Tanker giant Torm is gearing up for even bigger profit this year with a larger fleet, after logging a new record for 2023.
The US and Copenhagen-listed product tanker owner said it had acquired 22 modern ships last year, while shipping out 11 older models.
The company bought nine LR2s, seven LR1s and seven MRs, including en-bloc deals involving SKS Greentankers, Alterna Capital and ST Shipping, as well as another LR2 added this year.
“These transactions have both increased the long-haul fleet significantly and further improved the environmental profile of the total fleet,” the owner said.
“Torm sees attractive returns over the coming years by increasing the share of the larger vessel classes due to changing trading patterns, not least caused by the change in the global refinery landscape,” the company added.
The idea has been to boost operational leverage and expand capacity to benefit from an expected continued strong market.
The fleet will number 90 ships when all are delivered.
Net profit in the fourth quarter was $185m, down from $222m in the same period of 2022.
Revenue dropped to $267m compared with $332m the year before.
But annual Ebitda was the best ever at $848m, with net profit coming in at $648m, from $563m in 2022.
Chief executive Jacob Meldgaard said: “2023 ended strongly after a year of favourable market conditions.”
“Torm’s earnings set new records for the company, surpassing 2022,” he added.
Well-positioned for the future
“Through strategic fleet expansion and modernisation, we not only capitalised on the market conditions and delivered significant value to our shareholders, we also ensured that Torm is well-positioned for future years,” Meldgaard said.
The market was changed by geopolitical factors such as the rerouting of tankers away from the hazardous Red Sea region.
“The consequent trade recalibration towards long-haul trade led to a step-change in product tanker freight rates towards a higher average level,” Torm said.
“However, the recalibration also increased rate volatility as the product tanker fleet moved closer to the point of full utilisation, where even small changes in underlying demand and supply created high volatility in freight rates,” the company added.
Fourth-quarter time charter equivalent rates were $37,985 on average, down from $47,520 in a very strong final three months of 2022.
Earnings days increased to 7,312 versus 6,854 the year before.
The LR2s achieved $44,048 per day, with LR1s on $40,498 and MR ships managing $36,122.
As of 4 March, Torm has covered 25% of 2024 earning days at $44,089 per day.
The owner has 82% of first quarter days fixed at $45,036 per day.
LR2s stand at $59,330, with 78% coverage.
LR1s are at $50,794 with 77% of days booked, with MRs having 84% coverage at $40,413.
For 2024, Ebitda is expected to be between $700m and $1.05bn.
A change in freight rates of $1,000 per day will raise or lower Ebitda by $23.7m, the company said.
Torm is paying a dividend of $1.36 per share, or $126m, for the final three months.
This brings the payout to $497m in 2023, representing 83% of net profit excluding ship sales.
