORT FLOATING STORAGE IN THE MEDIUM TERM Brent forward spreads and VLCC rates USD/bbl USD/day 8 Brent M5-M1 VLCC rate (rhs) 180,000 Contango 4 150,000 • “Too little, too late”: 120,000 the unprecedented OPEC+ 2 output cuts due from May will not 0 90,000 Backwardation be eno
Slide 22: 14% of Product Tanker Tonnage Classified as Floating Storage
14% OF PRODUCT TANKER TONNAGE CLASSIFIED AS FLOATING STORAGE FOLLOWING A RECENT RAMP-UP Vessels in floating storage • The unprecedented decline in oil product Mn dwt demand has resulted in ullage issues at 20 terminals and refineries, resulting in a spate of logistical floating storage 15 • Given th
Slide 23: LR2 Vessels Switching Back to Clean
PRODUCT TANKER MARKET STRENGTH HAS RECENTLY TRIGGERED SOME LR2 VESSELS TO SWITCH BACK TO CLEAN USD/day % • Over the past six months, the Aframax rate premium to LR2 40,000 55 product tanker market has been Share of LR2s in dirty trades (rhs) supported by around 40 LR2s 30,000 50 switching to dirty t
Slide 24: IMO 2020 Effects on Clean Trading Not Fully Unfolded
IMO 2020 EFFECTS ON CLEAN TRADING HAVE NOT FULLY UNFOLDED YET MGO and VLSFO price spreads (USD/t) 100 MGO-VLSFO spread, Rotterdam • The tight price spread between MGO-VLSFO spread, Singapore MGO and VLSFO in early 2020 incentivized the use of MGO in Europe, with MGO share in bunker 50 sales increasi
Slide 25: Middle East Refinery Capacity Additions Long-Term Impact
MIDDLE EAST REFINERY CAPACITY ADDITIONS EXPECTED TO HAVE A POSITIVE LONG-TERM IMPACT Middle East refinery capacity net additions (m b/d) Forecasted Realized 0.63 0.56 2020-23 avg.=0.41 mb/d 0.32 0.25 0.14 2015-19 avg. 2020F 2021F 2022F 2023F • As oil product demand increases, the ton-mile demand is
Slide 26: Product Tanker Order Book Remains at Historical Low
PRODUCT TANKER ORDER BOOK REMAINS AT HISTORICAL LOW LEVEL Product tanker order book as percentage of the fleet (%) 24 19 19 15 16 14 14 11 12 10 10 8 8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 5Y avg. 10Y avg. Orders with dual- fuel specification 10 15 • The product tanker order bo
Slide 27: Vessel Values and Market Rates Disconnected
VESSEL VALUES AND MARKET RATES DISCONNECTED DUE TO THE COVID-19 UNCERTAINTY USDm LR2 ‘000 USD/day USDm MR ‘000 USD/day 60 40 40 25 35 55 30 35 20 50 25 45 20 15 30 15 40 10 10 25 35 5 0 0 0 5 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan
Slide 28: COVID-19 Leading to Medium-Term Market Volatility
COVID-19 LEADING TO MEDIUM-TERM MARKET VOLATILITY Key medium- to long-term market drivers • The unprecedented oversupply of crude and oil products, due to the COVID-19 induced demand destruction, has led to onshore storage filling up fast and keeping increasing number of vessels tied up in floating
Slide 29: Agenda
AGENDA 1 Introduction to TORM and 2019 highlights 2 Product tanker market overview and outlook 3 Financial metrics 4 Asset management & scrubber investments 29
Slide 30: Q1 2020 Financials
Q1 2020 FINANCIALS USDm Q1 2020 Q1 2019 2019 P&L TCE earnings 158 117 425 Gross profit 115 74 252 Sale of vessels 0 0 1 EBITDA 102 62 202 Profit before tax 57 23 167 Profit before tax excl. impairment reversal 57 23 47 Balance sheet Equity 1,046 867 1,008 NIBD 798 584 786 Cash and cash equivalents 1
Slide 31: Spot-Orientation Provides Operating Leverage with High Near-Term Coverage
SPOT-ORIENTATION PROVIDES SIGNIFICANT OPERATING LEVERAGE WITH HIGH NEAR-TERM COVERAGE Significant operational leverage Unfixed days as of 31 March 2020 LR2 MR (% of total days) LR1 Handy 28,356 (100%) 28,410 (100%) 4,340 4,771 18,671 (89%) 3,207 3,207 2,405 2,145 20,082 19,706 13,667 453 726 726 202
Slide 32: Net Asset Value Estimated at USD 993M
NET ASSET VALUE ESTIMATED AT USD 993M 31 March 2020 figures, USDm Net LTV of 49% 1,832 923 993 56 10 112 129 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 49% ensuring a strong capital structure • Net Asset
Slide 33: Well-Positioned to Service Future CAPEX Commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS Liquidity and CAPEX as of 31 March 2020 USDm Available liquidity CAPEX commitments 273 Retrofit scrubbers Newbuildings incl. scrubber 76 23 45 133 129 21 86 47 112 21 26 Cash Available MR LR2 Total 2020 2021 Total position Working newbuilding newbu
Slide 34: Favourable Financing Profile with No Major Near-Term Maturities
FAVOURABLE FINANCING PROFILE WITH NO MAJOR NEAR-TERM MATURITIES Scheduled debt repayments as of 31 March 2020 USDm 918 12 16 Financial lease 69 167 Mortgage debt 152 27 95 13 78 27 751 76 38 57 33 224 Oustanding ROY 2020 2021 2022 2023 2024 2025 Hereafter debt as of 31 March 2020* Ample headroom und
Slide 35: Agenda
AGENDA 1 Introduction to TORM and 2019 highlights 2 Product tanker market overview and outlook 3 Financial metrics 4 Asset management & scrubber investments 35
Slide 36: Long-Term Industrial Player with Focus on Superior Operational Performance
TORM IS A LONG-TERM INDUSTRIAL PLAYER WITH FOCUS ON SUPERIOR OPERATIONAL PERFORMANCE Long-term industrial player with an integrated operational platform • Industrial player with a long-term time horizon in the product tanker market • Prevalent platform through several cycles with superior financial
Slide 37: Historical Transactions and Vessel Value Development
HISTORICAL TRANSACTIONS AND VESSEL VALUE DEVELOPMENT USDm LR2 - Newbuildings MR - Newbuildings 60 LR1 - Newbuildings MR - 7.5-year second-hand (based on avg. of 5 and 10 years) 55 50 Two GSI LR2s Four GSI LR2s (incl. scrubbers) 45 (excl. scrubbers) 40 Two GSI LR1s (incl. scrubbers) 35 30 Three GSI N
Slide 38: TORM's Recent Vessel Sales Done at Broker Value
TORM’S RECENT VESSEL SALES ARE DONE AT BROKER VALUE Vessel name Vessel Date Age Sales price, net Broker segment of commission, values, USDm USDm TORM Ohio Handy Q3-18 16.7 TORM Neches MR Q3-18 18.0 • Since Q3 2018, TORM has sold 12 TORM Clara MR Q4-18 17.9 vessels at broker value TORM Charente Handy
Slide 39: Two Main Options to Comply with IMO 2020 Sulfur Regulation
THERE ARE TWO MAIN OPTIONS FOR OCEAN-GOING VESSELS TO COMPLY WITH THE UPCOMING IMO 2020 SULFUR REGULATION Product/chemical Worldwide tankers1) TORM2) Newbuildings Scrubber ~4,200 ~500 49 vessels installations vessels vessels sass (12%) (15%) (60%) Existing fleet on the Shipowners’ sulfur water regul
Slide 40: Scrubber Installations Across Shipping Segments
SCRUBBER INSTALLATIONS ACROSS SHIPPING SEGMENTS Product tankers to be fitted with scrubbers (% of current fleet) No. of vessels 300 In service and fitted with scrubber/in yard 15% In service and reported for retrofit 250 On order and to be fitted with scrubber 200 150 30% 100 50 10% 3% 0 LR2 Panamax
Slide 41: Scrubber Installations Impact Supply Effect and Fuel Mix
SCRUBBER INSTALLATIONS IMPACT TIMING OF SUPPLY EFFECT AND FUEL MIX FOR MARINE TRANSPORTATION Bunker consumption – scrubber sensitivity M b/d Compliant fuels HSFO 6 5 1.3 4 3.9 3.7 3 4.2 4.7 4.5 2 3.7 1 1.1 1.3 0.5 0.8 0 0.3 Current bunker Consumption Consumption Consumption Consumption Consumption c
Slide 42: TORM's Scrubber JV
49 SCRUBBER INSTALLATIONS WILL BE CONDUCTED SUPPORTED BY TORM’S SCRUBBER JV TORM’s scrubber JV, ME Production China Ownership share: 27.5% ME • One of the largest risks with scrubber Production installations is the potential delay during both China the production and the installation phase • Due to
Slide 43: Fuel Spread Has Narrowed Along with Decline in Crude Oil Price
FUEL SPREAD HAS NARROWED ALONG WITH DECLINE IN CRUDE OIL PRICE Cal2020 price spread between 0.5% compliant fuels and 3.5% HSFO, Rotterdam delivery vs Brent • The spread USD/t USD/bbl between 0.5% 300 70 compliant fuel and 3.5% HSFO 250 60 is currently 50 trading at USD 200 73 for the 40 calendar yea
Slide 44: Appendix
APPENDIX TORM
Slide 45: Management Team with International Outlook and Shipping Experience
MANAGEMENT TEAM WITH AN INTERNATIONAL OUTLOOK AND MANY YEARS OF SHIPPING EXPERIENCE Executive Director Jacob Meldgaard ▪ Executive Director of TORM plc ▪ CEO of TORM A/S since April 2010 ▪ Chairman of the Board of Danish Shipping and member of the Board of Danish Ship Finance ▪ Previously Executive
Slide 46: Key Figures
KEY FIGURES USDm Q1 2020 Q1 2019 2019 2018 Revenue 246 186 693 635 EBITDA 102 62 202 121 Profit/(loss) before tax 57 23 167 -33 Net profit/(loss) excluding impairment charges 56 23 46 -35 Balance sheet Total assets 2,101 1,717 2,004 1,714 Equity 1,046 867 1,008 847 NIBD 798 584 786 627 Cash and cash
Slide 47: Fleet Overview
FLEET OVERVIEW # of LR2 LR1 MR Handy As of 14 May 2020 vessels 70 68 68 68 11 11 11 60 9 9 9 50 40 30 46 46 46 20 10 0 2 2 2 14 May End 2020 End 2021 Graph excluding sale and 11 11 13 leaseback vessels 47
Slide 48: Oil Market Oversupply Bringing Onshore Storage to Its Limits
UNPRECEDENTED OIL MARKET OVERSUPPLY IS BRINGING THE ONSHORE SPARE STORAGE CAPACITY TO ITS LIMITS CPP inventories in key trading hubs* Mn bbl • As a result of COVID-19 caused demand destruction, CPP inventories in the US, ARA and Singapore combined have grown counter- seasonally in April and are curr
Slide 49: Trade Routes Supported by IMO 2020 Regulation
BOTH MEDIUM-HAUL REGIONAL TRADE AND LONG-HAUL TRADE ARE SUPPORTED BY THE IMO 2020 REGULATION Examples of trade routes impacted 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 trad
Slide 50: Product Tanker Freight Rates at an All-Time High
PRODUCT TANKER FREIGHT RATES AT AN ALL-TIME HIGH LR2 (TC1) MR (average) USD ‘000/day USD ‘000/day Source: Clarksons. Spot earnings: LR2: TC1 Ras Tanura-> Chiba, MR: average basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->Sydney.
Slide 51: Expected Positive TCE Impact from Scrubber Investments
TORM EXPECTS A POSITIVE TCE IMPACT ON THE TORM FLEET DUE TO THE SCRUBBER INVESTMENTS Avg. fuel Compliant fuel and TCE impact per Annual TCE impact Vessel type consumption, HSFO fuel spread vessel, USD/day2) per vessel, USDm tons/day1) assumption, USD/t MR Eco vessel ~11 × 100 = ~1,100 0.4 MR Non-eco
Slide 52: Oaktree Is Majority Shareholder with Free Float of 34%
OAKTREE IS THE MAJORITY SHAREHOLDER WITH A REMAINING FREE FLOAT OF 34% Share information Estimated shareholdings as of May 2020 (%) TORM’s shares are listed on Nasdaq in Copenhagen and Nasdaq in New York under 100 the tickers TRMD A and TRMD, respectively. 14 Shares • 74.8m A-shares, one B-share and