TORM reports strongest first half in three years
TORM has reported its strongest half year result in three years, with an EBITDA of $102.1 million, up from $66.7 million in the same period last year. Meanwhile, profit before tax for the first six months of 2019 amounted to $28.7 million, up from a loss of $7.5 million. EBITDA for the second quarter of 2019 was $40.6 million ($29.4 in 2Q18).
“TORM’s results in the first half of 2019 reflect the Company’s strong operating performance relative to its peers and our focus on maintaining efficient operations and a low cost base. Our profit before tax of $28.7 million in the first half of 2019 represented the strongest half-year result in three years, and we are pleased to be able to generate a profit also in the second quarter of year that has been negatively impacted by an unusually high and prolonged refinery maintenance period,” said Executive Director Jacob Meldgaard and adds: “We believe the IMO 2020 regulation will drive increased demand for product tankers and that TORM is well positioned to take advantage of these new market dynamics.”
The Board of Directors has considered the Company’s options and believes that at this time the continued modernisation of the fleet through newbuildings, purchase of modern second-hand tonnage and scrubber installations will provide for the optimal capital allocation.
During the second quarter of 2019, TORM purchased four modern 2011-built MR vessels for $83 million. The vessels are expected to be delivered during August 2019. To finance the purchase and to support TORM’s solid capital structure, TORM has entered into six sale and leaseback transactions, which are expected to be executed during the third quarter of 2019.
TORM also took delivery of two MR newbuildings during the second quarter of 2019, sold the MR vessel TORM Gunhild (built in 1999) for $6 million and repaid debt of $4 million in connection with the vessel sale. The vessel has been delivered to the new owners. After the quarter ended on 30 June 2019, TORM has taken delivery of one MR newbuilding and sold two additional vessels, the MR vessel TORM San Jacinto (built in 2002) and the Handy vessel TORM Saone (built in 2004), for $16 million.
The implementation deadline for the IMO 2020 sulphur regulation is approaching, and the shipping industry has to comply with the new regulation either by reducing sulphur emissions with scrubbers or by using compliant fuels. TORM’s joint venture ME Production China, a joint venture with ME Production, a leading scrubber manufacturer, and Guangzhou Shipyard International (GSI), which is part of the China State Shipbuilding Corporation Group, has provided it with the flexibility to make timely decisions on retrofit installations as it developed its compliance strategy.
With close to half of the fleet being retrofitted with scrubbers and half of the fleet using compliant fuels, TORM has a balanced approach to the new regulation. “We have developed customized schedules for the vessels that will be using compliant fuels from January 1, 2020. As of August 15, 2019, TORM has conducted six scrubber installations, and by January 1, 2020, 28 out of 34 scheduled installations are expected to be finalised, with the remaining six consisting of three newbuilding deliveries and three retrofit installations.”
For more information visit www.torm.com
19th August 2019
