11 November 2015 Safe Harbor Statement Matters discussed in this - - PowerPoint PPT Presentation

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Q3 2015 results 11 November 2015

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Safe Harbor Statement

Matters discussed in this presentation may constitute forward-looking statements. Such statements reflect TORM's current expectations and are subject to certain risks and uncertainties that could negatively impact TORM's business. To understand these risks and uncertainties, please read TORM's announcements to NASDAQ OMX Copenhagen. The presentation may include statements and illustrations concerning risks, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, TORM's examination of historical operating trends, data contained in our records and other data available from third parties. As many of these factors are subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TORM makes no warranties or representations about accuracy, sequence, timeliness or completeness of the content of this presentation.

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Agenda

TORM Q3 Highlights Product Tanker Market Overview and Outlook TORM Q3 Financial and Operating Performance

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Highlights for Q3 2015

Q3 2015 Results Tanker Dry bulk Guidance

• The product tanker freight rates across segments has been USD/day ~26,000 in Q3 which are the

highest freight rates earned since 2008

• The Tanker segment reported a gross profit of USD 104m in Q3 2015 (PF USD 114m)
• Planned wind-down of dry bulk activities completed with redelivery of last T/C-in vessel and sale of our

last two Panamax vessels

• TORM’s dry bulk segment reported a gross result of USD -1m for Q3

Corporate events

• The new Restructuring Agreement was implemented on 13 July 2013 giving TORM strategic and

financial flexibility

• New ownership structure and Board in place
• TORM has secured undrawn financing of USD 67m for the first three MR newbuildings and undrawn

financing of USD 26m for two of the second-hand MR vessels mentioned above

• Full year 2015 guidance is an EBITDA of USD 200 - 220m and a PBT of USD 115 - 135m
• Pro forma guidance, reflecting the combined fleets’ full year performance, is an EBITDA of USD 310 –

330m and a PBT of USD 185 - 205m S&P (Tanker)

• During Q3, TORM purchased three modern second-hand MR vessels (2007, 2010 and 2012 built) for a

total consideration of USD 80m

• The value of TORM’s product tanker fleet increased by USD 77m (~5%) during Q3

USDm Reported Q3 2015 Pro forma Q3 2015 Pro forma Q3 2014 Pro forma Q1-Q3 2015 EBITDA 96 105 26 257 Profit before tax 65 81

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Q3 2015 reported a positive EBITDA of USD 96m and a positive PBT of USD 65m

Comments:

• Q3 EBITDA of USD 96m and Profit before tax of USD 65m
• Q3 pro forma EBITDA of USD 105m and pro forma Profit before tax of USD 81m
• Q3 Equity of USD 947m and Cash and cash equivalents of USD 170m
• Q3 average Tanker TCE/day of USD 25,969 and average Tanker OPEX/day of USD 6,733

USDm Reported Q3 2015 Pro forma Q3 2015* Pro forma Q3 2014* Pro forma Q1-Q3 2015* Pro forma Q1-Q3 2014* Pro forma 2014* P&L TCE Earnings 150 165 101 453 293 416 Gross profit 104 114 41 287 113 172 Sale of vessels EBITDA 96 105 26 256 69 118 Profit before tax 65 81

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12 Balance sheet Equity 947 947 764 947 764 770 NIBD 534 534 643 534 643 668 Cash and cash equivalents 170 170 77 170 77 56 Key drivers Number of vessels (#) 75 75 80 75 80 79 Tanker TCE/day (USD) 25,969

• 14,772

23,714 14,195 15,171 Tanker OPEX/day (USD) 6,733

• 7,649

7,132 7,603 7,656

* Pro forma figures prepared as though the Restructuring occurred at 1 January 2014 and include the combined TORM and Njord fleet

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Agenda

TORM Q3 Highlights Product Tanker Market Overview and Outlook TORM Q3 Financial and Operating Performance

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Product tanker freight rates continued at strong levels

Source: Clarksons. Spot earnings: LR2: TC1 (Ras Tanura-> Chiba), LR1: TC5 (Ras Tanura-> Chiba) and MR: average basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->Sidney.

Freight rates in ‘000 USD/day East (Q3 2015)

• The LR market benefitted from the ramp-up of

refinery capacity in Saudi Arabia and the UAE

• The Far East exported large volumes of gasoil to

West Africa and north-western Europe

• Declining freight rates for dirty trading led LR2s

to switch back into the clean market West (Q3 2015)

• Freight rates driven by high European refinery

margins yielding export volumes to West Africa

• Considerable European export of gasoline to the

US East Coast due to US demand and capacity restrictions

• The refineries in the Mexican Gulf area had high

exports to South and Latin America

• High naphtha flows from West to East in

July/Aug

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Demand outlook for the product tanker market is mixed

Sources: IEA, Reuters, TORM Research. * Data by time of arrival in Asia

• West to East naphtha arbitrage

flows are set to pick up from lows in Sep-Oct

• After a strong summer driving

demand in Q3, US gasoline demand is expected to undergo a seasonal decline in Q4, yet remain higher y-o-y

• Imports to Latin America are

expected to decline amid weak demand and restart of a number

• f refineries in the region
• A steep contango and tight

storage availability in the NW Europe jet market leading to postponed arrivals

• Strengthening of the crude

market has a potential to encourage some LRs to switch to dirty trade

• Refinery rationalization will

continue in Europe and Pacific, while more capacity will be added in Asia and the Middle East, supporting long haul trade Refinery expansions favoring tonne-mile Asia naphtha imports by source*

Net distillation capacity additions and expansions, m b/d m tons

Refinery net expansions 2014-2020

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Supply outlook for the product tanker fleet varies by segment

Net fleet growth y-o-y in % of total fleet (no. of vessels)

• Product tanker deliveries

totaled 8.2m dwt during Q1-Q3

• This corresponds to a fleet

growth of 4.7% (in terms of no.

• f vessels)
• For FY 2015, the fleet is

forecast to expand by 6.5% (in terms of no. of vessels)

• The LR2 and MR segments are

set to lead the growth

• The fleet is forecast to grow by

5.0% in 2016

Note: Increase calculated basis number of vessels. The number of vessels by the beginning of 2015 was: LR2 258, LR1 327, MR 1,396, Handy 649. Note: Net fleet growth: Gross order book adjusted for expected scrapping and delivery slippage. Source: TORM Research.

2005-2014 average fleet growth for LR2, LR1, MR and Handysize

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Product tanker vessel prices

• Product tanker ordering totaled

8.8m dwt during Q1-Q3, up 10% from FY2014

• Ordering continued to be

focused towards the LR1 and LR2 segments

• Ordering in the MR segment has

gained momentum while interest for the Handysize segment has been limited

• Activity in the second-hand

market has picked up in Q3, especially within modern MR tonnage

• Second-hand activity remains

limited in the LR segment due to limited available modern tonnage

Source: Clarksons.

USDm LR1 - Newbuilding MR - Newbuilding USDm MR - 5 yr. Second-Hand USDk/day MR 1Yr T/C

Vessel price development

LR2 - Newbuilding

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Agenda

TORM Q3 Highlights Product Tanker Market Overview and Outlook TORM Q3 Financial and Operating Performance

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Fleet update

PER 30.9.2015

# vessels

(includes Njord and TORM vessels pre restructuring completion date, 13 July 2015)

Q2 2015 Changes Q3 2015 Changes Q4 2015 Changes 2016 Owned vessels LR2 8.0 8.0 LR1 7.0 7.0 MR 42.0 42.0 8.0 50.0 1.0 51.0 Handysize 11.0 11.0 Tanker Division 68.0

• 68.0

8.0 76.0 1.0 77.0 Bulk activities 2.0 2.0

• 2.0
• Total

70.0

• 70.0

6.0 76.0 1.0 77.0 Charter-in vessels LR2 2.0 2.0 2.0 2.0 LR1

• MR

2.0 2.0 2.0 2.0 Handysize

• Tanker Division

4.0

• 4.0
• 4.0

4.0 Bulk activities 1.0 1.0

• 1.0
• Total

5.0

• 5.0
• 1.0

4.0 4.0 Total fleet 75.0

• 75.0

5.0 80.0 1.0 81.0

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TORM has significant operating leverage in an structurally improving product tanker market

Fleet Spot Days 578 3,956 4,015 826 2015 Q4 2016 2017 5,631 3,692 536 28,922 19,161 2,545 3,260 28,943 18,723 2,555 3,650

Handy LR2 LR1 MR

Illustrative change in cash flow generation potential for the TORM Fleet ∆ Average TCE/day 2015 Q4 2016 2017 USD 2,000 11.3 57.8 57.9 USD 1,000 5.6 28.9 28.9 USD (1,000) (5.6) (28.9) (28.9) USD (2,000) (11.3) (57.8) (57.9) USDm # of days Spot, % 84% 99% 100%

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Peer comparison shows that TORM has continued to perform commercially despite financial difficulties and an older fleet

Notes:

• Peer gorup is based on Ardmore (split by ECO and ECO-modified); d’Amico, Frontline 2012, Norden, BW, Teeday Tankers and Scorpio
• Q3 2015 figures are missing Frontline 2012, BW and d’Amico as they have not published yet.

USD/day

5.000 10.000 15.000 20.000 25.000 30.000 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15

MR - Total reported TCE

Peer Hi-Lo TORM PF spot Peer avg

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Pro forma OPEX is trending downwards

7,500 9,500 9,000 6,500 8,500 7,000 8,000 USD/operating day Handysize LR2 MR LR1 Q3 15 Q2 15 Q1 15 Q4 14 Q3 14 Y-o-Y change

• 13%
• 18%
• 10%
• 13%

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TORM has a fully integrated business model and admin expenses are trending significantly down

TORM has maintained a fully integrated business model… 2 4 6 8 10 12 14 16 18 20 22 24

• 19%
• 54%

2015 Q1-3 proforma 2014 2013 2012 2011 2010 2009 2008 … and TORM’s cost program has trimmed admin expenses significantly

• Admin. expenses (quarterly avg. in USD m)
• TORM has a fully integrated

business model to obtain the highest possible ‒ trading flexibility ‒ earning power

• TORM manages

‒ ~80 vessels commercially ‒ ~75 vessels technically

• Global reach ensures proximity to

customers

• Outsourced technical and

commercial management would affect other line items of the P&L

• Average admin cost per earning

day is below 1,500 USD

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TORM has has a fully funded newbuilding program with a favourable financing profile

Ample headroom under

• ur attractive covenant

package:

• Loan-to-Value

(depending on facility)

• Minimum liquidity:

USD 50m*

• Minimum book equity

ratio: 25% (adjusted for market value of vessels)

Debt repayments do not include any potential cash sweep under TORM’s loan facilities. ** Of which USD 20m must be cash or cash equivalents

425 155 801 708 2016 2018 2017 Q4 2015 (incl bulk sale) 49 57 2019 93 Total debt Debt as 30 Sep. 2015 16 23 Future secured draw down 2020 Hereafter 75 189 92 80 2015 17 172 2016 Total NB SH 168 338 170 Total available liquidity Cash position Available debt facility Capex commitments Available liquidity

Capex and Liquidity (USDm)

TORM is well positioned to service future CAPEX and debt commitments

Scheduled debt repayments (USDm)

100% 2% 3% 6% 9% 19% 7% 53%

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Forecasted EBITDA for the combined company in the range of USD 200m

• USD 220m for FY2015

Earnings sensitivity Q4 2015 EBITDA (USDm) Change in freight rates (USD/day) Segment

• 2,000
• 1,000

1,000 2,000 Tankers (USDm)

• 11
• 6

6 11 EPS per shares (USD)

• 0.18
• 0.09

0.09 0.18

* Applying 63.8m shares ** The financial results for 2015 will reflect Oaktree activities in the period from January 2015 until completion of TORM’s Restructuring (13 July 2015) and the combined entity from completion of TORM’s Restructuring until 31 December 2015 *** Pro forma figures prepared as though the Restructuring occurred at 1 January 2014 and include the combined TORM and Njord fleet

Profit before tax (USDm) EPS* (USD) 1 January – 30 June (Oaktree) Full-year (Combined)** 53 200 – 220 35 115 – 135 Pro forma guidance (Combined)*** 310 – 330 185 – 205 1.8 – 2.1 2.9 – 3.2

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Highlights for Q3 2015

Q3 2015 Results Tanker Dry bulk Guidance

• The product tanker freight rates across segments has been USD/day ~26,000 in Q3 which are the

highest freight rates earned since 2008

• The Tanker segment reported a gross profit of USD 104m in Q3 2015 (PF USD 114m)
• Planned wind-down of dry bulk activities completed with redelivery of last T/C-in vessel and sale of our

last two Panamax vessels

• TORM’s dry bulk segment reported a gross result of USD -1m for Q3

Corporate events

• The new Restructuring Agreement was implemented on 13 July 2013 giving TORM strategic and

financial flexibility

• New ownership structure and Board in place
• TORM has secured undrawn financing of USD 67m for the first three MR newbuildings and undrawn

financing of USD 26m for two of the second-hand MR vessels mentioned above

• Full year 2015 guidance is an EBITDA of USD 200 - 220m and a PBT of USD 115 - 135m
• Pro forma guidance, reflecting the combined fleets’ full year performance, is an EBITDA of USD 310 –

330m and a PBT of USD 185 - 205m S&P (Tanker)

• During Q3, TORM purchased three modern second-hand MR vessels (2007, 2010 and 2012 built) for a

total consideration of USD 80m

• The value of TORM’s product tanker fleet increased by USD 77m (~5%) during Q3

USDm Reported Q3 2015 Pro forma Q3 2015 Pro forma Q3 2014 Pro forma Q1-Q3 2015 EBITDA 96 105 26 257 Profit before tax 65 81

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Appendix

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Seafarers: ~2,800

• 1,300

Filipino seafarers

• 1,100

Indian seafarers

• 170

Danish seafarers

• 200

Croatian seafarers

• 30

Polish seafarers TORM offices: ~260 A world leading product tanker company

• 125+ years of history
• A leading product tanker owner

Listed on NASDAQ OMX Copenhagen Key facts Global footprint based on regional power and presence TORM employees:

TORM at a glance

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Product tankers have coated tanks and have specially designed cargo systems with flexibility to transport a wide range of different products

Oil product supply chain Exploration Transportation Refining Transportation Storage/distribution

Crude

• il

Fuel oil Diesel Gas oil / Gas-

• line

Kero- sene / Jet fuel Clean conden- sate Naph- tha MTBE

• Veg. oil

Biofuel Ethanol ”Dirty products” ”Clean products”

Typical refined oil product carried on TORM’s vessels

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TORMs new Board of Directors following the EGM on 25 August 2015

• Mr. Christopher

Boehringer

• Mr. David

Weinstein

• Mr. Pär Göran

Trapp

• Mr. Torben

Janholt

• Chairman of TORM’s Board of Directors
• Oaktree representative
• Deputy Chairman of TORM’s Board of Directors
• Representing minority shareholders
• Member of TORM’s Board of Directors
• Selected by Oaktree
• Member of TORM’s Board of Directors
• Selected by Oaktree
• Mr. Kári

Gardarnar

• Mr. Rasmus

Hoffmann

• Member of TORM’s Board of Directors
• Employee representative
• Member of TORM’s Board of Directors
• Employee representative

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Management team with an international outlook and many years of shipping experience

Jacob Meldgaard

▪ CEO of TORM since April 2010 ▪ Previously Executive Vice President of the Danish shipping company NORDEN where

he was in charge of the company’s dry cargo division

▪ Prior to that he held various positions with J. Lauritzen and A.P. Møller-Mærsk ▪ More than 20 years of shipping experience

Mads Peter Zacho

▪ Chief Financial Officer

Lars Christensen

▪ Head of Projects

Executive Management Senior Management Christian Søgaard-Christensen

▪ Head of Investor Relations and

Corporate Support Jesper S. Jensen

▪ Head of Technical Division

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The Restructuring was implemented in three steps

Debt above net asset value of TORM’s assets written down against warrants of 7.5% of TORM Part of TORM’s debt following the write- down was converted to new equity Oaktree contributed 31 product tanker vessels (incl. six newbuildings) with attached debt against a majority shareholding

• No. of owned

vessels: Debt write-down Debt-to-equity conversion Oaktree vessel contribution TORM prior to the Restructuring NAV (USDbn): 45

• 0.5

45 ~0 45 ~0.3 76 ~0.9 1 2 3

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Oaktree is the new majority shareholder in TORM

TORM’s shares are listed on NASDAQ OMX Copenhagen under the ticker TORM A Shares

• Share capital of 958m divided into 63.8m A

shares, one B share and one C share

• The B and C shares have certain voting rights
• A Share has a nominal value of DKK/share

15.00 TORM has a market capitalization of USD ~1.0bn For further company information, visit TORM at www.torm.com Share information Ownership structure (31 July 2015*) 31.6% 6.4% 62.0% Other DW Partners, LP OCM Njord Holdings S.à r.l.

* Based on public filings.

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Q3 2015 reported key figures

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USDm* Q3 2015 Q1-Q3 2015 2014 Revenue 216 354 180 EBITDA 96 148 41 Profit/(loss) before tax 65 100 13 Balance sheet Total assets 1,767 1,767 626 Equity 947 947 470 NIBD 534 534 103 Cash and cash equivalents 170 170 38 Cash flow statement Operating cash flow 78 135 17 Investment cash flow 46

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• 378

Financing cash flow

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1 397 Financial related key figures EBITDA margin 44% 42% 23% Equity ratio 54% 54% 75% Return on invested capital (ROIC) 28% 14% 6%

* The financial results for 2015 will reflect Oaktree activities in the period from January 2015 until completion of TORM’s Restructuring (13 July 2015) and the combined entity from completion of TORM’s Restructuring until 31 December 2015

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TORM tanker spot rates versus industry benchmark

Source: Clarksons, Spot earnings: LR2: TC1 (Ras Tanura-> Chiba), LR1: TC5 (Ras Tanura-> Chiba), MR: average basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->Sidney, Handysize: average basket of Augusta->Lavera, Tuapse->Agioi Theodoroi.

TORM spot vs. industry benchmark Q3 2015 (USD/day) TORM spot vs. industry benchmark last 12 months (USD/day)

Note: Benchmarks are not one-to-one comparisons as they do not take into account broker commission, armed guards and low sulphur fuel costs.

10,000 40,000 30,000 20,000 50,000 Handysize

• 10%

+14%

• 22%

LR1

• 1%

LR2 MR Benchmark TORM 40,000 30,000 20,000 10,000 50,000 Handysize +2%

• 15%
• 14%

LR1 +0% LR2 MR Benchmark TORM

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The combined group has a spot oriented profile in a strong market

Owned days PER 30.9.2015 T/C-in days at fixed rate T/C-in days at floating rate Total physical days Coverage

BGA

2015 2016 2017 2015 2016 2017 Owned days LR2 733 2,893 2,920 LR1 614 2,545 2,555 MR 4,026 18,458 18,615 Handysize 1,007 3,971 4,015 Tanker Division 6,380 27,867 28,105 Panamax 40

• Handymax
• Bulk activities

40

• Total

6,419 27,867 28,105 T/C-in days at fixed rate T/C-in costs, USD/day LR2

• LR1
• MR

175 703 108 16,000 16,000

• Handysize
• Tanker Division

175 703 108 16,000 16,000

• Panamax

14

• 14,500
• Handymax
• Bulk activities

14

• 14,500
• Total

189 703 108 15,890 16,000

• T/C-in days at floating rate

LR2 183 722 730 LR1

• MR
• Handysize
• Tanker Division

183 722 730 Panamax

• Handymax
• Bulk activities
• Total

183 722 730 Total physical days Covered days LR2 916 3,615 3,650 338 355

• LR1

614 2,545 2,555 78

• MR

4,201 19,161 18,723 509

• Handysize

1,007 3,971 4,015 182 15

• Tanker Division

6,738 29,292 28,943 1,107 370

• Panamax

54

• 54
• Handymax
• Bulk activities

54

• 54
• Total

6,792 29,292 28,943 1,160 370

• Coverage rates, USD/day

LR2 37% 10% 0% 24,755 30,799

• LR1

13% 0% 0% 16,627

• MR

12% 0% 0% 21,791

• Handysize

18% 0% 0% 19,618 17,246

• Tanker Division

16% 1% 0% 21,976 30,238

• Panamax

100% 0% 0% 3,830

• Handymax

0% 0% 0%

• Bulk activities

100% 0% 0% 3,830

• Total

17% 1% 0% 21,139 30,238

• Covered, %

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Industry cooperation and transparency is key to TORM’s Corporate Social Responsibility

Set climate targets:

• 20% reduction of CO2 emissions pr. vessel by 2020

(starting point in 2008), in g/ton-km

• 25% reduction of CO2 emissions from offices per

employee by 2020 (starting point in 2008), ton-employee TORM has set and communicated on climate targets

• Danish Shipowners’ Association

As part of DSA,TORM is pushing for international regulation and standards

• n e.g. emissions through the

International Maritime Organization

• Maritime Anti Corruption Network

TORM is founding member of a global business network working towards a maritime industry free of corruption that enables fair trade

• UN Global Compact

TORM became signatory to the UNGC in 2009 as the first Danish shipping company TORM is actively participating in… Target: 6.4 2014 7.0 2008 8.0

• 13%

Target: 2.2 2008 2014 2.3 3.1

• 25%

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