Danish product tanker owner Torm is under no pressure to sell elderly vessels in a practically non-existent sale-and-purchase market.
That was the message from its chief financial officer Kim Balle, speaking during a podcast with Value Investor's Edge analyst J Mintzmyer.
The executive said the company was "continuously" looking to maintain and renew the fleet in the most profitable manner, through either secondhand deals or newbuilding contracts.
Torm has taken delivery of two LR1s and two MR1s this year, but Balle said the shipowner sees volatile markets and a lot of insecurity in the market.
"We have seen that it has been quite difficult for buyers and sellers to actually engage in dialogue because it's been difficult to inspect vessels for sale," he said.
"And also that the actual delivery to new owners is quite complicated, when you need to depart an onboard new crew in a world where there's basically restrictions in most countries."
Balle said liquidity has evaporated in the sale-and-purchase market, which he blamed on operational issues both for buyers and sellers.
However, he said the situation is slowly starting to ease.
Older ships shed
Last year, TradeWinds reported the company sold five older vessels, following four offloaded the previous year.
Torm still retains two ships from the 1990s and 18 built between 2000 and 2004.
Balle said the 2019 disposals had an average age of 18 years.
"They are actually within a very narrow band of being around that vintage when they exit our fleet," he added.
"And that's not a coincidence, that is actually because up until then, we see more value creation on our platform by maintaining the vessels to a high standard that meets the criteria of our customers."
This allows them to contribute with a high return on invested capital, he said.
"We constantly drive our assets for as long as we deem that they are suitable for our customers," he added.
"We see that it is the better employment...to keep them on our balance sheet rather than selling them off.
The CFO said the company's maintenance regime means it can keep operating the vessels until they are 20 years old.
"So, we do not have the youngest fleet, but we've got a fleet that we can utilise towards all of our customers and which contributes with the highest earnings," Balle added.
"And as we move forward, I sincerely believe that we will, again, be selling older tonnage, but we don't have the back against the wall and we are happy to maintain them."
Torm chief executive Jacob Meldgaard emphasised that message.
"Yes, we have older assets, and yes, we will be selling them, but we're not going to sell them before we extracted the full value of them and then we will redeploy that capital intelligently."
