Slide 1: Q2 2020 Results Teleconference
17 AUGUST 2020 Q2 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: Second Quarter Highlights
SECOND QUARTER HIGHLIGHTS Q2/H1 FINANCIAL HIGHLIGHTS VESSEL INVESTMENTS One MR delivered during Q2 2020. Seven older vessels sold covering two LR2s and five MRs. Q2 2020 TCE of USD/day 25,274 H1 2020 TCE of USD/day 24,465 As of 17 August 2020, TORM has installed 40 Q2 EBITDA of USD 119m H1 EBITDA of
Slide 5: Crew change challenge being resolved by the One TORM platform
CREW CHANGE CHALLENGE BEING RESOLVED BY THE ONE TORM PLATFORM AND IN DIALOGUE WITH AUTHORITIES • Safety is the top priority for TORM and an integral part of the One TORM platform 22 June 2020 14 August 2020 • Safety is especially important during the COVID-19 pandemic and TORM has implemented severa
Slide 6: TORM's recent vessel sales were well timed and done above broker values
TORM’S RECENT VESSEL SALES WERE WELL TIMED AND DONE ABOVE PREVAILING BROKER VALUES USDm Vessel name Vessel Delivery Age Sales price, net Q1 2020 segment date of commission, broker 32 5-year MR vessel USDm values, USDm 31 TORM Mary MR Q2-20 18.1 30 TORM Gertrud MR Q3-20 17.6 29 TORM Kristina LR2 Q3-2
Slide 7: COVID-19 related factors sending product tanker freight rates on a rollercoaster ride
COVID-19 RELATED FACTORS SENDING PRODUCT TANKER FREIGHT RATES ON A ROLLERCOASTER RIDE LR2 (TC1) TORM MR (spot) Q2 2020 USD/day MR (avg) TORM MR covered Q3 2020 as of 13 August 2020 • Unprecedented decline in local oil demand 170,000 leading to regional dislocations and long- haul trade (e.g. US/Euro
Slide 8: The oil market has moved from stockbuilding to stockdrawing phase
THE OIL MARKET HAS MOVED FROM STOCKBUILDING TO STOCKDRAWING PHASE • The COVID-19 pandemic has Pre-COVID-19 led to an unprecedented oil Jan 2020 demand destruction • Initially, refinery runs have been Refined product lagging declines in demand, stocks build leading to unprecedented inventory builds b
Slide 9: Floating storage has come down as a first step towards rebalancing
FLOATING STORAGE HAS COME DOWN AS A FIRST STEP TOWARDS REBALANCING Vessels in floating storage • The unprecedented decline in oil product Mn dwt demand has resulted in limited storage space 18 at terminals and refineries, resulting in a spate 17 of logistical floating storage 16 15 • At its peak in
Slide 10: Onshore inventories have stabilized and started to slowly decline
ONSHORE INVENTORIES HAVE STABILIZED AND STARTED TO SLOWLY DECLINE AFTER UNPRECEDENTED BUILDS CPP inventories in key trading hubs* Mn bbl • The COVID-19 caused demand destruction and resulted in a counter-seasonal growth of CPP inventories in the US, ARA and Singapore to an all-time high • This put o
Slide 11: Low tonnage supply growth alleviating effects from destocking
LOW TONNAGE SUPPLY GROWTH ALLEVIATING EFFECTS FROM DESTOCKING Fundamental effects on demand and supply from the COVID-19 Product tanker order book at historical low level as % of total fleet Short-term Medium-term • Potential economic stimulus 56% • Increased product exports in initial phases of dem
Slide 12: Continuous changes in the COVID-19 situation impact the product tanker market
CONTINUOUS CHANGES IN THE COVID-19 SITUATION, AND ECONOMIC ACTIVITIES IN DIFFERENT COUNTRIES, IMPACT THE PRODUCT TANKER MARKET THE COVID-19 SITUATION CONTINUES TO IMPACT THE GLOBAL TANKER MARKET • The initial unprecedented decline in oil demand due to the COVID-19, led to significant regional demand
Slide 13: COVID-19 causing medium-term market volatility
COVID-19 CAUSING MEDIUM-TERM MARKET VOLATILITY Key medium- to long-term market drivers • Economic stimulus supporting recovery in oil demand in H2 2020, and restoring some of the trades distorted by the COVID-19 once the initial stock draw is over • Product tanker order book to fleet ratio at histor
Slide 14: TORM commercially outperforms peers in its key MR segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT CORRESPONDING TO USD 34M IN H1 2020 MR reported TCE, USD/day Q2 2020 performance: • TORM: USD/day 23,012 • Peer average: USD/day 19,512 TORM MR USD 14m USD 36m USD 19m USD 24m USD 34m premium* Note: Peer group is based on Ardmore, d’Amico (co
Slide 15: TORM's commercial capabilities are 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 16: 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 30 June 2020 LR2 MR (% of total days) LR1 Handy 26,207 (98%) 27,210 (100%) 3,251 4,172 3,237 3,177 10,960 (82%) 1,308 982 18,993 19,135 8,357 313 726 726 2020 202
Slide 17: Cost focus maintained with current low levels partly impacted by COVID-19 factors
COST FOCUS MAINTAINED WITH CURRENT LOW LEVELS PARTLY IMPACTED BY COVID-19 FACTORS Significant reduction in OPEX OPEX per day (yearly, weighted avg. in USD/day) -21% 7,655 7,193 Compared to the full 6,771 6,673 6,389 6,371 year of 2014, TORM 6,021 has reduced the OPEX cost base by approx. USD 44m on
Slide 18: Net asset value estimated at USD 985m while net loan-to-value of just 47%
NET ASSET VALUE ESTIMATED AT USD 985M WHILE NET LOAN-TO-VALUE OF JUST 47% 30 June 2020 figures, USDm Net LTV of 47% 1,735 908 985 52 11 86 181 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 47% ensuring a str
Slide 19: Well-positioned to service CAPEX commitments and to pursue new opportunities
WELL-POSITIONED TO SERVICE CAPEX COMMITMENTS AND TO PURSUE NEW OPPORTUNITIES Liquidity and CAPEX as of 30 June 2020 USDm Available liquidity CAPEX commitments 302 Retrofit scrubbers Newbuildings incl. scrubber 76 45 181 98 12 86 86 12 0 12 Cash position Available LR2 Total available 2020 2021 Total
Slide 20: Favorable financing profile with no major near-term maturities
FAVORABLE FINANCING PROFILE WITH NO MAJOR NEAR- TERM MATURITIES Scheduled debt repayments as of 30 June 2020 USDm 902 19 46 12 Financial lease 155 Mortgage debt 149 13 97 13 80 27 77 38 747 59 33 239 Oustanding ROY 2020 2021 2022 2023 2024 2025 Hereafter debt as of 30 June 2020* Ample headroom under
Slide 21: Strong performance and capital structure have enabled a significant return to shareholders
STRONG PERFORMANCE AND CAPITAL STRUCTURE HAVE ENABLED A SIGNIFICANT RETURN TO SHAREHOLDERS TORM’s financial position and H1 2020 result… …has enabled a meaningful return to shareholders Total TCE rates USD/day 24,465 Payout ratio 50% of Net income EBITDA USD 221m Total dividend USD 63m (DKK 397m) Ne