Slide 1: Q1 2019 Results
z a |e I dT dA 14 MAY 2019 Q1 2019 RESULTS TORM
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 Introduction to TORM and Q1 2019 highlights 2 Product tanker market overview and outlook 3 IMO 2020 4 Financial metrics 3
Slide 4: TORM at a Glance
TORM AT A GLANCE A world-leading product tanker company Fleet overview* 72 Owned 9 On order • A leading pure-play product tanker owner • Large commercial footprint with presence in all key product tanker segments 12 ⚫⚫⚫⚫⚫⚫⚫⚫⚫⚫ • Strong capital structure to support disciplined growth strategy LR2 ⚫⚫
Slide 5: Q1 2019 Financial Highlights
Q1 2019 FINANCIAL HIGHLIGHTS 5
Slide 6: The Reference Company in the Product Tanker Segment
THE REFERENCE COMPANY IN THE PRODUCT TANKER SEGMENT TORM is a large-scale, pure-play TORM’s superior integrated product tanker owner, active in all operating platform includes key product tanker segments in order in-house technical and commercial management to meet customer needs (preferred by custo
Slide 7: TORM Commercially Outperforms Peers in Its Key MR Segment
TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY MR SEGMENT Q1 2019 performance: • TORM: USD/day 16,765 • Peer average: USD/day 15,031 FY 2015: USD 28m FY 2016: USD 14m FY 2017: USD 35m FY 2018: USD 20m Q1 2019: USD 8m Note: Peer group is based on Ardmore, d’Amico (composite of LR1, MR and Handy), Fro
Slide 8: TORM's Commercial Capabilities Focused on Optimizing Geographical Positioning
TORM’S COMMERCIAL CAPABILITIES ARE FOCUSED ON OPTIMIZING GEOGRAPHICAL POSITIONING USD/day (%) 6,000 70 West outperformance Majority of TORM’s MRs West of Suez 5,000 4,000 3,000 60 2,000 1,000 0 50 East outperformance 1,000 Majority of TORM’s MRs East of Suez 2,000 3,000 40 4,000 5,000 6,000 30 Q1 -
Slide 9: Fully Integrated Business Model with Competitive Cost Structure
FULLY INTEGRATED BUSINESS MODEL WITH COMPETITIVE COST STRUCTURE TORM has trimmed administration Significant reduction in OPEX expenses OPEX per day (yearly, weighted avg. in USD/day) Admin. expenses (quarterly avg. in USDm) -16% 2008 7,655 2009 7,193 6,771 6,673 6,448 2010 6,389 Compared to 2014 201
Slide 10: Fleet and Scrubber Update
FLEET AND SCRUBBER UPDATE • TORM has sold the MR vessels TORM Amazon (built 2002) and TORM Cecilie (built 2001) during Q1 2019 for a total consideration of USD 15m and repaid total debt of USD 9m in connection with the vessel sales Sales & • One vessel was delivered to the new owner during the first
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS Pure-play product ~75 vessels deployed in the spot market across all four larger product tanker tanker exposure segments Superior commercial One TORM approach with in-house commercial and technical management provides superior earnings while maintaining a balanced cost structur
Slide 12: Agenda
AGENDA 1 Introduction to TORM and Q1 2019 highlights 2 Product tanker market overview and outlook 3 IMO 2020 4 Financial metrics 12
Slide 13: Strong Start to the Year Followed by Seasonal Softening
STRONG START TO THE YEAR FOLLOWED BY SEASONAL SOFTENING USD/day Q1 2019 • Open arbitrage windows and generally healthy trade patterns • Commencement of refinery maintenance period in Europe, the US and the Middle East • Unplanned refinery outages in the US leading to increased gasoline imports to th
Slide 14: Vessel Values Have Stabilized at Higher Levels
VESSEL VALUES HAVE STABILIZED AT HIGHER LEVELS 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-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Newbuilding 5 yr. second-han
Slide 15: 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 16: Product Inventories Back to Normal Levels
PRODUCT INVENTORIES BACK TO NORMAL LEVELS Aggregated global CPP inventories* Inventories compared to 5-year average levels Billion bbl • Global CPP inventories are back to 5-year average levels • Diesel inventories in main import areas continue to be at relatively low levels, indicating a potential
Slide 17: Middle East Refinery Capacity Additions Set to Increase Significantly Through 2021
MIDDLE EAST REFINERY CAPACITY ADDITIONS SET TO INCREASE SIGNIFICANTLY THROUGH 2021 Middle East refinery capacity net additions (m b/d) Forecasted Realized 0.82 0.84 0.47 0.18 0.12 0.12 0.06 0.12 -0.03 2015 2016 2017 2018 2019F 2020F 2021F • As oil product demand increases, the ton-mile demand is pos
Slide 18: Product Tanker Order Book Continues to Shrink
PRODUCT TANKER ORDER BOOK CONTINUES TO SHRINK Product tanker order book as percentage of the fleet M dwt • Product tanker order book to fleet ratio at a historically low level of 8.3% (11% for MRs, 3% for LR1s and 9% for LR2s) • In Q1 2019, the product tanker fleet grew by 1.6% with 4.3% growth expe
Slide 19: IMO 2020 Sulfur Cap Will Potentially Lead to ~5% Incremental Growth
IMO 2020 SULFUR CAP WILL POTENTIALLY LEAD TO ~5% INCREMENTAL GROWTH IN THE PRODUCT TANKER TRADE Global consumption of marine bunkers* Distillates VLSFO M b/d Compliant fuels* HSFO 6 5 4 TORM’s current estimate Potential of for new trade clean product tankers additional diesel demand 3 2 1 0 2017 202
Slide 20: More Flexibility to Produce Additional Diesel in Net Exporting Regions
MORE FLEXIBILITY TO PRODUCE ADDITIONAL DIESEL IN NET EXPORTING REGIONS Exporting regions increase diesel production capacity… …while IMO 2020 will increase the deficit in importing regions M b/d +0.4 m b/d additional M b/d +0.3 m b/d additional 1.2 export capacity 1.2 import requirement 0.8 0.8 0.4
Slide 21: Medium-Haul and Long-Haul Trade 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 enforced by the IMO 2020 regulation • Increased flexibility to produce additional diesel in net exporting regions and refinery expansion support long-haul and medium-haul trade r
Slide 22: Agenda
AGENDA 1 Introduction to TORM and Q1 2019 highlights 2 Product tanker market overview and outlook 3 IMO 2020 4 Financial metrics 22
Slide 23: TORM Has Ordered 13 Additional Scrubbers in April 2019
TORM HAS ORDERED 13 ADDITIONAL SCRUBBERS IN APRIL 2019 FOR RETROFITTING IMO 2020 sulfur regulation compliance options Significant number of vessels committed to scrubbers1) Installed newbuildings and scrubber-ready Committed retrofit Newbuildings and Committed newbuildings and scrubber-ready 0.5% co
Slide 24: Majority of Scrubber Installations Delivered Ahead of 2020 Deadline
MAJORITY OF 34 SCRUBBER INSTALLATIONS WILL BE DELIVERED AHEAD OF THE 2020 DEADLINE SUPPORTED BY TORM’S SCRUBBER JV TORM’s scrubber JV, ME Production China Ownership share: 27.5% • One of the largest risks with scrubber installations is the potential delay during both ME Production the production and
Slide 25: Agenda
AGENDA 1 Introduction to TORM and Q1 2019 highlights 2 Product tanker market overview and outlook 3 IMO 2020 4 Financial metrics 25
Slide 26: Profitable in Q1 2019
PROFITABLE IN Q1 2019 USDm Q1 2019 Q1 2018 2018 P&L TCE Earnings 117 97 352 Gross profit 74 49 169 Sale of vessels 0 1 1 EBITDA 62 37 121 Profit before tax 23 1 -33 Balance sheet Equity 867 892 847 NIBD 584 577 627 Cash and cash equivalents 155 174 127 Key figures 0.31 0.01 -0.48 Earnings per share
Slide 27: Spot-Orientation Provides Significant Operating Leverage
SPOT-ORIENTATION PROVIDES SIGNIFICANT OPERATING LEVERAGE Unfixed days # of days as of 31 March 2019 LR2 LR1 MR Handy (% of total days) 28,138 (98%) 28,972 (100%) 3,589 4,230 3,274 3,265 18,105 (89%) 2,271 1,764 19,480 19,662 12,781 1,289 1,795 1,815 2019 2020 2021 Illustrative change in cash flow ge
Slide 28: Net Asset Value Estimated at USD 829m
NET ASSET VALUE ESTIMATED AT USD 829M 31 March 2019 figures, USDm Net LTV of 52% 1,599 728 829 57 4 258 155 Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value (incl. newbuildings) CAPEX • Net Loan-to-Value was 52% ensuring a strong capital structure • Net Asset V
Slide 29: Well-Positioned to Service Future CAPEX Commitments
WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS CAPEX and liquidity as of 31 March 2019 USDm CAPEX commitments Available liquidity Retrofit scrubbers* Newbuildings incl. scrubber 438 Subject to documentation 46 2 162 26 42 40 75 155 258 232 2019 2020 Total Cash position Available working Newbuil
Slide 30: Favourable Financing Profile with No New Near-Term Maturities
FAVOURABLE FINANCING PROFILE WITH NO NEW NEAR- TERM MATURITIES Scheduled debt repayments as of 31 March 2019 USDm 95 86 704 390 133 Debt as of 31 March 2019* Falling due within one year Falling due between Falling due between Hereafter one and two years two and three years Ample headroom under our a
Slide 31: Appendix
APPENDIX TORM
Slide 32: Management Team with an International Outlook
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 33: Key Figures
KEY FIGURES USDm Q1 2019 Q1 2018 2018 2017 Revenue 186 163 635 657 EBITDA 62 37 121 158 Profit/(loss) before tax 23 1 -33 3 Net profit/(loss) 23 1 -35 2 Balance sheet Total assets 1,717 1,737 1,714 1,647 Equity 867 892 847 791 NIBD 584 577 627 620 Cash and cash equivalents 155 174 127 134 Cash flow
Slide 34: Fleet Overview
FLEET OVERVIEW # of LR2 LR1 MR Handy As of 14 May 2019 vessels 80 77 78 78 69 11 11 11 70 11 9 9 9 60 7 50 40 30 52 53 53 46 20 10 5 5 5 5 0 14 May 2019 End 2019 End 2020 End 2021 Chartered- in and leaseback 3 3 3 3 vessels 34
Slide 35: Industry Cooperation and Transparency Are Key to TORM's CSR
INDUSTRY COOPERATION AND TRANSPARENCY ARE KEY TO TORM’S CORPORATE SOCIAL RESPONSIBILITY TORM is committed to support… UN Sustainable TORM supports the SDGs based on an assessment of our CSR activities and Development Goals areas of impact. UN Global TORM became signatory to the UNGC in 2009 as the f
Slide 36: Supporting Education and Climate Action
SUPPORTING EDUCATION AND CLIMATE ACTION • In 2018, TORM extended its support to the UN Sustainable Development Goals (SDGs) as a natural progression of its commitment to the UN Global Compact • TORM focuses on two specific SDGs, which are linked to the Company’s current CSR activities. Activities an
Slide 37: Strong Start to the Year Followed by Seasonal Softening
STRONG START TO THE YEAR FOLLOWED BY SEASONAL SOFTENING LR2 (TC1) MR (average) USD ‘000/day USD ‘000/day Source: Clarksons. Spot earnings: LR2: TC1 Ras Tanura-> Chiba, MR: average basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->
Slide 38: Oaktree Is the Majority Shareholder with Remaining Free Float of 36%
OAKTREE IS THE MAJORITY SHAREHOLDER WITH A REMAINING FREE FLOAT OF 36% Share information Estimated shareholdings as of May 2019 (%)* TORM’s shares are listed on Nasdaq Copenhagen and Nasdaq New York under the 100 tickers TRMD A and TRMD, respectively. 12 Shares 20 • 74.2m A-shares, one B-share and o
Slide 39: TORM Expects a Positive TCE Impact from Scrubber Investments
TORM EXPECTS A POSITIVE TCE IMPACT FOR THE TORM FLEET DUE TO THE SCRUBBER INVESTMENTS Avg. fuel Compliant-HSFO fuel TCE impact per Annual TCE impact Vessel type consumption, spread assumption, vessel, USD/day2) per vessel, USDm tons/day1) USD/t MR Eco vessel ~11 × 200 = ~2,200 0.8 MR Non-Eco vessel