Torm believes product tanker market fundamentals look positive for another three years, as it revealed another ship sale and increased profit.
The Copenhagen and New York-listed owner logged net earnings of $209.2m, against $153.6m in the same period of 2023, as rates rose.
Ebitda grew to $265.8m from $198.5m, while revenue was up at $444.1m versus $390.2m the year before.
“Our strong performance extended into the first quarter of 2024, supported by favourable market conditions and the timely delivery of vessels acquired in 2023,” chief executive Jacob Meldgaard said.
“Sustained geopolitical tensions continue to contribute to Torm’s strong results,” he added.
Torm noted a robust market in the first three months, albeit with freight rates retreating towards the end of the quarter.
Rerouting of vessels away from the dangerous Red Sea region kept tonne-miles high.
Torm’s average time-charter equivalent earnings were $43,152 per day, up from $41,717 a year ago.
The boost was a result of both a rise in revenue and a decrease in port and bunker expenses, commissions and other costs.
LR2s came in at $54,443 per day, with LR1s at $48,583 and MRs on $39,121.
Rates edging up
As of 6 May, Torm had covered 42% of 2024 earning days at $43,189 per day.
For the second quarter, the figure is 55% of capacity at $43,695.
A total of 58% of LR2 days have been fixed at $51,078, while LR1s stand at $45,975 for 51% of days, and MRs have 54% of days fixed at $40,477.
Recent acquisitions have “significantly” added to the company’s tonnage, “thereby increasing operating leverage in order to benefit from an expected continued strong market”, the owner said.
Older ships continue to be sold.
After the end of the quarter, Torm said it had agreed to sell the 51,000-dwt MR Torm Eric (built 2006).
Delivery of the South Korean-built tanker to an unnamed buyer is expected during the second quarter.
VesselsValue assesses the ship as worth $20.9m, up from $12m two years ago.
The Torm Eric was acquired from Parakou Shipping in Hong Kong for $20.7m as part of an en-bloc deal by Torm’s major shareholder, Oaktree Capital Management.
Medium-term market support
The fleet will stand at 89 vessels worth $3.5bn after the sale goes through.
Torm is paying a dividend of $1.50 per share, or $140.9m.
Looking at second-quarter markets, the shipowner said a return of US Gulf refineries from spring maintenance has led to increased diesel exports to Europe, at the same time as new refineries in the Middle East have ramped up runs.
“This, coupled with expectations of a new, higher export quota batch from China and continued disruption at the Red Sea, suggests that the market is likely to absorb lower volumes from Russia on unplanned refinery outages due to drone attacks,” Torm added.
In the medium term of two to three years, the market is expected to be supported by high capacity utilisation and manageable newbuilding deliveries for both product and crude tankers, Torm argued.
“This is supported by fundamental changes in the oil market with refineries having closed down in importing regions such as Australia and New Zealand, while new refining capacity has been added in the Middle East,” the company said.
Torm has raised the bottom end of its annual 2024 Ebitda forecast range from $700m to $800m. The maximum expected remains $1.05bn.
