Copenhagen-listed Torm is rewarding investors again after second-quarter earnings soared past analysts’ expectations.
Net profit at the Danish product tanker company was $184.3m versus $99.7m in 2022, boosted by strong markets and unrealised gains on financial instruments related to freight and bunkers of $37m.
Revenue was up at $384.3m from $338.5m, and there was a 23% increase in time charter equivalent (TCE) earnings to $36,360 per day.
Ebitda rose 54% to $236.8m. Fearnley Securities had estimated Ebitda at $212m, largely in line with consensus.
The investment bank views Torm as attractively priced going into the winter market at 92% of net asset value, below its historical level.
The interim dividend will be $1.50 per share.
“During the second quarter of 2023, we experienced a continued healthy rate environment,” chief executive Jacob Meldgaard said.
“Based on this, we will return $126.6m to our shareholders as dividends for the period.”
Torm has bought seven LR1 and three MR ships so far this year, and sold one older MR in May.
After the end of the second quarter, another MR has been sold — the 46,000-dwt Torm Freya (built 2003). But no buyer was named.
VesselsValue assesses the ship to be worth $14m.
More financing in place
Torm has now completed a previously announced refinancing of bank and leasing agreements worth $480m and said it had further secured a $123m facility to be used for additional secondhand vessel funding.
Of this, the owner used $50m in the second period.
Debt maturities have been extended to 2028 and 2029.
“The product tanker market remained strong but volatile in the second quarter of 2023, albeit rates were lower than in the first quarter,” the company said.
Torm added that this was primarily attributable to refinery maintenance, lower diesel imports and destocking in the European Union, leading to a temporary reduction in exports and consequently a release of global vessel capacity.
As of 14 August, the owner had covered 72% of 2023 earning days at $36,531 per day.
For the third quarter, the figure is $30,534 per day for 74% of days.
“Our financial outlook is based on our current product tanker market expectations, but we have very low visibility on TCE rates that are not yet fixed with our customers,” the company said.
Actual market rates during 2023 may be significantly lower or significantly higher than current expectations, Torm warned.
The company is forecasting 2023 TCE earnings of between $1.05bn and $1.175bn.
Ebitda could reach between $775m and $900m.
