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TORM A/S Q2 2010 Results

COPENHAGEN, Denmark, Aug. 19, 2010 (GLOBE NEWSWIRE) -- TORM posted a loss before tax of USD 24 million for Q2 2010. The result was in line with expectations and better than the same period a year ago. "In Q2, the product tanker market was affected by seasonality; however, positive signs of recovery were seen late in the quarter. We believe underlying demand is improving and will support the product tanker segment going forward," says CEO Jacob Meldgaard.

  • The result before tax for the second quarter of 2010 was a loss of USD 24 million, compared to a loss of USD 33 million in the same period last year. The result for the second quarter was in line with expectations. The result for the second quarter of 2010 was positively impacted by mark-to-market non-cash adjustments of USD 2 million.  
  • A loss of USD 22 million before tax was recorded for the first six months of 2010. The result for the first quarter of 2010 includes a profit of USD 18 million from the sale of two bulk vessels.  
  • In the second quarter of 2010, product tanker rates were negatively impacted by seasonality, influx of new tonnage and continued discharge of vessels from floating storage. The demand for refined products in the West remained slow, and the freight rate weakness seen in the crude oil markets did not spur additional demand for the larger LR tonnage. The demand for vegetable oil to China and Europe and for naphtha in the Far East did not offer sufficient rate support until the end of Q2 where also demand for gasoline in the West showed an upward trend.  
  • Panamax bulk rates remained volatile in the second quarter of 2010. Up to mid-May, the rates increased to USD 37,100/day, but then fell to USD 22,100/day at the end of the quarter. Due to TORM's high coverage of earning days, the volatility in bulk spot rates had limited impact on TORM's earnings.  
  • On a quarterly basis, TORM calculates the long-term earnings potential of its fleet based on discounted expected future cash flows. The calculated value of the fleet at 30 June 2010 supports book value.  
  • At 30 June 2010, equity amounted to USD 1,220 million, equivalent to USD 17.6 per share (DKK 106.9 per share), excluding treasury shares, corresponding to an equity ratio of 38%.  
  • TORM's undrawn credit facilities and cash totalled approximately USD 600 million at the end of the second quarter. Capex relating to the order book amounted to USD 372 million.  
  • Net interest-bearing debt totalled USD 1,691 million at 30 June 2010, compared to USD 1,622 million at 31 March 2010. The increase is due to borrowing in connection with the newbuilding programme.   
  • At 30 June 2010, TORM had covered 33% of the remaining earning days for 2010 in the Tanker Division at USD 16,470/day and 81% of the remaining earning days in the Bulk Division at USD 19,725/day.  
  • TORM forecasts a loss before tax of USD 40-60 million for 2010.

Teleconference

TORM will host a teleconference and webcast ( www.torm.com ) today, at 3:00 pm Copenhagen time (CET), see details on page 9. 

Key figures  
Million USD   Q2 2010 Q2 2009 Q1-Q2 2010 Q1-Q2 2009 2009  
Income statement              
Revenue   201.3 193.6 406.8 452.4 862.3  
Time charter equivalent earnings (TCE)   130.2 138.2 277.7 337.3 632.9  
Gross profit   41.1 38.9 97.0 136.4 242.5  
EBITDA   23.6 30.6 78.9 111.3 202.5  
Operating profit (EBIT)   -10.8 -2.9 9.5 46.0 49.8  
Profit/(loss) before tax   -24.4 -32.5 -21.8 6.7 -19.0  
Net profit   -24.1 -33.6 -21.8 6.0 -17.4  
Balance sheet              
Total assets   3,210.2 3,255.7 3,210.2 3,255.7 3,227.2  
Equity   1,219.9 1,269.8 1,219.9 1,269.8 1,246.7  
Total liabilities   1,990.3 1,985.9 1,990.3 1,985.9 1,980.5  
Invested capital   2,908.6 2,932.6 2,908.6 2,932.6 2,926.0  
Net interest bearing debt   1,691.4 1,669.9 1,691.4 1,669.9 1,682.5  
Cash flow              
From operating activities   -0.2 11.8 20.7 73.0 116.3  
From investing activities   -68.3 -17.6 -27.2 -144.3 -199.4  
Thereof investment in tangible fixed assets   -69.6 -44.7 -93.2 -174.2 -288.8  
From financing activities   3.3 19.7 5.8 15.6 36.6  
Total net cash flow   -65.2 13.9 -0.7 -55.7 -46.5  
Key financial figures              
Gross margins:              
TCE   64.7% 71.4% 68.3% 74.6% 73.4%  
Gross profit   20.4% 20.1% 23.8% 30.2% 28.2%  
EBITDA   11.7% 15.8% 19.4% 24.6% 23.5%  
Operating profit   -5.4% -1.5% 2.3% 10.2% 5.8%  
Return on Equity (RoE) (p.a.)*)   -7.8% -8.0% -5.2% -0.3% -1.3%  
Return on Invested Capital (RoIC) (p.a.)**)   -1.5% -1.7% 0.0% 1.9% 1.7%  
Equity ratio   38.0% 39.0% 38.0% 39.0% 38.6%  
Exchange rate USD/DKK, end of period   6.07 5.27 6.07 5.27 5.19  
Exchange rate USD/DKK, average   5.86 5.48 5.62 5.60 5.36  
Share related key figures              
Earnings per share, EPS USD -0.3 -0.5 -0.3 0.1 -0.3  
Diluted earnings per share, EPS USD -0.3 -0.5 -0.3 0.1 -0.3  
Cash flow per share, CFPS USD 0.0 0.2 0.3 1.1 1.7  
Share price, end of period (per share of DKK 5 each) DKK 46.1 54.0 46.1 54.0 50.7  
Number of shares, end of period Million 72.8 72.8 72.8 72.8 72.8  
Number of shares (excl. treasury shares), average Million 69.3 69.2 69.3 69.2 69.2  
               
*)  Gains from sale of vessels and the mark-to-market adjustments of 'Other financial assets' have not been annualised when calculating the  Return on Equity.  
 
**)  Gain from sale of vessels has not been annualised when calculating the Return on Invested Capital.  
 
Profit by division
Million USD Q2 2010 Q1-Q2 2010
  Tanker Division Bulk Division Non allocated Total Tanker Division Bulk Division Non allocated Total
Revenue 180.3 21.0 0.0 201.3 364.4 42.4 0.0 406.8
Port expenses, bunkers and commissions -69.3 -1.3 0.0 -70.6 -128.3 -2.2 0.0 -130.5
Freight and bunkers derivatives -0.5 0.0 0.0 -0.5 1.4 0.0 0.0 1.4
Time charter equivalent earnings 110.5 19.7 0.0 130.2 237.5 40.2 0.0 277.7
Charter hire -40.3 -14.1 0.0 -54.4 -78.9 -27.2 0.0 -106.1
Operating expenses -33.9 -0.8 0.0 -34.7 -72.2 -2.4 0.0 -74.6
Gross Profit 36.3 4.8 0.0 41.1 86.4 10.6 0.0 97.0
Profit/(loss) from sale of vessels 0.0 0.0 0.0 0.0 0.0 18.2 0.0 18.2
Administrative expenses -15.3 -2.2 0.0 -17.5 -32.1 -3.5 0.0 -35.6
Other Operating income 1.3 0.0 0.0 1.3 3.0 0.0 0.0 3.0
Share of results of jointly controlled entities 0.6 0.0 -1.9 -1.3 1.6 0.0 -5.3 -3.7
EBITDA 22.9 2.6 -1.9 23.6 58.9 25.3 -5.3 78.9
Impairment losses on jointly controlled entities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Depreciation and impairment losses -33.7 -0.7 0.0 -34.4 -68.1 -1.3 0.0 -69.4
Operating profit (EBIT) -10.8 1.9 -1.9 -10.8 -9.2 24.0 -5.3 9.5
Financial items, net -- -- -13.6 -13.6 -- -- -31.3 -31.3
Profit/(Loss) before tax -- -- -15.5 -24.4 -- -- -36.6 -21.8
Tax -- -- 0.3 0.3 -- -- 0.0 0.0
Net profit/(loss) -- -- -15.2 -24.1 -- -- -36.6 -21.8
The activity that TORM owns in a 50/50 joint venture with Teekay and the 50% ownership of FR8 Holding Pte. Ltd. are included in "Not-allocated".

Tanker Division

The division realised an operating loss of USD 11 million for the second quarter of 2010, compared to a loss of USD 12 million in the same period in 2009.

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