Slide 1: Q3 2018 Results
15 November 2018 Q3 2018 RESULTS
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 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 3
Slide 4: Highlights for the Third Quarter of 2018
HIGHLIGHTS FOR THE THIRD QUARTER OF 2018 • EBITDA for Q3 2018 was USD 15m and the result before tax a loss of USD 24.5m • RoIC for the period was -4.3% and loss per share was 34 US cents Results • Net Asset Value estimated at USD 826m as of 30 September 2018, corresponding to a NAV/share of USD 11.2
Slide 5: Q3 2018
Q3 2018 USDm Q3 2018 Q3 2017 2017 P&L TCE Earnings 71 95 397 Gross profit 27 47 200 Sale of vessels 0 0 3 EBITDA 15 37 158 Profit before tax -25 -4 3 Balance sheet Equity 859 784 791 NIBD 597 630 620 Cash and cash equivalents 163 145 134 Key figures -0.34 -0.07 0.04 Earnings per share (USD) -4.3% 1.
Slide 6: TORM Has a Strong Commitment Towards Scrubbers Due to Attractive Business Cases
TORM HAS A STRONG COMMITMENT TOWARDS SCRUBBERS DUE TO ATTRACTIVE BUSINESS CASES Newbuildings and • One scrubber installed scrubber-ready • All remaining 12 vessels committed Scrubber installation • Eight retrofit vessels committed (including one Remaining fleet on already installed) the water IMO 20
Slide 7: TORM Has Entered into a Scrubber JV to Produce and Sell Scrubbers
TORM HAS ENTERED INTO A SCRUBBER JV TO PRODUCE AND SELL SCRUBBERS Current risks JV rationale • One of the largest risks with scrubber installations is • Secure scrubber production slots with ME Production the potential delay due to lack of quality and and the possibility to add additional scrubber r
Slide 8: Agenda
AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 8
Slide 9: Main Market Drivers
MAIN MARKET DRIVERS SHORT TERM LONG TERM POSITIVE DRIVERS • Global CPP stockpiles have returned to normal levels, • Global oil demand growth remains above the historical and below average diesel inventories in key importing average of around 1 mb/d per annum regions suggest the need for rebuilding t
Slide 10: Market Conditions Worsened in Q3 2018, but Have Improved in Q4
MARKET CONDITIONS WORSENED IN Q3 2018, BUT HAVE IMPROVED IN Q4 WITH TCE RATES UP BY ~20% LR2 (TC1) USD ‘000/day MR (average) USD ‘000/day Q3 2018 Q4 2018-TO-DATE WEST OF SUEZ • Robust gasoline imports from Europe to the USEC • Strengthened rates in the USG as a result of strong demand from WC • Redu
Slide 11: Product Inventories Back to Historical Levels
PRODUCT INVENTORIES BACK TO HISTORICAL LEVELS Global CPP inventories* Billion bbl • Global CPP inventories are now back to 5-year average levels, but continued stock drawing and the accompanying price backwardation have continued to limit import demand and hamper arbitrage trades • Despite a seasona
Slide 12: Middle East Refinery Capacity Additions Expected to Have a Positive 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) M b/d Forecasted 2018-2022 0.7 Realized 2013-2017 (avg.) 0.62 0.6 0.5 0.40 0.4 +30% 0.33 Avg. 0.35 0.29 (2018-2022) 0.3 0.27 0.2 0.1 0.08 0.0 2013-17 (avg) 2018F 2
Slide 13: IMO 2020 Sulfur Cap Potentially Leading to Increased Product Tanker Trade
IMO 2020 SULFUR CAP POTENTIALLY LEADING TO INCREASED PRODUCT TANKER TRADE Global consumption of marine bunkers* M b/d 6 5 Distillates (CPP) 4 3 Potential new trade for clean product tankers Compliant fuels* (CPP, DPP) 2 1 ULSFO (DPP) HSFO (DPP) 0 2016 2020E • From 1 January 2020, up to 2 mb/d of HSF
Slide 14: 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 • As a result of relatively low ordering this year, the product tanker order book to fleet ratio has fallen to a historical low level of 9.4% • The order book to fleet ratio stands at 11% for MRs
Slide 15: Newbuilding Prices Increasing Despite Limited Volumes
NEWBUILDING PRICES INCREASING DESPITE LIMITED VOLUMES USDm LR2 ‘000 USD/day USDm MR ‘000 USD/day LR2 - Newbuilding LR2 – 5 yr. Second-Hand LR2 1Yr T/C MR - Newbuilding MR - 5 yr. Second-Hand MR 1Yr T/C • Product tanker newbuilding market was characterized by increasing prices and low activity in Q3
Slide 16: Agenda
AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 16
Slide 17: 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 Q3 2018 performance: 25,000 • TORM: USD/day 10,051 • Peer average: USD/day 9,723 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 Q
Slide 18: Vessel Geographical Positioning Is Crucial for Earnings
VESSEL GEOGRAPHICAL POSITIONING IS CRUCIAL FOR EARNINGS West outperformance TORM West-focused East outperformance TORM East-focused * West premium calculated as spread between Atlantic triangulation (TC2 & TC14) and Transpacific voyage (TC10). Source: Clarksons, TORM. 18
Slide 19: Significant Operating Leverage
SIGNIFICANT OPERATING LEVERAGE Unfixed days LR2 LR1 Handy MR # of days as of 30 September 2018 (% of total days) 30,332 (100%) 27,779 (98%) 4,264 4,294 3,218 2,587 18,775 20,691 5,315 (78%) 515 759 3,601 2,124 2,159 440 2018 (ROY) 2019 2020 As of 12 November 2018, TORM has covered 61% of its total Q
Slide 20: 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) -16% 2008 7,655 2009 7,193 2010 6,771 6,673 6,458 2011 2012 2013 -48% 2014 *
Slide 21: Net Asset Value Estimated at USD 826m
NET ASSET VALUE ESTIMATED AT USD 826M 30 September 2018 figures, USDm Net LTV of 54% 1,661 760 826 55 3 296 163 Value of vessels Outstanding debt Committed CAPEX Cash Working Capital Other* Net Asset Value (incl. newbuildings) • Net loan-to-value was 54% ensuring a strong capital structure • Net Ass
Slide 22: Well-Positioned to Service Future CAPEX Commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS CAPEX and liquidity as of 30 September 2018 (USDm) CAPEX commitments Available liquidity Retrofit scrubber Newbuilding incl. Scrubber 187 22 24 75 425 163 264 296 2 32 Cash position Available working Newbuilding Total available 2018 2019-20 Total c
Slide 23: Favorable Financing Profile with No New Near-Term Maturities
FAVORABLE FINANCING PROFILE WITH NO NEW NEAR-TERM MATURITIES Scheduled debt repayments as of 30 September 2018 (USDm) 95 87 291 734 261 Debt* as of 30 Falling due within one year Falling due between Falling due between Hereafter September 2018 one and two years two and three years Ample headroom und
Slide 24: Appendix
APPENDIX
Slide 25: TORM at a Glance
TORM AT A GLANCE A world-leading product tanker company Fleet overview* 77 Owned 10 On order • A leading pure-play product tanker owner • Large commercial footprint with presence in all key product tanker segments 11 • Strong capital structure to support disciplined growth strategy LR2 +1
Slide 26: Fleet Update
FLEET UPDATE # of As of 30 September 2018 vessels 90 80 81 80 72 74 72 11 LR2 11 70 7 10 11 9 9 LR1 60 7 7 7 50 40 50 50 54 55 MR 30 48 20 10 8 7 6 6 6 Handy 0 End 2017 End Q3 2018 End 2018 End 2019 End 2020 Chartered-in and leaseback vessels 5 3 3 3 3 26
Slide 27: The Reference Company in the Product Tanker Segment
THE REFERENCE COMPANY IN THE PRODUCT TANKER SEGMENT TORM’s superior integrated TORM is a large scale, pure-play operating platform includes product tanker owner, active in all in-house technical and commercial key product tanker segments in management (preferred by customers) order to meet customer
Slide 28: Flexibility to Transport a Wide Range of Different Products
FLEXIBILITY TO TRANSPORT A WIDE RANGE OF DIFFERENT PRODUCTS 28
Slide 29: TORM Has Distributed a Total of USD 48m to Shareholders in 2016 and 2017
TORM HAS DISTRIBUTED A TOTAL OF USD 48M TO SHAREHOLDERS IN 2016 AND 2017 Distribution to shareholders (USDm) 1 • On 12 September 2017, TORM paid a dividend of USD 1.2m, corresponding to a dividend per share of USD 25 0.02 or DKK ~0.13 48 19 3 • During 2016, TORM distributed a total of USD 47m to sha
Slide 30: Oaktree Is the Majority Shareholder and Ownership Has Become More Dispersed
OAKTREE IS THE MAJORITY SHAREHOLDER AND OWNERSHIP HAS BECOME MORE DISPERSED Share information Estimated shareholdings as of 31 January 2018, % TORM’s shares are listed on NASDAQ 100 1 Copenhagen and NASDAQ New York under 13 the tickers TRMD A and TRMD, respectively. 16 Shares 64 7 • 74.2m A-shares,
Slide 31: Management Team with an International Outlook and Many Years of Shipping Experience
MANAGEMENT TEAM WITH AN INTERNATIONAL OUTLOOK AND MANY YEARS OF SHIPPING EXPERIENCE Executive Director Senior Management Jacob Meldgaard Christian Søgaard-Christensen ▪ Executive Director in TORM plc ▪ Chief Financial Officer ▪ CEO of TORM A/S since April 2010 ▪ Previously Executive Vice President o
Slide 32: Key Figures
KEY FIGURES Q1-Q3 Q1-Q3 Proforma USDm 2017 2016 2018 2017 2015 Revenue 467 486 657 680 854 EBITDA 81 117 158 200 319 Profit/(loss) before tax -32 -1 3 -142 188 Net profit/(loss) excluding impairment charges -33 -1 2 43 187 Balance sheet Total assets 1,718 1,659 1,647 1,571 1,867 Equity 859 784 791 7
Slide 33: TORM Tanker Spot Rates Versus Industry Benchmark
TORM TANKER SPOT RATES VERSUS INDUSTRY BENCHMARK TORM spot vs. industry benchmark Q3 2018 (USD/day) TORM Benchmark 20,000 +56% +85% +52% 15,000 +279% 10,000 5,000 0 LR2 LR1 MR Handysize TORM spot vs. industry benchmark last 12 months (USD/day) TORM Benchmark 20,000 +89% +46% 15,000 +38% +83% 10,000
Slide 34: TORM Has a Spot-Oriented Profile with Significant Leverage to Market Upside
TORM HAS A SPOT-ORIENTED PROFILE WITH SIGNIFICANT LEVERAGE TO MARKET UPSIDE As of 30 September 2018 2018 2019 2020 2018 2019 2020 O wned days C overed,% LR2 939 3,955 3,939 26% 1% - LR1 611 2,587 3,218 16% - - MR 4,449 18,557 20,023 22% 3% - Handysize 535 2,124 2,159 18% - - To tal 6,5 34 27 ,22 3 2
Slide 35: Industry Cooperation and Transparency Are Key to TORM's Corporate Social Responsibility
INDUSTRY COOPERATION AND TRANSPARENCY ARE KEY TO TORM’S CORPORATE SOCIAL RESPONSIBILITY TORM is committed to support… TORM has set and communicated on climate targets • Clean Shipping Alliance 2020 Clean TORM joined the CSA 2020 as one of the first shipping Shipping companies in Denmark and hereby s