Torm Plc Class A · OMXCOP:TRMD_A
Torm Plc Class A — Q2 2023 Earnings Presentation
18 slides from Torm Plc Class A's earnings presentation, Aug 17, 2023
Slide 1: Q2 2023 Results Teleconference and Webcast
17 AUGUST 2023 Q2 2023 RESULTS TELECONFERENCE AND WEBCAST
Slide 2: Safe harbor statement as to the future
Safe harbor statement as to the future Matters discussed in this release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information
Slide 3: Today's presenters
Today’s presenters JACOB MELDGAARD ▪ Executive Director of TORM plc ▪ CEO of TORM A/S since 2010 ▪ Member of the Board of Danish Shipping ▪ Member of the Board of Danish Ship Finance ▪ Member of the Board of the International Chamber of Shipping ▪ More than 30 years of shipping experience KIM BALLE
Slide 4: Q2 2023 highlights
Q2 2023 highlights Adjusted EBITDA Profit before EPS EPS TCE MR TCE EBITDA RoIC (%) (USDm) tax (USDm) (USD/share) (DKK/share) (USD/day) (USD/day) (USDm) Q2 2023 237 200 184 33.9 2.2 15.3 36,360 33,862 Q2 2022 153 163 107 22.7 1.3 9.2 29,622 29,174 Change +54% +23% +72% +70% +66% +23% +16% RESULTS DI
Slide 5: Geopolitical tensions leading to a step change towards higher average freight rates
Geopolitical tensions leading to a step change towards higher average freight rates USD/day Clarksons avg. MR benchmark 65.000 Clarksons avg. MR benchmark - annual avg. Clarksons avg. MR benchmark - 2023YTD avg. 60.000 TORM MR spot earnings - annual avg. 55.000 TORM MR spot earnings - 1H 2023 avg. 5
Slide 6: Trade recalibration has increased ton-miles even with lower EU import volumes
Trade recalibration has increased ton-miles even with lower EU import volumes EU/UK CPP imports (monthly average) ▪ Post-sanctions, EU/UK total CPP import volumes have Long-haul imports Ton-miles (rhs) declined by 15% y-o-y, driven by extensive stockbuilding m tons bn ton-miles Short-haul imports ah
Slide 7: Depleted diesel stockpiles in Europe are leading to widened arbitrage spreads
Depleted diesel stockpiles in Europe are leading to widened arbitrage spreads Amsterdam-Rotterdam-Antwerp weekly diesel stockpiles Europe – Middle East diesel price spread m bbl USD/ton 26 200 2023 2022 5-year high/low 5-year average ARA front month - AG spot price spread, 1 week MA 24 180 2010-2021
Slide 8: Freight rates rebounding after a seasonally weaker second quarter
Freight rates rebounding after a seasonally weaker second quarter Global CPP loadings by vessel type, vs. Jan-2022 ▪ So far in Q3, CPP volumes lifted on MRs have rebounded, supported by increased exports from the US Gulf, NW Europe, m b/d China and the Middle East. 3.0 LR2/LR1 MR ▪ CPP volumes lifte
Slide 9: Recent switching of the LR2 fleet from clean to dirty further supports the product tanker market
Recent switching of the LR2 fleet from clean to dirty further supports the product tanker market Aframax* premium to LR2 and LR2 share in DPP ▪ Since the start of 2023, a net of 35 LR2 vessels have gone from clean to dirty trades, effectively reducing the LR2 fleet USD/day Aframax rate premium to LR
Slide 10: Refinery dislocation is adding ton-mile demand
Refinery dislocation is adding ton-mile demand Refinery closures and capacity additions in 2020-2023 (kb/d) Middle East refinery capacity additions (mb/d) 11,3 1,0 0,2 0,5 9,5 0,1 Capacity 2020 2021 2022 2023 Capacity end-2019 end-2023 ▪ Since 2020, 2.5m b/d of refining capacity has been closed down
Slide 11: Fleet growth remains low despite recent increase in newbuilding activity
Fleet growth remains low despite recent increase in newbuilding activity Product tanker ordering (m dwt) ▪ Product tanker order book to fleet ratio is at % % of existing fleet 10% with delivery from 2023ROY to 2026, 45% 17% 10% 2% 5% 3% 5% 14% 5% 9% 1% 6% 4% 3% 3% 3% 3% 5% which implies fleet additi
Slide 12: Combined LR2 and Aframax order book is manageable
Combined LR2 and Aframax order book is manageable LR2 and Aframax tanker deliveries (known order book) and expected removals ▪ The recent increase in LR2 ordering should be seen in combination with the Aframax No. of vessels ordering given the versatility of the LR2 fleet 50 which can transport both
Slide 13: Demand and supply factors remain positive
Demand and supply factors remain positive Ton-mile demand Tonnage supply 1 110 110 4 110 2 105 105 105 1 104 3 102 2 100 100 100 100 95 95 90 90 85 85 80 80 Ton-mile Trade Demand Ton-mile Trade Demand Ton-mile Tonnage supply Net fleet growth Tonnage supply Net fleet growth Tonnage supply end-2021 re
Slide 14: Strong markets and high earnings have enabled high dividend payouts in 2022-2023
Strong markets and high earnings have enabled high dividend payouts in 2022-2023 TCE1 USDm ▪ Q2 2023 was the strongest second quarter in TORM’s history. 332 317 308 ▪ TCE reached USD 308m including USD 37m unrealized gains on financial 265 instruments in Q2. 210 ▪ TORM obtained an EBITDA result of U
Slide 15: TORM's MR fleet outperforming peers in 27 out of 30 quarters
TORM’s MR fleet outperforming peers in 27 out of 30 quarters MR reported TCE, USD/day Q2 2023 performance: • TORM: USD/day 33,862 • Peer average: USD/day 27,795 TORM MR premium* USD 14m USD 36m USD 20m USD 24m USD 39m USD 42m USD 38m USD 42m Note: Peer group is based on Ardmore, d’Amico (composite o
Slide 16: 74% of earning days in Q3 23 covered at USD/day 30,534
74% of earning days in Q3 23 covered at USD/day 30,534 As of 14 August 2023 LR2 LR1 MR Total coverage Earning days1 1,074 1,191 1,189 1,177 1,249 1,265 1,217 1,222 5,127 5,230 5,184 5,304 7,451 7,685 7,591 7,703 Coverage % (14 August 2023) 70% 0.3% 0% 88% 38% 5% 71% 15% 10% 74% 16% 8% Average rate2
Slide 17: Strong markets and high earnings have increased vessel values and reduced the net LTV ratio
Strong markets and high earnings have increased vessel values and reduced the net LTV ratio Vessel value USDm ▪ Total vessel value increased by 6% to USD 3.1bn in Q2 as TORM has 3,084 taken delivery of all the vessels acquired during Q1 and Q2 2023 and as 2,893 2,650 the value of the existing fleet
Slide 18: Key take-aways from TORM's Q2 2023 earnings call
Key take-aways from TORM’s Q2 2023 earnings call ▪ Historically strong financial Q2 performance with Q2 2023 EBITDA being 54% higher than Q2 2022. ▪ The normally softer second quarter provides TORM with 74% coverage at USD 30,534 per day for Q3 2023. ▪ Seasonally increasing demand, low product stock