Slide 1: Q1 2020 Results Teleconference
1 4 M AY 2 0 2 0 Q1 2020 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 Presenters
TODAY’S PRESENTERS 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
Slide 4: Safety First
SAFETY FIRST • Safety is the top priority for TORM and an integral part of the One TORM platform • Safety is especially important during the COVID-19 pandemic • To safeguard employees during the COVID-19 pandemic, several precautionary measures were used, e.g. having all office-based employees worki
Slide 5: Highlights
HIGHLIGHTS Q1 FINANCIAL HIGHLIGHTS VESSEL INVESTMENTS During Q1 2020, TORM took delivery of two LR1 newbuildings and one MR newbuilding Ordered two LR2 newbuildings EBITDA of USD 102m TCE Q1 2020 of USD/day 23,643 After the quarter ended, TORM took delivery of one additional MR newbuilding Profit be
Slide 6: Operating in a Dynamic Environment
OPERATING IN A DYNAMIC ENVIRONMENT OPEC+ COVID-19 RUSSIA & SAUDI ARABIA CHANGING DAILY 6
Slide 7: Numerous Major Events Driving Product Tanker Freight Rates to an All-Time High
NUMEROUS MAJOR EVENTS DRIVING PRODUCT TANKER FREIGHT RATES TO AN ALL-TIME HIGH LR2 (TC1) TORM MR (spot) USD/day MR (avg) TORM MR covered Q2 2020 as of 11 May 2020 170,000 Q1 2020 80,000 • Panama Canal delays 75,000 • Maintenance at Middle East export-oriented refineries • High product exports from C
Slide 8: The COVID-19 Pandemic Has Tightened Tonnage Supply and Led to Market Inefficiencies
THE COVID-19 PANDEMIC HAS TIGHTENED TONNAGE SUPPLY AND LED TO MARKET INEFFICIENCIES Fundamental effects on demand and supply from the COVID-19 MR rates have been strong despite COVID-19 Short-term Medium-term • Increased product exports in • Potential economic stimulus in China and other countries U
Slide 9: COVID-19 Induced Demand Destruction Has Led to Unprecedented Oversupply of Oil Products
COVID-19 INDUCED DEMAND DESTRUCTION HAS LED TO AN UNPRECEDENTED OVERSUPPLY OF OIL PRODUCTS • The COVID-19 pandemic has Pre-COVID-19 led to an unprecedented oil Jan 2020 demand destruction • Refinery runs have been Refined product lagging declines in demand, stocks build leading to unprecedented inve
Slide 10: Contango in Oil Prices Support Floating Storage in the Medium Term
CONTANGO IN OIL PRICES SUPPORT FLOATING STORAGE IN THE MEDIUM TERM Brent forward spreads and VLCC rates USD/bbl USD/day 8 Brent M5-M1 VLCC rate (rhs) 180,000 Contango 4 150,000 • “Too little, too late”: 120,000 the unprecedented OPEC+ 2 output cuts due from May will not 0 90,000 Backwardation be eno
Slide 11: 14% of Product Tanker Tonnage Classified as Floating Storage
14% OF PRODUCT TANKER TONNAGE CLASSIFIED AS FLOATING STORAGE FOLLOWING A RECENT RAMP-UP Vessels in floating storage • The unprecedented decline in oil product Mn dwt demand has resulted in ullage issues at 20 terminals and refineries, resulting in a spate of logistical floating storage 15 • Given th
Slide 12: Product Tanker Market Strength Has Triggered Some LR2 Vessels to Switch Back to Clean
PRODUCT TANKER MARKET STRENGTH HAS RECENTLY TRIGGERED SOME LR2 VESSELS TO SWITCH BACK TO CLEAN USD/day % • Over the past six months, the Aframax rate premium to LR2 40,000 55 product tanker market has been Share of LR2s in dirty trades (rhs) supported by around 40 LR2s 30,000 50 switching to dirty t
Slide 13: Product Tanker Order Book Remains at Historical Low Level
PRODUCT TANKER ORDER BOOK REMAINS AT HISTORICAL LOW LEVEL Product tanker order book as percentage of the fleet (%) 24 19 19 15 16 14 14 11 12 10 10 8 8 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 5Y avg. 10Y avg. Orders with dual- fuel specification 10 15 • The product tanker order bo
Slide 14: COVID-19 Leading to Medium-Term Market Volatility
COVID-19 LEADING TO MEDIUM-TERM MARKET VOLATILITY Key medium- to long-term market drivers • The unprecedented oversupply of crude and oil products, due to the COVID-19 induced demand destruction, has led to onshore storage filling up fast and keeping increasing number of vessels tied up in floating
Slide 15: TORM Commercially Outperforms Peers in Its Key MR Segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT CORRESPONDING TO USD 19M IN Q1 2020 MR reported TCE, USD/day Q1 2020 performance: • TORM: USD/day 22,461 • Peer average: USD/day 18,821 TORM MR USD USD 14m USD 36m USD 19m USD 24m premium* 19m Note: Peer group is based on Ardmore, d’Amico (co
Slide 16: TORM's Commercial Capabilities Focused on Optimizing Geographical Positioning
TORM’S COMMERCIAL CAPABILITIES ARE FOCUSED ON OPTIMIZING GEOGRAPHICAL POSITIONING USD/day (%) 14,000 80 West outperformance Majority of TORM’s MRs West of Suez 12,000 10,000 70 8,000 6,000 60 4,000 2,000 0 50 -2,000 East outperformance Majority of TORM’s -4,000 MRs East of Suez 40 -6,000 -8,000 30 -
Slide 17: Spot-Orientation Provides Significant Operating Leverage with High Near-Term Coverage
SPOT-ORIENTATION PROVIDES SIGNIFICANT OPERATING LEVERAGE WITH HIGH NEAR-TERM COVERAGE Significant operational leverage Unfixed days as of 31 March 2020 LR2 MR (% of total days) LR1 Handy 28,356 (100%) 28,410 (100%) 4,340 4,771 18,671 (89%) 3,207 3,207 2,405 2,145 20,082 19,706 13,667 453 726 726 202
Slide 18: TORM's Earnings Are Very Sensitive to Realization of Freight Rates
TORM’S EARNINGS ARE VERY SENSITIVE TO REALIZATION OF FREIGHT RATES Quarterly EBITDA Annualized EPS* Quarterly PBT Annualized figures* Quarterly EPS USDm 600 USD 3.0 / DKK 20.5 500 USD 0.8 / DKK 5.1 400 USD 0.6 / DKK 4.1 300 202 200 102 100 57 47 0 Full-year 2019 Q1 2020 (USD/day 16,526) (USD/day 23,
Slide 19: Fully Integrated Business Model with Competitive Cost Structure
FULLY INTEGRATED BUSINESS MODEL WITH COMPETITIVE COST STRUCTURE Significant reduction in OPEX OPEX per day (yearly, weighted avg. in USD/day) -20% 7,655 7,193 Compared to the full 6,771 6,673 6,389 6,371 6,089 year of 2014, TORM has reduced the OPEX cost base of approx. USD 44m on an annualized basi
Slide 20: Net Asset Value Estimated at USD 993M
NET ASSET VALUE ESTIMATED AT USD 993M 31 March 2020 figures, USDm Net LTV of 49% 1,832 923 993 56 10 112 129 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 49% ensuring a strong capital structure • Net Asset
Slide 21: Well-Positioned to Service Future CAPEX Commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS Liquidity and CAPEX as of 31 March 2020 USDm Available liquidity CAPEX commitments 273 Retrofit scrubbers Newbuildings incl. scrubber 76 23 45 133 129 21 86 47 112 21 26 Cash Available MR LR2 Total 2020 2021 Total position Working newbuilding newbu
Slide 22: Favourable Financing Profile with No Major Near-Term Maturities
FAVOURABLE FINANCING PROFILE WITH NO MAJOR NEAR-TERM MATURITIES Scheduled debt repayments as of 31 March 2020 USDm 918 12 16 Financial lease 69 167 Mortgage debt 152 27 95 13 78 27 751 76 38 57 33 224 Oustanding ROY 2020 2021 2022 2023 2024 2025 Hereafter debt as of 31 March 2020* Ample headroom und
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