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TORM A/S Q2 2010 Results

The number of earning days for the Bulk Division was 29% lower in the second quarter of 2010 than in the same period last year due to the sale of vessels.

The dry bulk market stayed at a relatively strong level throughout most of the second quarter of 2010, with Panamax spot rates peaking at around USD/day 37,100 in mid-May. Rates continued to be driven by the Chinese demand for iron ore and coal as well as high port congestion.

However, towards the end of the quarter and at the beginning of the third quarter, rates decreased sharply and did not stabilise until the end of July. By then, Panamax spot rates were down to around USD 16,000/day. The decline in rates was driven by the continued high influx of new vessels, especially in the Capesize segment, in combination with declining Chinese demand for coal and uncertainty surrounding the future Chinese demand for iron ore. Total fleet growth in the dry bulk segment came to about 4% in the second quarter of 2010.

As TORM seeks high coverage of earning days for the Bulk Division, the volatility in bulk spot rates has limited impact on TORM's earnings in 2010.

At 30 June, coverage for the remaining part of 2010 was 81% at USD 19,725/day.
Bulk Division Q2 09   Q3 09   Q4 09   Q1 10   Q2 10   Change Q2 09 - Q2 10 12 month avg.  
  Panamax (60-80,000 DWT)              
Available earning days 1,496 1,255 1,204  1,119 1,060 -29%  
TCE per earning day 1) 13,756 17,968 19,690  18,298 18,611 35% 18,642
Operating days 636 392 368  315 182 -71%  
Operating expenses per operating day 2) 5,106 4,477 4,066  5,187 4,603 -10%  4,583
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.

Other activities

Other (non-allocated) activities were a loss on investments in jointly controlled entities of USD 2 million, financial expenses of USD 14 million and tax of USD 0 million.

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