Presentation of Q1 2011 results 1 Safe Harbour Statement Matters - PowerPoint PPT Presentation

Presentation of Q1 2011 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

Highlights Highlights Q1 2011 Tanker market Dry bulk market Finance Summary • Q1 loss before tax of USD 45m Results • In line with expectations • Weak rates in Q1 2011 Tanker • Stronger market during the past couple of months • Rates under pressure in Q1 2011 Dry bulk • Highest number of newbuilding deliveries in a single quarter • Annual cost savings of USD 10m - full effect in 2012 Changing Trim • Deferral of 2 MR newbuildings to Q1 2013 and Q2 2014 • TORM maintains a 2011 forecast of a loss before tax of USD 100 – 125m Forecast • Considerable uncertainty as only 24% of the earning days are covered 3 3

Highlights Financial highlights Q1 2011 Tanker market Dry bulk market Finance Summary Financials USD million Q1 2011 Q1 2010 2010 2009 P&L Q1 2011 loss before tax of USD 45m, negatively affected by USD 6m from Gross profit 28 56 180 243 sale of vessels Sale of vessels -6 18 2 33 Q1 2011 EBITDA excl. sale of EBITDA 4 55 97 203 vessels of USD 10m compared to Q1 Profit before tax -45 3 -136 -19 2010 EBITDA of USD 37m – Balance difference primarily explained by lower coverage in a low freight rate Equity 1,075 1,248 1,115 1,247 environment NIBD 1,853 1,622 1,875 1,683 Positive investment cash flow Cash and cash equivalents 142 186 120 122 • USD 101m from sale of vessels, Cash flow statement two Kamsarmax newbuildings (P&L Operating cash flow -11 21 -1 116 effect in Q4 2010) and one MR vessel (P&L effect in Q1 2011) Investment cash flow 33 41 -187 -199 • USD 68m instalments on newbuildings 4

Highlights The product tankers freight rates Tanker market Dry bulk market Finance Summary Freight rates (MR, LR1 and LR2) in USDt/day 90 80 LR2 (TC1) 70 60 50 TORM continues to outperform the benchmarks 40 • Q1: LR2 +10%, LR1 +101% and MR +74% 30 • 2010: LR2 +14%, LR1 +22% and MR +46% 20 10 0 Q1 2011 positive impacts: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Non fundamental demand due to North Africa 70 LR1 (TC5) MAX MIN 2011 unrest and oil price volatility 60 • Transatlantic MR strength from gasoline arbitrage 50 opportunities • US export to South America 40 • Cold weather stimulating heating oil demand 30 20 Q1 2011 negative impacts: 10 • Ample tonnage, notably in the East market • Low US gasoline import 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec • Continued low level of floating storage; ~2% of 50 MR (TC2) world fleet MAX MIN 2011 • Weak dirty market 40 Into Q2 2011 – positive signs 30 • Non fundamental demand from oil price volatility 20 • Arbitrage opportunities 10 0 LR2 vessel size (Long Range): Aframax tanker 80-120,000 dwt Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec LR1 vessel size (Long Range): Panamax tanker 60-80,000 dwt 5 2005 - 2009 range 2009 2010 2011 MR vessel size (Medium Range):Handymax tanker 30-60,000 dwt Source: Clarksons, until 13 May 2011

Highlights The Atlantic market has improved Tanker market Dry bulk market Finance CSR Summary Increased oil price volatility… USD/bbl 130 • Drastic oil price increase and volatility – following North Africa unrest 120 • Increased Brent /WTI spread 110 • Improved US refinery margins • Higher US export of refined products (excl. 100 gasoline) 90 • Arbitrage movements “helped” by volatility 80 70 60 Jun/10 Aug/10 Oct/10 Dec/10 Feb/11 Apr/11 Crude Oil, WTI NYMEX Brent Crude … and falling US gasoline stocks Thousands barrels 250,000 240,000 230,000 • Draw on cheaper stocks 220,000 20 Floating storage volumes* 10 No of vessels 30 40 LR1 LR2 Smax VLCC No of vessels (26 Jul 20010) 0 210,000 • Expect replenishing of stocks to support the 200,000 market 190,000 180,000 Jun/10 Aug/10 Oct/10 Dec/10 Feb/11 Apr/11 6 U.S. Total Gasoline Ending Stocks Source: Factset

Highlights Supply continues to be affected by significant slippage Tanker market Dry bulk market Finance Slippage is continuing… Summary Newbuildings (LR2, LR1, MR & SR) No. of vessels 90 Significant slippage continues 80 • Q1 2011, slippage of 60% 70 60 • Full year 2010 delivery of 174 vessels, 44% 50 40 less than planned 30 20 • Q1 2011 net fleet growth of 2% 10 0 Q1 Q2 Q3 Q4 Expected deliveries Actual deliveries Source: Inge Steensland and TORM …and net fleet growth is declining Order book stands at 17% of the fleet on water No of MR % yoy equivalents Slippage expected to continue 300 12% • 30% in 2011 and 2012 250 10% 10% • No slippage from 2013 as there is free yard capacity 200 8% 8% compared to orders this year 150 6% TORM estimates 10% cancellations 100 5% 4% 4% • Limited cancellations 4% 50 2% 0 Assumed new ordering of 40 MR (2013 delivery) 2009 2010 2011 2012 2013 -50 0% Total net growth in the fleet declines from 5% in 2011 to LR2 LR1 approx. 4% in 2013 MR SR New ordering est. Total by MR equivalent 7 Note: Net fleet growth: Gross order book adjusted for scrapping, slippage, phase out of single hulls and new ordering Source: Inge Steensland and TORM

Highlights Product Tanker market - Tanker market Dry bulk market Finance demand will outgrow supply from 2011 to 2013 Summary Demand and supply development (2011 - 2013) Demand Supply 750 Swing factors: Number of vessels* • Order book delays • Delays in refineries 500 • Floating storage 40 40 75 74 403 • Slow steaming 68 72 250 54 • Changes in transport 404 206 258 patterns 0 • Embargoes & strikes Growth in oil Increasing port Total demand Total supply Phase out & LR into dirty Additional 2013 Refinery and transportation Swing factors Cancellations Order book gross trade/triangulation • Blockage of water ways Arbitrage/cross scrapping increase demand market increase deliveries and ports days • Disruptions to refinery production • Hurricanes Source: TORM research *All effects are recalculated into MR equivalents – to enable comparision based on their volume relative to MR Demand primarily driven by Supply primarily driven by • LR into dirty • Refinery expansions in the Middle East and • Some LR1 vessels are replacing Panamax India & changes in transport patterns phase outs in crude • Increased oil demand • 30% of LR2 vessels are trading in the crude • Increasing port days due to increased • Phase-out of single hulls and scrapping of old activity/bottlenecks tonnage • Arbitrage • Additional new ordering of 2013 deliveries • Improving US exports 8

Product tanker vessel prices stable – but limited S&P activity Highlights Tanker market Dry bulk market Finance Summary Vessel price development MR newbuilding and second-hand prices USDm 60 Some softening in newbuilding prices 50 Increasing second-hand prices 40 30 Increasing newbuilding activity • Newbuilding slots for 2011/2012 seems to be 20 covered 10 0 Yards preparing new “green” designs Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 MR DWT Products Tanker Newbuilding Prices MR 5 year old second-hand prices MR - 1 year T/C and second-hand prices USDt/day USDm 30 60 25 50 20 40 15 30 T/C rates and second-hand prices are 10 20 relatively well correlated 5 10 0 0 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 1 Year Time charter Rate 47-48,000 Modern Products Tanker MR 5 year old second-hand prices (right axis) 9 Source: Clarksons, until 13 May 2011