Slide 1: H1 2018 Results
16 August 2018 H1 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 second quarter of 2018
HIGHLIGHTS FOR THE SECOND QUARTER OF 2018 • EBITDA for Q2 2018 was USD 29m and the result before tax a loss of USD 8.6m • RoIC for the period was 0.1% and loss per share was 12 US cents • Net Asset Value estimated at USD 840m as of 30 June 2018, corresponding to a NAV/share of USD 11.4 or DKK 72 Res
Slide 5: Q2 2018
Q2 2018 USDm Q2 2018 Q2 2017 2017 P&L TCE Earnings 90 93 397 Gross profit 42 45 200 Sale of vessels 0 0 3 EBITDA 29 36 158 Profit before tax -9 -2 3 Balance sheet Equity 882 788 791 NIBD 598 556 620 Cash and cash equivalents 159 214 134 Key figures -0.12 -0.03 0.04 Earnings per share (USD) 0.1% 2.1%
Slide 6: Agenda
AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 6
Slide 7: Main market drivers
MAIN MARKET DRIVERS POSITIVE DRIVERS Strong global refined product demand underpinned by healthy economic growth Global clean petroleum product stockpiles have returned to normal levels New export-oriented refineries coming online in the Middle East from H2 2018 onwards IMO 2020 potentially leading
Slide 8: Soft market conditions persisted in Q2 2018
SOFT MARKET CONDITIONS PERSISTED IN Q2 2018 LR2 (TC1) USD ‘000/day MR (average) USD ‘000/day Q2 2018 Q3 to date • Continued refinery maintenance in the Middle East and peak refinery • The return of Middle Eastern refinery capacity from maintenance has maintenance in Asia in April-May resulted in bui
Slide 9: Declining product inventories now below historical levels
DECLINING PRODUCT INVENTORIES NOW BELOW HISTORICAL LEVELS Global CPP inventories Billion bbl • Global CPP inventories are now below 5-year average levels, but continued stock drawing and the accompanying price backwardation continued to limit import demand and hamper arbitrage trades • During Januar
Slide 10: Long term product tanker demand factors remain positive
LONG TERM PRODUCT TANKER DEMAND FACTORS REMAIN POSITIVE 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 2019F 2020F 2021F 2022F • Oil
Slide 11: 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 • With new rules on sulfur cap on marine b
Slide 12: Product tanker fleet and order book
PRODUCT TANKER FLEET AND ORDER BOOK Product tanker order book as percentage of the fleet M dwt • The product tanker order book to fleet ratio currently stands at 10%, the second lowest since 1995 • The order book to fleet ratio at 11% for MRs, 7% for LR1s and 13% for LR2s • In 2018 YTD, the product
Slide 13: Newbuilding prices are coming off the lows
NEWBUILDING PRICES ARE COMING OFF THE LOWS USDm LR USDm MR ‘000 USD/day LR2 - Newbuilding LR1 - Newbuilding MR - Newbuilding MR - 5 yr. Second-Hand MR 1Yr T/C • Newbuilding prices increased in Q2 2018, coupled with relatively active MR ordering • Vessel values for modern product tankers stabilized d
Slide 14: Agenda
AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 14
Slide 15: 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 25,000 Q2 2018 performance: • TORM: USD/day 13,005 MR reported TCE, USD/day 20,000 • Peer average: USD/day 11,061 15,000 10,000 5,000 - TORM MR Q1 15 Q2 15 Q3 15 Q4 15 Q1 1
Slide 16: Significant operating leverage
SIGNIFICANT OPERATING LEVERAGE Unfixed days LR2 LR1 Handy MR # of days as of 30 June 2018 (% of total days) 31,294 (100%) 28,969 (99%) 4,370 4,333 3,280 2,585 11,823 (85%) 19,598 21,096 1,188 1,424 8,001 2,453 2,548 2018 (ROY) 2019 2020 As of 7 August 2018, 55% of the remaining total earning days in
Slide 17: 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) -14% 8,000 7,655 2008 7,193 2009 7,000 6,771 6,673 6,593 2010 6,000 2011 5,0
Slide 18: Net asset value estimated at USD 840m
NET ASSET VALUE ESTIMATED AT USD 840M 30 June 2018 figures, USDm Net LTV of 54% 1,675 758 840 70 1 306 159 Value of vessels Outstanding debt Committed CAPEX Cash Working Capital Other* Net Asset Value (incl. newbuildings) • Net loan-to-value was 51% ensuring a strong capital structure • Net Asset Va
Slide 19: Well-positioned to service future CAPEX commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS CAPEX and liquidity as of 30 June 2018 (USDm) CAPEX commitments Available liquidity 261 306 208 75 442 159 46 2018 2019-20 Total Cash position Available working Newbuilding Total available capital facility financing liquidity agreements 19
Slide 20: Favorable financing profile with no new near-term maturities
FAVORABLE FINANCING PROFILE WITH NO NEW NEAR-TERM MATURITIES Scheduled debt repayments as of 30 March 2018 (USDm) 90 96 86 731 459 Debt* as of 30 June 2018 Falling due within one year Falling due between Falling due between Hereafter one and two years two and three years Ample headroom under our att
Slide 21: Appendix
APPENDIX
Slide 22: TORM at a glance
TORM AT A GLANCE A world-leading product tanker company Fleet overview 74 Owned 10 On order • A leading pure-play product tanker owner 4 BB • Large commercial footprint with presence in all key product tanker segments 12 • Strong capital structure to support disciplined growth strategy LR2 +1 • Dual
Slide 23: Fleet update
FLEET UPDATE # of As of 30 June 2018 vessels 90 83 84 80 75 11 LR2 72 74 11 70 7 10 11 9 LR1 9 60 7 7 7 50 40 56 57 MR 50 50 50 30 20 10 8 7 7 7 7 Handy 0 End 2017 End Q2 2018 End 2018 End 2019 End 2020 Chartered-in and leaseback vessels 5 4 3 3 3 23
Slide 24: 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 25: Flexibility to transport a wide range of different products
FLEXIBILITY TO TRANSPORT A WIDE RANGE OF DIFFERENT PRODUCTS 25
Slide 26: 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 19 48 3 • During 2016, TORM distributed a total of USD 47m to sha
Slide 27: 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 6 • 74.2m A-shares,
Slide 28: 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 29: Key figures
KEY FIGURES Proforma USDm Q2 2018 Q2 2017 2017 2016 2015 Revenue 163 157 657 680 854 EBITDA 29 36 158 200 319 Profit/(loss) before tax -9 -2 3 -142 188 Net profit/(loss) excluding impairment charges -9 -2 2 43 187 Balance sheet Total assets 1,744 1,651 1,647 1,571 1,867 Equity 882 788 791 781 976 NI
Slide 30: TORM tanker spot rates versus industry benchmark
TORM TANKER SPOT RATES VERSUS INDUSTRY BENCHMARK Note: Benchmarks are not one-to-one comparisons as they do not take broker commission, armed guards and low sulfur fuel costs into account. Source: Clarksons, Spot earnings: LR2: TC1 (Ras Tanura-> Chiba), LR1: TC5 (Ras Tanura-> Chiba), MR: average bas
Slide 31: 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 June 2018 31
Slide 32: 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 actively participating in… TORM has set and communicated on climate targets • UN Global Compact Set climate target: TORM became signatory to the UNGC in 2009 as the first Danish • In 2017, TORM has contin