1 2 Ma y Q RESULTS

Transcription

1 1 2 Ma y Q RESULTS

2 SAFE HARBOR STATEMENT 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 forwardlooking 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. 2

3 AGENDA Highlights Product Tanker Market Overview and Outlook Financial and Operating Performance 3

4 HIGHLIGHTS FOR THE FIRST QUARTER OF 2016 Q Results EBITDA of USD 70m and Profit before tax of USD 31m, which is in line with guidance RoIC of 10% and Earnings per share of USD 0.5 (or DKK 3.3) Net Asset Value estimated at USD 1,069m, corresponding to a NAV/share of USD 16.8 or DKK Product tanker market TORM s achieved product tanker freight rates across segments has been at USD/day ~20,000, which is in line with the fourth quarter of 2015 despite a generally softer market Refinery utilization has been high throughout the first quarter of 2016, however negatively impacted by high gasoline and diesel stocks and a warm winter in the northern hemisphere In the East, a high number of newbuilding deliveries have negative impacted the market Sales & Purchase Delivery of the last three MR newbuildings during the first quarter of 2016 Second-hand values have been under pressure due to limited available financing and an increase in sale candidates The value of TORM s product tanker fleet has decreased by USD 140m (~7%) in the first quarter of 2016 Corporate events TORM anticipates to distribute USD 25m in dividends in September 2016 with the intention to subsequently distribute 25 to 50% of Net Income on a semi-annual basis New corporate structure of the TORM Group has been established including the insertion of a UK parent company, TORM plc, a delisting of TORM A/S and a listing of TORM plc on Nasdaq Copenhagen Squeeze-out process ongoing in which TORM plc will acquire the remaining shares from the non-accepting TORM A/S minority shareholders TORM has secured financing for the LR2 newbuildings of up to USD 115m (up to 60%) at attractive terms 2016 guidance For the full year 2016, TORM expects: EBITDA in the range of USD m Profit before tax in the range of USD m 4

5 EBITDA OF USD 70M AND A POSITIVE PBT OF USD 31M FOR Q USDm P&L Q Pro forma Q1 2015* Q Pro forma 2015* TCE Earnings Gross profit Sale of vessels EBITDA Profit before tax Balance sheet Equity 1, NIBD Cash and cash equivalents Key figures Earnings per share (USD) Returm on Invested Capital (RoIC) 10.1% 14.4% 8.9% 14.1% Net Asset Value (NAV) 1,069-1,169 1,169 Number of vessels (#) Tanker TCE/day (USD) 19,845 22,876 19,757 22,879 Tanker OPEX/day (USD) 7,400 7,346 7,331 7,193 * Pro forma figures for 2015 presented as though the Restructuring occurred as of 1 January 2015 and include the combined TORM and Njord fleet EBITDA of USD 70m and a positive profit before tax of USD 31m for Q Q Equity of USD 1,001m and cash and cash equivalents of USD 123m Q RoIC of 10.1% and Earnings per share of USD 0.5 (or DKK 3.3) Q Tanker freight rates of USD/day 19,845 5

6 AGENDA Highlights Product Tanker Market Overview and Outlook Financial and Operating Performance 6

7 PRODUCT TANKER FREIGHT RATES EASED DURING Q YET PARTLY OVERPERFORMED Q RATES FREIGHT RATES IN 000 USD/DAY West The market was impacted by high gasoline and diesel stocks in addition to a warmer-than-usual winter in the northern hemisphere The MRs benefitted from increased flows of mixed aromatics from Europe to China, while diesel flows from the US to Europe eased High product stockpiles resulted in discharge delays, impacting the market positively The LR market was positively impacted by the increase in mixed aromatic trade from Europe to China Naphtha arbitrage trade from Europe to the Far East was relatively low West African CPP imports stated to increase towards the end of Q1 East The market continued to benefit from the recent ramp-up in refinery capacity in Saudi Arabia and the United Arab Emirates, generating demand for primarily LR tonnage going both east and west During Q1 both the LR and MR markets were negatively impacted by an increased number of vessels from the mixed aromatic transfers to China and the delivery of newbuildings at the same time, long-haul cargoes to bring tonnage from East to West were scarce, and partly covered by larger crude tankers carrying refined oil products on their virgin voyage The palm oil market was lower than expected due to reduced production Some refinery maintenance in the Middle East was observed towards the end of the quarter 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 7

8 DEMAND FOR PRODUCT TANKERS SET TO BE DRIVEN BY GASOLINE TRADE US OIL DEMAND GROWTH, Y-O-Y 000 b/d REFINERY NET EXPANSIONS AND OIL DEMAND GROWTH m b/d Note: * US gasoline and distillates demand growth forecast for 2016 is based on EIA STEO April 2016 Sources: EIA, IEA, TORM Research After relatively weak refinery margins in Q1 due to high stockpiles and subdued demand for gasoil/ diesel, margins in the Atlantic have started to recover on increased gasoline demand Refineries are expected to continue to ramp up runs to meet strong summer gasoline demand, forecasted to grow by close to 0.5m b/d y-o-y in Q2 (driven by Asia and North America) US gasoline demand rose at the fastest annual rate in almost 40 years in February FY 2016 growth is set to slow down from the 2015 level but remain well above the average seen during A shift in China s demand towards higher quality gasoline continues to draw in gasoline blending components from Europe Summer holiday season in the northern hemisphere is expected to lift jet fuel trade After weak performance in Q1, global gasoil/diesel demand is likely to get some support from increased power sector demand in the Middle East, yet global oversupply and consequently stockpiles are expected to increase Over longer term, refinery rationalization will continue in Europe and the Pacific, while more capacity will be added in Asia and the Middle East supporting long-haul trade Ton-mile demand for product tankers is forecast to grow by slightly above 6% p.a. during

9 SUPPLY OUTLOOK FOR THE PRODUCT TANKER FLEET VARIES BY SEGMENT NET FLEET GROWTH Y-O-Y (NO. OF VESSELS) % average fleet growth for LR2, LR1, MR and Handysize Product tanker ordering was very limited in Q1, posting the lowest level since Q Product tanker deliveries totaled 3.4m dwt during Q1 which combined with limited scrapping activity resulted in a 2% net fleet growth in Q1 Product tanker order book to total fleet ratio fell by 2.4 percentage points from the end of Q to 18.2% at the end of Q In 2016, the fleet is forecasted to expand by 5-6% in terms of no. of vessels (~7% in terms of dwt) The LR2 and LR1 segments are set to lead the growth, while the MR growth is expected to slow down from the 2015 level The total product tanker fleet is forecasted to grow by an average of 5% p.a. during in terms of no. of vessels (6% in terms of of dwt) Notes: Increase calculated basis number of vessels. The number of vessels by the beginning of 2016 was: LR2 285, LR1 325, MR 1,496, Handy 678 (includes chemical vessels). Net fleet growth: Gross order book adjusted for expected scrapping and delivery slippage. Source: TORM Research 9

10 PRODUCT TANKER VESSEL PRICES VESSEL PRICE DEVELOPMENT USDm LR2 - Newbuilding LR1 - Newbuilding MR - Newbuilding Ordering of product tanker newbuildings has been very limited so far this year Second-hand prices came under pressure, as the list of sales candidates remains historically long this resulted in hardly any second-hand activity as the cap between owners and buyers price ideas remained too wide Similarly, lack of financing contributed to the low activity in the newbuilding and second-hand markets USDm USDk/day MR - 5 yr. Second-Hand MR 1Yr T/C Source: Clarksons 10

11 AGENDA Highlights Product Tanker Market Overview and Outlook Financial and Operating Performance 11

12 TORM HAS SIGNIFICANT OPERATING LEVERAGE IN THE PRODUCT TANKER MARKET Unfixed days # of days LR2 LR1 MR Handy 19,102 1,837 1,409 13,018 26,749 2,640 2,514 17,599 27,569 3,479 2,555 17,520 2,837 Q2 Q ,995 4, Of total earning days 87% 93% 93% USDm Illustrative change in cash flow generation potential for the TORM fleet Average TCE/day Q2 Q USD 2, USD 1, USD (1,000) (19.1) (26.7) (27.6) USD (2,000) (38.2) (53.4) (55.1) 12

13 PEER COMPARISON SHOWS THAT TORM HAS CONTINUED TO PERFORM COMMERCIALLY DESPITE FINANCIAL DIFFICULTIES AND AN OLDER FLEET USD/day Notes: Peer gorup is based on Ardmore (split by ECO and ECO-modified), d Amico, Frontline 2012, Norden, BW, Teeday Tankers and Scorpio Q figures are missing for Frontline 2012, Teekay Tankers BW reporting is based on prospectus in

14 PRO FORMA OPEX HAS SHOWN A FLAT TREND USD/operating day 10,000 9,500 LR2 9,000 8,500 8,000 LR1 7,500 7,000 6,500 MR Handysize 0 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q

15 TORM HAS A FULLY INTEGRATED BUSINESS MODEL AND ADMIN EXPENSES ARE TRENDING SIGNIFICANTLY DOWN TORM operates on a fully integrated commercial and technical platform TORM s operational platform handles all commercial and technical operation The integrated business model provides TORM with the highest possible trading flexibility and earning power TORM manages ~80 vessels commercially ~75 vessels technically TORM has a global reach with offices in Denmark, India, the Philippines, Singapore, the UK and the USA Average admin cost per earning day for Q1 of USD/day 1,550 Outsourced technical and commercial management would affect other line items of the P&L TORM has trimmed administration expenses significantly Admin. expenses (quarterly avg. in USDm) % * 1Q 2016 * Pro forma figures for 2015 presented as though the Restructuring occurred as of 1 January 2015 and include the combined TORM and Njord fleet 15

16 TORM S NET ASSET VALUE ESTIMATED AT USD 1,069M 31 March figures, USDm LTV of 50% 1, , Based on broker values, TORM s vessels including newbuildings were estimated at USD 1,812m as of 31 March ,069 With an outstanding debt of USD 728m and committed CAPEX of USD 173m, TORM s Loan-to-Value was at 50% ensuring a strong capital structure Adjusting for cash and working capital, TORM s Net Asset Value (NAV) was estimated at USD 1,069m On a per share basis*, the NAV was estimated at USD 16.8 and DKK Value of vessels on water Value of Total vessel newbuildings value Outstanding debt Committed CAPEX Cash Working Capital Net Asset Value * Calculated based on 63,826,439 shares and USD/DKK fx rate of

17 TORM HAS A FAVOURABLE FINANCING PROFILE AND STRONG LIQUIDITY POSITION CAPEX and liquidity as of 31 March 2016 (USDm) CAPEX commitments Total Available liquidity 123 Cash position 75 Available debt facility Total available liquidity Financing of LR2 newbuildings TORM is well-positioned to service future CAPEX and debt commitments TORM has obtained binding committment for financing of the LR2 newbuildings of up to USD 115m (up to 60% financing) with 12 years maturity at attractive terms Strong operational cash flows expected in 2016 Scheduled debt repayments (USDm) 728 Debt as of 31 Mar ROY 2016 repayment** repayment repayment * Of which USD 20m must be cash or cash equivalent ** Excludes any potential financing related to the share repurchase conducted in the squeeze-out of up to a maximum of approximately USD 35m repayment repayment 304 Hereafter 100% 9% 12% 10% 19% 8% 42% TORM has, in order to allow for dividend payments, terminated the cash sweep mechanism under the term facility and will start to pay fixed amortization from third quarter of 2016 Ample headroom under our attractive covenant package: Loan-to-Value (depending on facility) Minimum liquidity: USD 75m* Minimum book equity ratio: 25% (adjusted for market value of vessels) 17

18 FORECASTED EBITDA IN THE RANGE OF USD 250M TO USD 330M FOR FY full-year result USD/day 1,000 freight rate change USD/day 2,000 freight rate change EBITDA (USDm) /- 19 +/- 38 Profit before tax (USDm) /- 19 +/- 38 Earnings per Share (USD) / /- 0.6 Earning per Share* (DKK) / /- 3.9 With 19,102 unfixed earning days as of 31 March 2016, TORM s financial result is highly exposed to freight rate fluctuations * Earning per Share in DKK is calculated assuming an USD/DKK fx rate of 6.53 and 63.8m shares 18

19 TORM INTENDS TO DISTRIBUTE 25 TO 50% OF NET INCOME FOLLOWING AN INITIAL FIXED PAYMENT OF USD 25M IN Q TORM s distribution policy Initial dividend in September Expected fixed dividend by September 2016 of USD 25.0m. With semi-annual distributions, this corresponds to; USD pr. share (approx. DKK 5.10)* Yield of 6.0%** based on share price from 11 May 2016 Policy onwards 25 to 50% of net income distributed semi-annually either as dividend and/or share repurchase Policy will be periodically reviewed Ongoing share purchase Corporate Reorganization On 15 April 2016, TORM established a new corporate structure of the TORM Group including the insertion of a UK parent company, TORM plc, a delisting of TORM A/S and a listing of TORM plc on Nasdaq Copenhagen The Corporate Restructuring was supported by 95.9% of TORM A/S shareholders, and TORM plc will acquire the shares from the remaining TORM A/S minority shareholders not accepting the transfer TORM plc may purchase shares for an amount of up to approx. USD 35m covering up to 4.1% of the outstanding TORM A/S shares Final outcome to be announced 25 May 2016 * Assuming fx rate of 6.51 USD/DKK and 63.8m shares outstanding ** Assuming share parice of DKK 84.5, fx rate of 6.51 USD/DKK and 63.8m shares outstanding 19

20 APPENDIX

21 TORM AIMS TO BE REGARDED AS THE REFERENCE COMPANY IN THE PRODUCT TANKER SEGMENT Pure-play product tanker owner Active in all large segments to meet customer demands ~80 owned product tankers Primarily spot-orientated Limited T/C-in (off-balance sheet) commitments Global scale One TORM Superior integrated operating platform In-house technical and commercial management (preferred by customers) One TORM Enhanced responsiveness to customers and higher TCEs Cost-efficient without leakages Moderate debt levels with attractive debt profile Financial strength to pursue growth Financial flexibility Strong balance sheet gives a competitive advantage when pursuing vessel acquisitions from lenders and yards Focused on profitability Growth May serve as consolidator Selective growth based on projected financial returns In-house S&P team with relationships with brokers, yards, banks and shipowners Semi-annual distribution policy of 25 to 50% of net income (after fixed payment of USD 25m in September 2016) Strong capital structure Selective fleet growth 21

22 FLEET UPDATE PER # of vessels Q Changes Q Changes EoY 2016 Changes EoY 2017 Changes EoY 2018 Owned vessels LR LR MR Handysize Total Charter-in vessels LR LR MR Handysize Total Total fleet Please note: TORM has the option to purchase up to six additional vessels within the LR2, LR1 or MR segment with expected delivery in 2018 and

23 TORM AT A GLANCE Key facts Global footprint based on regional power and presence A world-leading product tanker company 125+ years of history A leading product tanker owner Listed on Nasdaq Copenhagen TORM employees: TORM offices: ~270 Seafarers: ~3,000 1,300 Filipino seafarers 1,100 Indian seafarers 170 Danish seafarers 200 Croatian seafarers 30 Polish seafarers 23

24 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 Typical refined oil products carried on TORM s vessels Crude oil Fuel oil Condensate Diesel/ gasoil Jet fuel/ kerosene Naphtha Gasoline MTBE Ethanol Vegetable oil Biofuel Dirty products Clean products 24

25 MANAGEMENT TEAM WITH AN INTERNATIONAL OUTLOOK AND MANY YEARS OF SHIPPING EXPERIENCE Executive Director Jacob Meldgaard Executive Director in TORM plc CEO of TORM A/S 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 Senior Management Mads Peter Zacho Chief Financial Officer Lars Christensen Head of Projects Christian Søgaard-Christensen Head of Corporate Support Jesper S. Jensen Head of Technical Division 25

26 OAKTREE IS THE MAJORITY SHAREHOLDER AND OWNERSHIP HAS BECOME MORE DISPERSED Share information Ownership has become more dispersed TORM s shares are listed on Nasdaq Copenhagen under the ticker TRMD A Shares 61.2m A shares, one B share and one C share (+ up to 2.6m TORM A/S A shares being squeezed out) The B and C shares have certain voting rights A Share has a nominal value of USD/share 0.01 Shareholdings as at Restructuring 2015, % Estimated shareholdings as at April 2016, % For further company information, visit TORM at Oaktree DW Participants Institutional Retail unknown in Restructuring Total 26

27 REPORTED KEY FIGURES USDm* Q Q Revenue EBITDA Profit/(loss) before tax Balance sheet Total assets 1, ,867 Equity 1, NIBD Cash and cash equivalents Cash flow statement Operating cash flow Investment cash flow Financing cash flow Financial related key figures EBITDA margin 36% 36% 39% Equity ratio 54% 77% 52% Return on invested capital (RoIC) 10% 11% 13% * 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

28 TORM TANKER SPOT RATES VERSUS INDUSTRY BENCHMARK TORM spot vs. industry benchmark Q (USD/day) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 LR2-6% +15% +17% LR1 MR +23% Handysize TORM Benchmark TORM spot vs. industry benchmark last 12 months (USD/day) -8% +3% +4% +6% TORM Benchmark 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 LR2 LR1 MR Handysize Note: Benchmarks are not one-to-one comparisons as they do not take into account broker commission, armed guards and low sulphur fuel costs. 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. 28

29 TORM HAS A SPOT-ORIENTED PROFILE IN A STRONG MARKET PER Owned days T/C-in days at fixed rate T/C-in days at floating rate Total physical days Coverage Owned days LR2 2,165 2,983 4,231 LR1 1,912 2,514 2,555 MR 13,901 18,406 18,615 Handysize 2,939 3,995 4,015 Total 20,918 27,898 29,416 Charter-in days at fixed rate Charter-in costs, USD/day LR LR MR ,207 16,250 - Handysize Total ,207 16,250 - Charter-in days at floating rate LR LR MR Handysize Total Total physical days Covered days LR2 2,662 3,711 4,571 1,253 1,071 1,092 LR1 1,912 2,514 2, MR 14,423 18,691 18,615 1,405 1,092 1,095 Handysize 2,939 3,995 4, Total 21,937 28,912 29,756 2,835 2,163 2,187 Covered, % Coverage rates, USD/day LR2 47% 29% 24% 24,368 24,201 24,194 LR1 4% 0% 0% 25, MR 10% 6% 6% 19,320 17,429 17,573 Handysize 3% 0% 0% 18, Total 13% 7% 7% 21,689 20,782 20,880 29