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Third Quarter Report 2010

COPENHAGEN, Denmark, Nov. 18, 2010 (GLOBE NEWSWIRE) -- TORM posted a loss before tax of USD 27 million for Q3 2010. "Market conditions were difficult in the third quarter and the rates for product tankers continue to be weak as the signs of recovery seen during the summer months have not materialised into better rates. Our long-term view of the product tanker market, however, remains positive," CEO Jacob Meldgaard says.

  • The result before tax in Q3 2010 was a loss of USD 27 million compared to a profit of USD 4 million in the same period of 2009. The result is impacted by a USD 8 million one-off provision related to organisational and management changes in 2010. The Q3 2009 result was impacted by a USD 21 million profit from sale of vessels. The result in Q3 2010 is not satisfactory and slightly below expectations.
  • The result before tax for the first nine months of 2010 was a loss of USD 49 million and included a profit of USD 18 million from sale of vessels.
  • In Q3 2010, freight rates were higher than in both Q2 2010 and the same period last year. However, across segments freight rates were negatively influenced by ample tonnage supply, absence of general arbitrage opportunities and limited use of vessels for floating storage. MR freight rates continued to be under pressure due to low western demand for refined products. A few positive market signs during the summer driven by selective arbitrage opportunities and refinery disruptions in South America were not sufficient to support a freight rate improvement in Q3.
  • Panamax bulk rates remained volatile in Q3 2010, with rates fluctuating between USD/day 16,000 and USD/day 27,300. At the end of Q3, rates were USD/day 22,200. Due to TORM's high coverage of earning days, the volatility in bulk spot rates had limited impact on TORM's earnings.
  • At 30 September 2010, equity amounted to USD 1,190 million, equivalent to USD 17.2 per share (DKK 93.7 per share), excluding treasury shares, corresponding to an equity ratio of 36%.
  • TORM's undrawn credit facilities and cash totalled approximately USD 500 million at the end of Q3 2010. Capex relating to the order book amounted to USD 310 million. During Q4, TORM has entered into an agreement to sell the two Kamsarmax dry bulk newbuildings with planned delivery in Q1 2011 for a total consideration of USD 90 million.
  • Net interest-bearing debt totalled USD 1,738 million at 30 September 2010, compared to USD 1,691 million at 30 June 2010. The increase is due to borrowing related to the newbuilding programme.
  • At 30 September 2010, TORM had covered 30% of the remaining earning days for 2010 in the Tanker Division at USD/day 16,173 and 87% of the remaining earning days in the Bulk Division at USD/day 19,791.
  • TORM forecasts a loss before tax of USD 75-85 million for 2010 as stated in announcement no. 11 dated 4 November 2010.

Teleconference

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

Key figures            
             
        Q1-Q3 Q1-Q3  
USD million   Q3 2010 Q3 2009 2010 2009 2009
Income statement            
Revenue   225.7 208.8 632.5 661.2 862.3
Time charter equivalent earnings (TCE)   149.2 149.4 426.9 486.7 632.9
Gross profit   49.3 54.4 146.3 190.8 242.5
EBITDA   22.6 59.2 101.5 170.5 202.5
Operating profit/loss (EBIT)   -12.5 24.2 -3.0 70.2 49.8
Profit/loss before tax   -26.7 4.4 -48.5 11.1 -19.0
Net profit/loss   -26.5 2.1 -48.3 8.1 -17.4
Balance sheet            
Total assets   3,276.5 3,360.1 3,276.5 3,360.1 3,227.2
Equity   1,189.9 1,274.3 1,189.9 1,274.3 1,246.7
Total liabilities   2,086.6 2,085.8 2,086.6 2,085.8 1,980.5
Invested capital   2,924.6 2,947.6 2,924.6 2,947.6 2,926.0
Net interest-bearing debt   1,737.7 1,681.9 1,737.7 1,681.9 1,682.5
Cash flow            
From operating activities   21.3 22.2 42.0 95.2 116.3
From investing activities   -66.4 -34.2 -93.6 -178.5 -199.4
Thereof investment in tangible fixed assets   -66.8 -87.1 -160.0 -261.3 -288.8
From financing activities   67.2 95.7 73.0 111.3 36.6
Total net cash flow   22.1 83.7 21.4 28.0 -46.5
Key financial figures            
Gross margins:            
TCE   66.1% 71.6% 67.5% 73.6% 73.4%
Gross profit   21.8% 26.1% 23.1% 28.9% 28.2%
EBITDA   10.0% 28.4% 16.0% 25.8% 23.5%
Operating profit   -5.5% 11.6% -0.5% 10.6% 5.8%
Return on Equity (RoE) (p.a.)*)   -8.8% -3.5% -5.9% 0.0% -1.3%
Return on Invested Capital (RoIC) (p.a.)**)   -1.7% 1.2% -0.3% 2.6% 1.7%
Equity ratio   36.3% 37.9% 36.3% 37.9% 38.6%
Exchange rate USD/DKK, end of period   5.46 5.08 5.46 5.08 5.19
Exchange rate USD/DKK, average   5.77 5.21 5.67 5.47 5.36
Share-related key figures            
Earnings per share, EPS USD -0.4 0.0 -0.7 0.1 -0.3
Diluted earnings per share, EPS USD -0.4 0.0 -0.7 0.1 -0.3
Cash flow per share, CFPS USD 0.3 0.3 0.6 1.4 1.7
Share price, end of period (per share of DKK 5 each) DKK 40.4 51.6 40.4 51.6 50.7
Number of shares, end of period Mill. 72.8 72.8 72.8 72.8 72.8
Number of shares (excl. treasury shares), average Mill. 69.3 69.2 69.3 69.2 69.2
             
*) The gain from sale of vessels and the mark-to-market adjustments of 'Other financial assets' are not annualised for calculating the return on equity.
**) The gain from sale of vessels is not annualised for calculating the return on invested capital.
           
           
Profit/loss by division          
     
USD million Q3 2010 Q1-Q3 2010
  Tanker Bulk Not   Tanker Bulk Not  
  Division Division allocated Total Division Division allocated Total
                 
Revenue 200.4 25.3 0.0 225.7 564.8 67.7 0.0 632.5
Port expenses, bunkers and commissions -76.4 -1.0 0.0 -77.4 -204.7 -3.2 0.0 -207.9
Freight and bunkers derivatives 0.9 0.0 0.0 0.9 2.3 0.0 0.0 2.3
Time charter equivalent earnings  124.9 24.3 0.0 149.2 362.4 64.5 0.0 426.9
Charter hire -45.4 -15.9 0.0 -61.3 -124.3 -43.1 0.0 -167.4
Operating expenses -37.8 -0.8 0.0 -38.6 -110.0 -3.2 0.0 -113.2
Gross profit 41.7 7.6 0.0 49.3 128.1 18.2 0.0 146.3
Profit/loss from sale of vessels 0.0 0.0 0.0 0.0 0.0 18.2 0.0 18.2
Administrative expenses -21.8 -2.7 0.0 -24.5 -53.9 -6.2 0.0 -60.1
Other operating income 0.9 0.0 0.0 0.9 3.9 0.0 0.0 3.9
Share of results of jointly controlled entities -0.3 0.0 -2.8 -3.1 1.3 0.0 -8.1 -6.8
EBITDA 20.5 4.9 -2.8 22.6 79.4 30.2 -8.1 101.5
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 -34.4 -0.7 0.0 -35.1 -102.5 -2.0 0.0 -104.5
Operating profit/loss (EBIT) -13.9 4.2 -2.8 -12.5 -23.1 28.2 -8.1 -3.0
Financial items, net -- -- -14.2 -14.2 -- -- -45.5 -45.5
Profit/loss before tax -- -- -17.0 -26.7 -- -- -53.6 -48.5
Tax -- -- 0.2 0.2 -- -- 0.2 0.2
Net profit/loss -- -- -16.8 -26.5 -- -- -53.4 -48.3
                 
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 14 million for the third quarter of 2010, compared to a result of USD 0 million in the same period in 2009.

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