Slide 1: Q3 2019 Results Teleconference
12 NOVEMBER 2019 Q3 2019 RESULTS TELECONFERENCE 1
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: Today's Presenter
TODAY’S PRESENTER Jacob Meldgaard ▪ Executive Director of TORM plc ▪ CEO of TORM A/S since April 2010 ▪ Chairman of the Board of Danish Shipping and member of the Board of Danish Ship Finance ▪ Previously Executive Vice President of the Danish shipping company NORDEN, where he was in charge of the c
Slide 4: Q3 2019 Highlights
Q3 2019 HIGHLIGHTS • EBITDA of USD 32.0m in Q3 and loss before tax of USD 8.5m in Q3 • RoIC of 0.4% in Q3 and loss per share of 12 US cents in Q3 • Net Asset Value estimated at USD 887m as of 30 September 2019, corresponding to a NAV/share of USD 12.0 or DKK 82.2 Q3 results • Solid balance sheet: Ne
Slide 5: Soft rates during Q3 followed by a strong uptick in Q4
SOFT RATES DURING Q3 FOLLOWED BY A STRONG UPTICK IN Q4 Q3 2019 USD/day • In the West, the closure of the largest refinery on the US East Coast supported transatlantic gasoline flows, although weak demand from West Africa and limited West to East naphtha arbitrage flows kept freight rates suppressed
Slide 6: Unprecedent sentiment in the crude tanker market has carried over to product tanker rates
UNPRECEDENT SENTIMENT IN THE CRUDE TANKER MARKET HAS CARRIED OVER TO PRODUCT TANKER RATES Crude tanker rates Product tanker rates USD/day USD/day VLCC LR2 350,000 80,000 Suezmax LR1 Aframax 70,000 MR 300,000 60,000 250,000 50,000 200,000 40,000 150,000 30,000 100,000 20,000 50,000 10,000 0 0 Jul Aug
Slide 7: Low diesel inventories in the Atlantic Basin ahead of IMO 2020 and the winter
LOW DIESEL INVENTORIES IN THE ATLANTIC BASIN AHEAD OF IMO 2020 AND THE WINTER HEATING SEASON Diesel inventories in the US East Coast Million bbl Million bbl • Diesel inventories in the US East Coast are currently at 5-year lows (~30% below the 5-year average) • Diesel inventories in the ARA (Amsterd
Slide 8: Vessel values have continued to improve as freight market strengthens
VESSEL VALUES HAVE CONTINUED TO IMPROVE AS FREIGHT MARKET STRENGTHENS USDm LR2 ‘000 USD/day USDm MR ‘000 USD/day 60 35 40 25 55 30 35 20 25 50 20 45 15 30 15 40 10 10 25 35 5 0 0 0 5 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-1
Slide 9: IMO 2020 will be the catalyst for an estimated 7% growth in product tanker ton-mile demand
IMO 2020 WILL BE THE CATALYST FOR AN ESTIMATED 7% GROWTH IN PRODUCT TANKER TON-MILE DEMAND IN 2020 Global consumption of marine bunkers* Distillates M b/d Additional compliant fuels* VLSFO 6 HSFO 5 4 Potential TORM’s current new trade estimate of for clean product tankers additional diesel demand 3
Slide 10: Both medium-haul regional trade and long-haul trade will be supported by IMO 2020
BOTH MEDIUM-HAUL REGIONAL TRADE AND LONG-HAUL TRADE WILL BE SUPPORTED BY THE IMO 2020 REGULATION Examples of trade routes impacted by the IMO 2020 sulfur regulation • Increased flexibility to produce additional diesel in net exporting regions and refinery expansion support long-haul and medium-haul
Slide 11: Product tanker order book remains at 25 years low
PRODUCT TANKER ORDER BOOK REMAINS AT 25 YEARS LOW Product tanker order book as percentage of the fleet M dwt • The product tanker order book to fleet ratio is at a historically low level of 6.8% (9% for MRs, 2% for LR1s and 8% for LR2s) • In the first nine months of 2019, the product tanker fleet gr
Slide 12: Medium to long-term market drivers remain positive
MEDIUM TO LONG-TERM MARKET DRIVERS REMAIN POSITIVE Key medium to long-term market drivers • Global oil demand growth remains positive albeit slower than in previous years • Global CPP stockpiles have returned to normal levels • Refinery capacity addition in the Middle East potentially increasing sai
Slide 13: Two main options for ocean-going vessels to comply with IMO 2020 sulfur regulations
THERE ARE TWO MAIN OPTIONS FOR OCEAN-GOING VESSELS TO COMPLY WITH THE UPCOMING IMO 2020 SULFUR REGULATIONS Product/chemical Worldwide tankers1) TORM2) Newbuildings Scrubber ~3,700 ~480 44 vessels installation vessels vessels sass (12%) (14%) (55%) Existing fleet on the Shipowners’ sulfur water regul
Slide 14: Current fuel spread prices support the attractive scrubber business cases
CURRENT FUEL SPREAD PRICES SUPPORT THE ATTRACTIVE SCRUBBER BUSINESS CASES Cal2020 price spread between 0.5% compliant fuels and 3.5% HSFO, Rotterdam delivery 1) 50% LSFO/ 50% ULSD blend VLSFO 0.5% marine fuel (CAL2020) USD/t 260 • The spread between 0.5% compliant fuel 240 and 3.5% HSFO is currently
Slide 15: TORM commercially outperforms peers in its key MR segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT Q3 2019 performance: • TORM: USD/day 13,125 • Peer average: USD/day 13,069 FY 2015: USD 28m FY 2016: USD 14m FY 2017: USD 35m FY 2018: USD 20m 9M 2019: USD 14m Note: Peer group is based on Ardmore, d’Amico (composite of LR1, MR and Handy), Di
Slide 16: 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) Compared to 2014, -17% 2008 TORM has reduced 7,655 2009 the annual OPEX 7,19
Slide 17: Spot-orientation provides significant operating leverage
SPOT-ORIENTATION PROVIDES SIGNIFICANT OPERATING LEVERAGE Unfixed days # of days as of 30 September 2019 LR2 LR1 MR Handy (% of total days) 27,946 (96%) 29,301 (100%) 3,472 4,231 3,274 3,265 19,769 20,383 5,291 (79%) 524 568 3,902 1,431 1,422 297 2019 2020 2021 Illustrative change in cash flow genera
Slide 18: Well-positioned to service future capex commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS CAPEX and liquidity as of 30 September 2019 USDm CAPEX commitments Available liquidity 1) Additional scrubbers Newbuildings incl. scrubber Retrofit scrubbers 105 182 337 12 12 14 32 142 78 76 75 17 138 121 59 2019 2020 Total Cash position Available
Slide 19: Net Asset Value estimated at USD 887m
NET ASSET VALUE ESTIMATED AT USD 887M 30 September 2019 figures, USDm Net LTV of 50% 1,720 850 887 24 9 138 121 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 50% ensuring a strong capital structure • Net Ass
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