Presentation of Q1 2010 results 1
Safe Harbour 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 and filings with The US Securities and Exchange Commission. 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. 2
Financial summary Financial Highlights for Q1 2010 Tanker market Dry bulk market Finance CSR Financials (USDm) Gross profit per quarter 120 98 Gross profit of USD 56m in Q1 2010 100 • Positive development in gross profit since Q2 80 2009 driven by increased number of earning days and lower operating expenditures 56 54 60 52 39 • Absolute level remains low due to the continued 40 pressure on freight rates 20 0 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 EBIT in Tanker and Bulk Division Operating income (EBIT) of USD 20m in Q1 2010 60 compared to USD 49m in Q1 2009 49 50 • The Tanker Division is impacted by lower rates 40 compared to Q1 2009 where coverage had 26 30 24 been taken at higher rates 22 20 20 • EBIT for the Bulk Division in Q1 2010 is 10 2 positively impacted by USD 18m from the sale -0,3 -3,4 0 of two vessels. Q1 2009 was positively Tanker Division Bulk Division Non-allocated Total impacted by a one-off payment relating to the -10 redelivery of 4 vessels (USD 26m) Q1 2009 Q1 2010 3
Financial summary TORM has scale advantages with proven results Tanker market Dry bulk market Finance CSR TORM is one of the worlds largest product tanker companies Product tanker vessels controlled by TORM • Large and high quality fleet: 140 • >~30 vessels in each pool 120 • Global presence • 100 Young fleet (< 6 years in average) • Strict requirements to quality and safety 80 60 • Strong worldwide customer base: • Longterm relations to all the oil majors and 40 trading houses 20 • Commercial offices in the USA, Europe and 0 Asia LR2 LR1 MR SR Total • Cooperation on key functions: Owned TC in Pool Taken out (Jul 10) • Market intelligence With proven results • Bunker purchase • USD/day TORM Pool spot earnings vs benchmarks Q1 2010 Vetting coordination 20,000 0% • Clear benefits 18,000 32% • 16,000 Spot rates exceeding benchmarks 34% 14,000 • Better optimisation and planning of fleet 12,000 capacity leading to reduced idle and ballast 10,000 days 8,000 • Ability to give customers valuable options 6,000 regarding timing and destination of vessels 4,000 • Increased market insight 2,000 • Cost advantages 0 LR2 LR1 MR Pool Benchmark *Benchmarks are based on: 4 • LR1: TC5 (Ras Tanura-> Chiba) spot earnings from Clarksons • LR2: TC1 (Ras Tanura-> Chiba) spot earnings from Clarksons • MR: Avg. of spot earnings on TC2 (Rotterdam->NY), TC4 (Singapore-> Chiba) and Curacao->NY from Clarksons
Financial summary Continued difficult conditions on the product tanker market Tanker market Dry bulk market Finance CSR Freight rates (MR and LRs) Rates have remained low despite economic recovery USDt MR spot rates and 1 year T/C rates Positive 30 • Increased petrochemical production in the Far East led to higher naphtha demand 20 • Cold winter increased the demand for heating fuel (US demand up in Jan by 65% y-o-y) • Demand for TORM’s ice -class vessels pushed the 10 rates above the general market levels • Swap of LR2s into dirty supported the tonnage 0 balance in this segment Jan/09 Apr/09 Jul/09 Oct/09 Jan/10 Apr/10 MR spot rates (TC2) Negative MR 1 year T/C rates • High influx of new tonnage, though with significant TC2 spot avg 2005-2009 delay USDt LR1 and LR2 spot rates and 1 year T/C rates • Low US demand for gasoline 40 • Reduced floating storage which has freed tonnage 30 Into Q2, the rates have remained low: 20 • Refinery and petrochemical industry maintenance in Asia 10 • High gasoline inventories in the USA • Continued influx of newbuildings taking cargo out 0 of Asia Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 LR1 spot rates (TC5) LR1 1 year T/C rates LR2 spot rates (TC1) LR2 1 year T/C rates LR2 vessel size (Long Range): Aframax tanker 85-120,000 dwt LR1 (TC5) spot avg. 2005-2009 LR2 (TC1) Spot avg 2005-2009 LR1 vessel size (Long Range): Panamax tanker 60-85,000 dwt 5 MR vessel size (Medium Range):Handymax tanker 40-60,000 dwt *Source: Clarksons SR vessel size (Short Range): Handysize tanker – 30-40,000 dwt
Floating storage – significant decline during Q1 2010 Financial summary Tanker market Dry bulk market Finance CSR Floating storage has been significant… mbbl Clean products on floating storage* 120 100 80 60 Floating storage was significant during 2009 driven by a steep contango curve on middle distillates 40 and lower freight rates 20 However the cold winter, higher demand for middle 0 distillates and flattening contango led to discharge Jun - Jul - Aug - Sep - Oct - Nov - Dec - Jan - Feb - Mar - Apr - of floating storage during Q1 2010 and into Q2 09 09 09 09 09 09 09 10 10 10 10 The current number of vessels on floating storage ..and occupies vessels in clean and dirty market is approaching a level that is more in line with Floating storage volumes (4 Apr 2010)* historical levels No of vessels Percentage 20 70% App. 35% of the clean products on floating storage 60% are stored on vessels in the dirty segment 50% 40% 10 30% 20% 10% 0 0% LR1 LR2 Afra Smax VLCC 6 No of vessels (left axis) Percentage of total volume *Source: Inge Steensland and TORM research
Financial summary Economic recovery in the USA & Europe lagging Asia but Tanker market Dry bulk market Finance catching up CSR The Advanced Countries are Significant shock to the Asia was relatively less impacted catching up manufacturing cycle in the OECD One of the deepest cycles in record Developing Asia had shallow Manufacturing PMIs in China and recession India were quicker to recover - Sharp activity recovery from Q2 2009 appear to be topping out Opening of gap between global growth and Advanced Countries The advanced countries have lagged growth Asia but are catching up Policy tightening has begun in major Asian developing countries and is likely to continue in 2010 OECD leading indicator for Annual GDP growth Composite manufactoring PMI the OECD area % y/y % over 6 months % y/y 7 Sources: EcoWin
Financial summary Product tanker vessel prices have stabilised and increased - Tanker market Dry bulk market Finance continued limited S&P activity CSR Vessel price development* MR newbuilding and second-hand prices USDm 55 Newbuilding and second-hand prices have 50 increased during Q1 2010, indicating that 45 prices have bottomed out 40 35 There has been a relatively limited activity in 30 Q1 2010 for second-hand tankers in general, 25 although we have seen a number of sales in 20 the MR segment (13 during Q1). Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 During April, additional 14 MR vessels have MR DWT Products Tanker Newbuilding Prices been sold MR 5 year old second-hand prices MR 5 year old second-hand prices historic avg (2005-2009) MR - 1 year T/C and second-hand prices (indexed) 200 180 160 T/C rates and second-hand prices are 140 relatively well correlated 120 100 The T/C rate has continued to increase into 80 Q2 supporting continued increasing vessel 60 values 40 20 1/1-2005 = index 100 Vessel prices are furthermore driven by 0 expected improvement in earnings Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 MR 5 year old secondhand prices (index) 1 Year Time charter Rate 47-48,000 Modern Products Tanker - index 8 *Source: Clarksons and TORM research
Recommend
More recommend
