Slide 1: Q3 2017 Results
15 November 2017 Q3 2017 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
Orion purchase price considerations AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 3
Slide 4: Highlights for Q3 2017
HIGHLIGHTS FOR Q3 2017 • TORM has filed a registration statement with the U.S. Securities and Exchange Commission and expects to finalize a dual listing of TORM’s A- shares on Nasdaq New York in 2017 in addition to the existing listing on Nasdaq Copenhagen Corporate • No new securities will be issue
Slide 5: Dual listing in Copenhagen and New York
DUAL LISTING IN COPENHAGEN AND NEW YORK The TORM share will be tradable on two exchanges Dual Nasdaq listing Repositioning of shares • Shareholders will have the flexibility to move their TORM shares between the two Nasdaq stock exchanges in Copenhagen and New York • Share transfer forms will be ava
Slide 6: EBITDA of USD 37m in Q3 2017
EBITDA OF USD 37M IN Q3 2017 Q1-Q3 Q1-Q3 USDm Q3 2017 Q3 2016 2017 2016 2016 P&L TCE Earnings 95 103 295 365 458 Gross profit 47 50 147 198 242 Sale of vessels 0 0 3 0 0 EBITDA 37 40 117 166 200 Profit before tax -4 2 -1 48 -142 Adjusted profit before tax -2 2 2 47 43 (excluding impairment charges)
Slide 7: Agenda
Orion purchase price considerations AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 7
Slide 8: Product tanker market remained challenging in Q3
PRODUCT TANKER MARKET REMAINED CHALLENGING IN Q3 Spot rates 60 LR2 (TC1) Q3 LR 50 Increased volume of middle distillates moved from the Middle East to Europe, initially due to a 40 shutdown of Europe’s largest refinery in Rotterdam and later in order to replenish European stocks, following the rise
Slide 9: Product inventories have returned to norms
PRODUCT INVENTORIES HAVE RETURNED TO NORMS Global CPP inventories Short-term factors Billion bbl • Product stock draws accelerated in Q3 and global inventories dropped to close to 5-year average in August, driven by stronger-than-expected oil demand. During the first eight months of 2017, global CPP
Slide 10: Supply outlook for the product tanker fleet varies by segment
SUPPLY OUTLOOK FOR THE PRODUCT TANKER FLEET VARIES BY SEGMENT Net fleet growth y-o-y (no. of vessels)* % 2005-2015 average fleet growth for • In Q3, product tanker newbuilding activity slowed down from Q2, as LR2, LR1, MR and Handysize owners’ appetite for more expensive Tier 3 tonnage remained weak
Slide 11: Product tanker vessel prices
PRODUCT TANKER VESSEL PRICES Vessel price development USDm LR2 - Newbuilding LR1 - Newbuilding MR - Newbuilding • The second-hand market in Q3 remained slow on the back of a low freight market. The activity was mainly for older tonnage with prices overall unchanged • In Q4 so far, second-hand activi
Slide 12: Vessel positioning is a key earnings driver
VESSEL POSITIONING IS A KEY EARNINGS DRIVER Note: The shown routes do not reflect actual earnings but are a proxy for earnings within West respectively East region 12 Source: Clarksons, TORM
Slide 13: Agenda
Orion purchase price considerations AGENDA 1 Highlights 2 Product tanker market overview and outlook 3 Financial and operating performance 13
Slide 14: TORM has significant operating leverage in the product tanker market
TORM HAS SIGNIFICANT OPERATING LEVERAGE IN THE PRODUCT TANKER MARKET LR2 LR1 Handy Unfixed days # of days as of 30 September 2017 28,641 25,070 4,238 3,139 2,447 2,509 19,189 16,730 4,963 545 522 MR 3,361 2,692 2,767 2017 2018 2019 Of total 73% 89% 99% earning days Illustrative change in cash flow g
Slide 15: Peer comparison shows TORM has continued to perform commercially
PEER COMPARISON SHOWS THAT TORM HAS CONTINUED TO PERFORM COMMERCIALLY 30,000 High-Low TORM Peer avg. 25,000 20,000 MR reported TCE, USD/day 15,000 10,000 5,000 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 TORM MR USD 8m USD 1m USD 7m USD 4m USD 3m USD -0m USD 8m USD 6m USD 11m premium* 2015 2016 2017 ∑ USD 46m Note
Slide 16: OPEX has shown an improving trend
OPEX HAS SHOWN AN IMPROVING TREND USD/day 7,331 7,400 6,914 6,843 6,596 6,667 6,631 6,188 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 16
Slide 17: Fully integrated business model and admin expenses trending down
TORM HAS A FULLY INTEGRATED BUSINESS MODEL AND ADMIN EXPENSES ARE TRENDING SIGNIFICANTLY DOWN TORM operates on a fully integrated commercial and technical platform TORM has trimmed administration expenses significantly • TORM’s operational platform handles all commercial and Admin. expenses (quarter
Slide 18: TORM's net asset value estimated at USD 708m
TORM’S NET ASSET VALUE ESTIMATED AT USD 708M 30 September 2017 figures, USDm Net LTV of 57% • Based on broker values, TORM’s vessels 310 including newbuildings were estimated at USD 1,524m as of 30 September 2017 775 • With an outstanding debt of USD 775m and committed CAPEX of USD 238m, TORM’s Net
Slide 19: Favourable financing profile and strong liquidity position
TORM HAS A FAVOURABLE FINANCING PROFILE AND STRONG LIQUIDITY POSITION CAPEX and liquidity as of 30 September 2017 (USDm) CAPEX commitments Available liquidity 416 TORM is well-positioned to service future CAPEX and 98 238 75 196 102 145 debt commitments 38 2017 2018 2019 Total Cash position Availabl
Slide 20: TORM has distributed a total of USD 48m to shareholders
TORM HAS DISTRIBUTED A TOTAL OF USD 48M TO SHAREHOLDERS IN 2016 AND 2017 Distribution to shareholders (USDm) 1 • During 2017, TORM has paid a USD 1.2m dividend on 12 September 2017, corresponding to a dividend per 25 share of USD 0.02 or DKK ~0.13 48 19 3 • During 2016, TORM has distributed a total
Slide 21: Appendix
APPENDIX
Slide 22: TORM aims to be regarded as the reference company in product tankers
TORM AIMS TO BE REGARDED AS THE REFERENCE COMPANY IN THE PRODUCT TANKER SEGMENT TORM is a pure-play product tanker owner TORM’s superior integrated active in all large product tanker segments to operating platform includes meet customer demands in-house technical and commercial management (preferred
Slide 23: Fleet update
FLEET UPDATE # of vessels As of 14.11.2017 Q2 2017 Changes Q3 2017 Changes 2017 Changes 2018 Changes 2019 Owned vessels LR2 7 - 7 - 7 4 11 - 11 LR1 7 - 7 - 7 - 7 - 7 MR 48 2 50 - 50 - 50 4 54 Handysize 9 -1 8 - 8 -1 7 - 7 Total 71 1 72 - 72 3 75 4 79 Charter-in and leaseback vessels LR2 3 - 3 - 3 -2
Slide 24: TORM at a glance
TORM AT A GLANCE Key facts Global footprint based on regional power and presence A world-leading product tanker company • 128 years of history • A leading product tanker owner Listed on Nasdaq Copenhagen and before the end of 2017, dual-listed on Nasdaq Copenhagen and Nasdaq New York TORM employees:
Slide 25: Flexibility to transport a wide range of different products
FLEXIBILITY TO TRANSPORT A WIDE RANGE OF DIFFERENT PRODUCTS 25
Slide 26: Management team with an international outlook
MANAGEMENT TEAM WITH AN INTERNATIONAL OUTLOOK AND MANY YEARS OF SHIPPING EXPERIENCE Executive Director Jacob Meldgaard ▪ Executive Director in TORM plc ▪ CEO of TORM A/S since April 2010 ▪ Previously Executive Vice President of the Danish shipping company NORDEN where he was in charge of the company
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 2017, % TORM’s shares are listed on Nasdaq 100 2 Copenhagen under the ticker TRMD A, and will 13 be listed on Nasdaq New York under the ticker TRMD later in 2017 12
Slide 28: Key figures
KEY FIGURES USDm Q3 2017 Q3 2016 2016 Revenue 156 156 680 EBITDA 37 40 200 Impairment -3 - -185 Profit/(loss) before tax -4 2 -142 Adjusted Profit/(loss) before tax -2 2 43 Balance sheet Total assets 1,659 1,761 1,571 Equity 784 963 781 NIBD 630 612 609 Cash and cash equivalents 145 77 76 Cash flow
Slide 29: TORM tanker spot rates versus industry benchmark
TORM TANKER SPOT RATES VERSUS INDUSTRY BENCHMARK TORM spot vs. industry benchmark Q2 2017 (USD/day) TORM Benchmark 30,000 25,000 20,000 +44% 15,000 -16% +26% +198% 10,000 5,000 0 LR2 LR1 MR Handysize TORM spot vs. industry benchmark last 12 months (USD/day) TORM Benchmark 30,000 25,000 20,000 +35% +
Slide 30: TORM has a spot-oriented profile in a fundamentally strong market
TORM HAS A SPOT-ORIENTED PROFILE IN A FUNDAMENTALLY STRONG MARKET 2017 2018 2019 2017 2018 2019 As of 30.09.2017 Owned days LR2 658 3.484 3.961 Owned days LR1 641 2.509 2.447 MR 4.359 17.863 18.657 Handysize 733 2.747 2.767 Total 6.390 26.603 27.832 Charter-in and leaseback days at fixed rate LR2 92
Slide 31: During Q3 2017, TORM acquired six MR re-sales for USD 185m
DURING Q3 2017, TORM ACQUIRED SIX MR RE-SALES FOR A TOTAL CONSIDERATION OF USD 185M Clarksons quarterly MR newbuilding prices 2006-2017 14 TORM’s MR re-sales Clarksons today 12 10 The acquisitions were: # of quarters 8 2 MRs of Hyundai Mipo 4 MRs of GSI 6 4 2 0 30-31 32-33 34-35 36-37 38-39 40-41 42
Slide 32: TORM's corporate social responsibility
INDUSTRY COOPERATION AND TRANSPARENCY IS 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 for 2016: TORM became signatory to the UNGC in 2009 as the first Danish • In 2016, TORM se