TORM plc interim results for the third quarter of 2017

During the third quarter of 2017, TORM achieved competitive blended freight rates of USD/day 14,290, a satisfactory result considering that the freight market in general was weak for most of the quarter. Towards the end of the quarter, the market was affected by the hurricane Harvey and refinery disruptions in Mexico which briefly lifted Atlantic MR rates and had an even more sustained effect on Far East MR rates with increasing transport distances towards the Americas. The disruption to the refinery system at the US Gulf Coast has accelerated the draws on inventories in the western markets bringing stocks closer to levels which can facilitate increased arbitrage trades, says Executive Director Jacob Meldgaard.

During the third quarter of 2017, TORM realized a positive EBITDA of USD 37m and a result before tax of USD -4m (including an impairment of USD 3m).

EBITDA for the third quarter of 2017 was USD 37m (2016, same period: USD 40m). The result before tax for the third quarter of 2017 was a loss of USD 4m, which included an impairment of USD 3m from a vessel held-for-sale (2016, same period: profit of USD 2m). Cash flow from operating activities was positive with USD 18m in the third quarter of 2017 (2016, same period: USD 38m) and earnings per share (EPS) was USD -0.1 (2016, same period: USD 0.0).
  During the third quarter of 2017, product tanker freight rates started out at weak levels in general; however, by the end of August the market began to recover. The market improvement was mainly driven by increased demand for transpacific voyages. TORM's product tanker fleet realized average TCE earnings of USD/day 14,290 for 6,626 earning days (2016, same period: USD/day 14,391 for 7,188 earning days) and a gross profit of USD 47m (2016, same period: USD 50m).
  During the third quarter of 2017, TORM purchased six MR resale vessels for a total consideration of USD 185m. The first transaction included four MR resale vessels from GSI with expected delivery in 2019. The second transaction included two MR resale vessels from Hyundai Mipo. These two vessels, TORM Sovereign and TORM Supreme, were delivered during the third quarter of 2017. TORM has financing in place for all six vessels. In addition to the vessel acquisitions, TORM has sold one vessel, TORM Fox, a 2005-built Handysize vessel. Following the balance sheet date, TORM has entered into an agreement to sell TORM Rhone, a 2000-built Handysize vessel. The vessel is expected to be delivered to the new owner in Q4 2017/Q1 2018. The transaction will have a limited P&L impact.
  The carrying value of the fleet including prepayments was USD 1,402m as of 30 September 2017 excluding outstanding installments related to the order book of USD 238m. Based on broker valuations, TORM's fleet including newbuildings had a market value of USD 1,524m as of 30 September 2017. Compared to the broker valuations as of 30 June 2017, the fleet value has increased by USD 169m (~12.5%) mainly due to the acquisition of six MR resale vessels. When excluding vessels acquired and sold during the third quarter, the fleet value has decreased by USD 18m (~1.3%), which is in line with the fleet depreciation rate.
  Net interest-bearing debt amounted to USD 630m as of 30 September 2017. In connection with the acquisition of the six MR resale vessels, TORM finalized two loan agreements of USD 47m and USD 81m respectively. As of 30 September 2017, the USD 47m facility is fully drawn, whereas the USD 81m facility is undrawn. Following the balance sheet date, TORM and Danish Ship Finance have agreed to extend the maturity date for an existing loan tranche from June 2019 to December 2021. Other terms in the loan agreement are unchanged. As of 30 September 2017, TORM had undrawn credit facilities and cash of approx. USD 416m. As of 30 September 2017, TORM's order book stood at eight vessels: four LR2 newbuildings with expected delivery in 2018 and four MR resale vessels for delivery in 2019. Outstanding CAPEX relating to the order book amounted to USD 238m and is fully financed.
  Based on broker valuations as of 30 September 2017, TORM's net asset value (NAV), excluding charter commitments, is estimated at USD 708m, equivalent to a NAV/share of USD 11.4 or DKK 71.9.
  Equity amounted to USD 784m as of 30 September 2017, equivalent to a book equity/share of USD 12.7 or DKK 80.0 excluding treasury shares and outstanding warrants, giving TORM an equity ratio of 47%.
  As of 30 September 2017, 27% of the remaining earning days in 2017 were covered at USD/day 16,946.
  As of 6 November 2017, TORM had covered 60% of the earning days in the fourth quarter of 2017 at an average TCE of USD/day 15,775.

ABOUT TORM
TORM is one of the world's leading carriers of refined oil products. The Company operates a fleet of approximately 80 modern vessels with a strong commitment to safety, environmental responsibility and customer service. TORM was founded in 1889. The Company conducts business worldwide. TORM's shares are listed on Nasdaq Copenhagen (ticker: TRMD A). For further information, please visit www.torm.com.

SAFE HARBOR STATEMENTS AS TO THE FUTURE
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 performance, and underlying assumptions and statements other than statements of historical facts. The words believe, anticipate, intend, estimate, forecast, project, plan, potential, may, should, expect, pending and similar expressions generally identify forward-looking statements.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond our control, the Company cannot guarantee that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of the world economy and currencies, changes in charter hire rates and vessel values, changes in demand for ton miles of oil carried by oil tankers, the effect of changes in OPEC's petroleum production levels and worldwide oil consumption and storage, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in TORM's operating expenses, including bunker prices, dry-docking and insurance costs, changes in the regulation of shipping operations, including requirements for double hull tankers or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists.

In light of these risks and uncertainties, you should not place undue reliance on forward-looking statements contained in this release because they are statements about events that are not certain to occur as described or at all. These forward-looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.

Except to the extent required by applicable law or regulation, the Company undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

09-2017 - TORM Q3 2017 Report UK


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Source: TORM plc via Globenewswire

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