Torm Plc Class A · OMXCOP:TRMD_A
Torm Plc Class A — Q3 2023 Earnings Presentation
17 slides from Torm Plc Class A's earnings presentation, Nov 9, 2023
Slide 1: Q3 2023 Results Teleconference and Webcast
09 NOVEMBER 2023 Q3 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: Q3 2023 highlights
Q3 2023 highlights FINANCIAL HIGHLIGHTS MARKET REVIEW AND OUTLOOK • Historically strong financial performance in the first • The product tanker market has remained strong but volatile in Q3 nine months of 2023 with EBITDA of USD 614m • Markets adversely impacted by refinery maintenance and stock dra
Slide 5: Fleet update
Fleet update FLEET CHANGES IN 2023 FLEET OPTIMIZATION Acquisitions: 22 vessels • Selective fleet replenishment and growth with focus on high ROIC • Q1-Q3 2023 • Acquired vessels will be lifted to One TORM standards • 7 LR1 vessels built in 2011-2013 • 3 MR vessels built in 2013 • Scrubbers installed
Slide 6: TORM - a leading global product tanker company
TORM - a leading global product tanker company 1 2 3 One TORM platform Superior ROIC High pay-out ratio Inhouse integrated commercial Consistent selective fleet Our distribution policy secures and technical management replenishment and growth has a high pay-out ratio with 84% secured superior return
Slide 7: 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 55.000 Clarksons avg. MR benchmark - annual avg. 50.000 45.000 Russia’s invasion of 40.000 Ukraine leading to sanctions against Russia 35.000 30.000 COVID-19 25.000 20.000 15.000 1
Slide 8: Trade recalibration has increased ton-miles despite lower EU imports
Trade recalibration has increased ton-miles despite lower EU imports EU/UK CPP imports (monthly average) ▪ Post-sanctions, EU/UK total CPP import volumes have declined by 10%, driven by extensive stockbuilding ahead of m tons bn ton-miles the sanctions and generally lower diesel demand amid 12,0 42
Slide 9: The need to replenish diesel stockpiles in Europe coincides with increasing refinery runs in the Middle East
The need to replenish diesel stockpiles in Europe coincides with increasing refinery runs in the Middle East Amsterdam-Rotterdam-Antwerp weekly diesel stockpiles Middle East refinery capacity additions and crude runs (mb/d) m bbl 0,8 26 2023 2022 5-year high/low 5-year average Net capacity additions
Slide 10: Refinery dislocation is adding ton-mile demand
Refinery dislocation is adding ton-mile demand Refinery closures and capacity additions in 2020-2024 (kb/d) Australia/New Zealand CPP imports (kb/d) Marsden Kwinana Point 135k Australia New Zealand 146k b/d b/d and refinery Altona closure 90k b/d (NZ) refinery Bulver Island closures 102k b/d Kurnell
Slide 11: Fleet growth remains low despite recent increase in newbuilding activity
Fleet growth remains low despite recent increase in newbuilding activity Product tanker order book vs ageing fleet Product tanker deliveries and removals (m dwt) % m dwt 30 Order book as % of the fleet 20 Deliveries Deliveries of additional ordering, forecast Scrapping forecast Capacity above 20 yea
Slide 12: Demand and supply balances remain positive
Demand and supply balances remain positive Ton-mile demand Tonnage supply Index Index 115 115 2 111 110 3 110 2 107 105 5 105 2 104 2 102 100 100 100 100 95 95 90 90 Ton-mile in Trade Demand Ton-mile in Trade Demand Ton-mile in Tonnage supply Net fleet growth Tonnage supply Net fleet growth Tonnage
Slide 13: 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 ▪ Q1-Q3 2023 were the strongest first nine months results in TORM’s history 332 ▪ TCE reached USD 244m including USD 8.4m unrealized loss on financial 317 308 265 instruments in Q3 244 ▪ TORM delivered an EBIT
Slide 14: 64% of earning days in Q4 covered at USD/day 38,822
64% of earning days in Q4 23 covered at USD/day 38,822 As of 06 November 2023 (excludes the acquisition of 8 LR2 vessels announced on 09 Nov 23) LR21 LR1 MR Total coverage Coverage % 62% 17% 17% 75% 6% 0% 62% 13% 0% 64% 13% 2% 47.126 46.108 Average rate2 42.997 (USD/day) 42.997 42.997 40.134 39.932
Slide 15: 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 decreased by 1.2% to USD 3.055bn in Q3 as TORM sold 3,084 3,055 one LR1 vessel and the value of the remaining fleet decreased by 0.6% in the 2,893 2,650 quarter. 2,524 2
Slide 16: ESG KPIs: Continued progress on climate and safety
ESG KPIs: Continued progress on climate and safety SAFETY: Lost Time Accident Rate # Accidents per 1m ▪ TORM is close to reaching the accelerated 2025-target of a 40%-reduction in working hours LTM Target in 2030: Max. 0.3 carbon intensity by reaching 39% reduction in Q3 2023 0,67 0,65 ▪ The Safety/
Slide 17: Key take-aways from TORM's Q3 2023 earnings call
Key take-aways from TORM’s Q3 2023 earnings call ▪ Historically strong performance in first nine months of 2023 with EBITDA up 29% vs. last year, despite soft Q3 ▪ Seasonally increasing demand and low product stocks pointing towards a strong end to the year ▪ Product and crude tanker market supporte