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.

Rates continued at a low level in the third quarter of 2010 and we did not see signs of improvement in rates during the quarter. Compared to the second quarter 2010 and the same period a year ago, rate levels have improved as the world economy is regaining strength.

The continued influx of newbuildings, limited usage of vessels for floating storage and continued negative market sentiment have influenced freight rates negatively.

In the third quarter of 2010, the net fleet grew by about 2%, resulting in a fleet growth of approx. 4% year-to-date. The significant delay seen in deliveries of new tonnage continued in the third quarter, with slippage for the first nine months of the year of 40%.

MR freight rates were negatively impacted during the third quarter of 2010 as the demand for gasoline in the USA remained low. In late June and early July, a rate strengthening in the transatlantic trading route was experienced due to a combination of the wide opening of gasoline arbitrage from Europe to the USA, disruptions in the Brazilian refinery sector and few available vessels on the European continent. Rates, however, levelled off as vessels having sought alternative cargoes returned to the European continent.

For the LR segment, the Far East demand for naphtha remained stable during the third quarter of 2010. However rates weakened, as tonnage was added from newbuildings and the use of floating storage remained at a low level. The weak market for transport of crude oil added to the tonnage supply as no vessels sought occupation in the crude market.

The level of floating storage did not change during the third quarter of 2010. At the end of September, floating storage occupied approximately 3% of the total fleet. Movements in floating storage are volatile and impacted by the forward curve for the various refined products

At 30 September, coverage for the remaining part of 2010 was 30% at USD/day 16,173.

               
Tanker Division Q3 09 Q4 09 Q1 10 Q210 Q3 10 Change 12-month
            Q3 09 avg.
            - Q3 10  
 
LR2 (Aframax, 90-110,000 DWT)              
Available earning days  1,190  1,172  1,163  1,122  1,098 -8%  
TCE per earning day from the LR2 Pool  18,401  20,331  19,270  17,185  19,848 8%  
TCE per earning day 1)  17,406  18,356  18,456  15,505  17,672 2%  17,497
Operating days  1,104  1,104  1,080  1,092  1,104 0%  
Operating expenses per operating day 2)  6,496  6,933  6,908  6,301  6,571 1%  6,678
LR1 (Panamax 75-85,000 DWT)              
Available earning days  1,835  2,026  1,748  1,777  2,094 14%  
TCE per earning day from the LR1 Pool  15,036  14,304  16,273  14,903  14,662 -2%  
TCE per earning day 1)  16,514  16,516  16,686  15,509  14,628 -11%  15,835
Operating days  828  828  810  749  714 -14%  
Operating expenses per operating day 2)  6,706  5,986  6,454  5,420  5,729 -15%  5,897
MR (45,000 DWT)              
Available earning days  3,602  3,829  3,755  3,916  4,212 17%  
TCE per earning day from the MR Pool  14,974  11,521  14,179  12,567  13,753 -8%  
TCE per earning day 1)  15,349  12,417  14,700  12,363  14,280 -7%  13,440
Operating days  2,707  2,832  2,790  2,951  3,128 16%  
Operating expenses per operating day 2)  6,621  6,770  6,883  6,053  6,388 -4%  6,524
SR (35,000 DWT)              
Available earning days  1,160  1,103  1,002  979  951 -18%  
TCE per earning day 1)  18,378  16,894  18,034  16,099  13,851 -25%  16,220
Operating days  1,012  1,012  990  1,001  1,012 0%  
Operating expenses per operating day 2)  6,105  6,326  6,041  4,821  6,274 3%  5,866
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunkers, commissions and port expenses.
2) Operating expenses are related to owned vessels.

Bulk Division

Operating profit for the third quarter of 2010 was USD 4 million, compared to USD 25 million for the third quarter of 2009. Profit for the third quarter of 2009 includes a profit of USD 21 million from sale of vessels.

The number of earning days for the Bulk Division was 5% lower in the third quarter of 2010 than in the same period last year due to the sale of vessels.

The dry bulk market continued to be volatile during the third quarter of 2010. The decline in rates that commenced in mid-May continued until the end of July when rates bottomed out at USD/day 16,000. Then rates increased until mid-September, peaking at USD/day 27,300 with a subsequent levelling off to USD/day 22,200 by the end of the quarter.

Chinese demand for coal and iron ore continued to be the main driver in the dry bulk market. The rate decrease experienced at the end of the second and going into the third quarters was driven by uncertainty surrounding future Chinese demand for iron ore. Subsequently, this concern eased off, which in combination with the Russian grain export ban, implying longer ton mileage, supported the freight rates.

The dry bulk fleet grew by net 4% during the third quarter, bringing fleet growth to net 12% year-to-date.

As TORM seeks 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 September, coverage for the remaining part of 2010 was 87% at USD/day 19,791.
 
Bulk Division Q3 09 Q4 09 Q1 10 Q210 Q3 10 Change 12-month
            Q3 09 avg.
            - Q3 10   
 
Panamax (60-80,000 DWT)              
Available earning days  1,255  1,204  1,119  1,060  1,189 -5%  
TCE per earning day 1)  17,968  19,690  18,298  18,611  20,418 14%  19,254
Operating days  392  368  315  182  184 -53%  
Operating expenses per operating day 2)  4,477  4,066  5,187  4,603  4,297 -4%  4,538
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunkers, 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 3 million, financial expenses of USD 14 million and tax of USD 0 million.

Fleet developments

During the third quarter, TORM took delivery of two MR newbuildings, TORM Aslaug and TORM Agnete. At the end of the quarter, TORM's fleet of owned vessels comprised 68 tankers and two bulk carriers. In addition, TORM had 27 tankers and 11 bulk carriers on time charter. Another 26 tankers were either in pools or under commercial management.
   
  Owned vessels
  30 Jun 10 Addition Disposal 30 Sep 10
LR2 / Aframax 1) 12.5 -- -- 12.5
LR1 / Panamax 2) 7.5 -- -- 7.5
MR 35.0 2.0 -- 37.0
SR 11.0 -- -- 11.0
Product tankers 66.0 2.0 -- 68.0
Panamax dry bulk 2.0 -- -- 2.0
Total 68.0 2.0 -- 70.0
1) Includes a 50% stake in TORM Marina (treated as JV)
2) Includes a 50% stake in TORM Ugland (treated as JV)

Planned fleet changes

No vessels were contracted in the third quarter of 2010, and at the end of the quarter the order book thus comprised seven MR vessels and four Kamsarmax vessels. Capex relating to the order book amounted to USD 310 million.
   
  Newbuildings to be delivered
  2010 2011 2012 2013  
  Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Total
LR2 / Aframax -- -- -- -- -- -- -- -- -- -- --
LR1 / Panamax -- -- -- -- -- -- -- -- -- -- --
MR 1.0 2.0 -- 1.0 1.0 -- 1.0 1.0 -- -- 7.0
SR -- -- -- -- -- -- -- -- -- -- --
Product tankers 1.0 2.0 -- 1.0 1.0 -- 1.0 1.0 -- -- 7.0
Kamsarmax dry bulk -- 2.0 -- -- -- -- -- -- 1.0 1.0 4.0
Total -- 4.0 -- 1.0 1.0 -- 1.0 1.0 1.0 1.0 11.0

In late October 2010, TORM took delivery of the MR vessel TORM Almena from the Chinese shipyard GSI Guangzhou.

On 16 November TORM acquired 50% of the vessel TORM Marina for USD 27 million, corresponding to a vessel value of USD 26 million.

TORM has during the fourth quarter, as announced on 1 November in announcement no. 10, entered into an agreement to sell the two Kamsarmax dry bulk newbuildings with planned delivery to TORM in Q1 2011. The newbuildings have been sold for a total consideration of USD 90 million with a total net loss of USD 16 million. The newbuildings are expected to be delivered to the new owner in the first quarter of 2011, where the effect of the transaction will be recognised in the financial statements.

Third quarter of 2010

Results

Gross profit for the third quarter of 2010 came to USD 49 million, down from USD 54 million for the corresponding period of 2009. Administrative expenses for the third quarter of 2010 were USD 25 million, against USD 18 million for the third quarter of 2009. The third quarter of 2010 includes a one-off provision for organisational and management changes in 2010. Profit before depreciation and amortisation (EBITDA) for the period was USD 23 million, against USD 59 million for the third quarter of 2009. The third quarter of 2009 was positively affected by a profit of USD 21 million from sale of vessels.

Depreciation was USD 35 million during the third quarter of 2010.

Operating profit for the third quarter of 2010 was a loss of USD 13 million, compared to an operating profit of USD 24 million for the same quarter of 2009.

The third quarter of 2010 was impacted by mark-to-market non-cash adjustments of USD 0 million in total, USD 0.2 million related to FFA/bunker derivatives and USD -0.2 million on other derivative financial instruments.

In the third quarter of 2010, financial items amounted to an expense of USD 14 million, against an expense of USD 20 million in the same quarter of 2009.

The result after tax was a loss of USD 27 million in the third quarter of 2010, against a profit of USD 2 million in the third quarter of 2009. The result for the third quarter of 2009 was impacted by a profit of USD 21 million from sale of vessels. No vessels were sold during the third quarter of 2010.

Assets

Total assets increased from USD 3,210 million at 30 June 2010 to USD 3,277 million at 30 September 2010.

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 September 2010 supports the book value.

Liabilities

During the third quarter of 2010, net interest-bearing debt increased to USD 1,738 million from USD 1,691 million at 30 June 2010. The increase in debt is due to borrowing in connection with the newbuilding programme.

Total equity

In the third quarter of 2010, equity decreased from USD 1,220 million at 30 June 2010 to USD 1,190 million, due to the loss posted. Equity as a percentage of total assets was 36% at 30 September 2010, compared to 38% at 30 June 2010.

At 30 September 2010, TORM held 3,461,580 treasury shares, corresponding to 4.8% of the Company's share capital, which is unchanged since 30 June 2010.

Liquidity 

TORM's undrawn credit facilities and cash totalled about USD 500 million at the end of the third quarter of 2010.

Outlook

TORM forecasts a loss before tax of USD 75-85 million for 2010 as stated in announcement no. 11 dated 4 November 2010.

Coverage

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.

The table below shows the figures for 2010 for the period 1 October to 31 December 2010 and full-year 2011 and 2012.

  2010 2011 2012 2010 2011 2012
   Owned days      
LR2  1,092  4,380  4,392      
LR1  638  2,555  2,562      
MR  3,400  14,746  15,690      
SR  986  4,015  4,026      
Tanker division  6,116  25,696  26,670      
Bulk division  182  1,437  1,506      
Total  6,298  27,133  28,176      
             
   T/C in days  T/C in costs (USD/day)
LR2  --   --   --   --   --   -- 
LR1  1,553  6,115  4,842  20,803  21,498  21,910
MR  911  3,650  3,108  16,357  16,626  16,164
SR  --   --   --   --   --   -- 
Tanker division  2,464  9,765  7,950  19,159  19,677  19,664
Bulk division  1,000  3,735  4,228  15,789  15,523  15,954
Total  3,464  13,500  12,178  18,187  18,528  18,376
             
   Total physical days  Covered days
LR2  1,092  4,380  4,392  432  646  128
LR1  2,191  8,670  7,404  437  777  532
MR  4,311  18,396  18,798  1,400  1,737  412
SR  986  4,015  4,026  345  858  40
Tanker division  8,580  35,461  34,620  2,613  4,019  1,111
Bulk division  1,182  5,172  5,734  1,022  1,123  153
Total  9,762  40,633  40,354  3,635  5,142  1,264
             
   Coverage %  Coverage rates (USD/day)
LR2  40  15  3  22,272  25,823  22,987
LR1  20  9  7  16,382  18,350  17,495
MR  32  9  2  14,838  16,089  15,348
SR  35  21  1  13,695  14,587  15,128
Tanker division  30  11  3  16,173  17,771  17,245
Bulk division  87  21  3  19,791  17,811  21,206
Total  37  13  3  17,190  17,780  17,725
             
Fair value of freight rate contracts that are mark-to-market in the income statement (USD m):
Contracts not included above  0.0        
Contracts included above  0.2        
             
Notes            
Actual no of days can vary from projected no of days primarily due to vessel sales and delays of vessel deliveries. T/C in costs do no include potential extra payments from profit split arrangements.

Post balance sheet events

TORM has during the fourth quarter, as as announced on 1 November in announcement no. 10, entered into an agreement to sell the two Kamsarmax dry bulk newbuildings with planned delivery to TORM in Q1 2011. The newbuildings have been sold for a total consideration of USD 90 million with a total net loss of USD 16 million. The newbuildings are expected to be delivered to the new owner in the first quarter of 2011, where the effect of the transaction will be recognised in the financial statements.              

Safe Harbor Forward-looking Statements

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and statements other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although TORM believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TORM cannot guarantee that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward- looking statements include the strength of the world economy and currencies, changes in charter hire rates and vessel values, changes in demand for "tonne miles" of oil carried by oil tankers, the effect of changes in OPEC's petroleum production levels and worldwide oil consumption and storage, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in TORM's operating expenses, including bunker prices, dry-docking and insurance costs, changes in the regulation of shipping operations, including requirements for double hull tankers or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. Risks and uncertainties are further described in reports filed by TORM with the US Securities and Exchange Commission, including the TORM Annual Report on Form 20-F and its reports on Form 6-K.

Forward-looking statements are based on management's current evaluation, and TORM is only under an obligation to update and change the listed expectations to the extent required by law.

The TORM share

The price of the TORM share was DKK 40.4 at 30 September 2010, against DKK 46.1 at 30 June 2010, equivalent to a decrease of DKK 5.7 (12%).

Accounting policies

This interim report for the third quarter of 2010 is presented in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies. The interim report for the third quarter of 2010 is unaudited and is presented in accordance with the same accounting policies as the Annual Report 2009.

Information

Teleconference

TORM will host a telephone conference for financial analysts and investors on 18 November 2010 at 3:00 pm Copenhagen time (CET), reviewing the interim report for the first nine months of 2010. The conference call will be hosted by Jacob Meldgaard, CEO, Roland M. Andersen, CFO, and Sune S. Mikkelsen, VP Investor Relations, and will be conducted in English.

To participate, please call 10 minutes before the conference on tel.: +45 3271 4607 (from Europe) or +1 887 491 0064 (from the USA). The teleconference will also be webcast via TORM's website www.torm.com . The presentation material can be downloaded from the website.

Next reporting

TORM's Annual Report 2010 will be published on 10 March 2011.

Statement by the Board of Directors and Executive Management on the Interim Report

The Board of Directors and Executive Management have considered and approved the interim report for the period 1 January – 30 September 2010.

The interim report, which is unaudited, has been prepared in accordance with the general Danish financial reporting requirements governing listed companies, including the measurement and recognition provisions of IFRS which are expected to be applicable to the Annual Report 2010.

We consider the accounting policies applied to be appropriate, and in our opinion the interim report gives a true and fair view of the Group's assets, liabilities, financial position and of the results of operations and consolidated cash flows.

Copenhagen, 18 November 2010
Executive Management     Board of Directors
Jacob Meldgaard, CEO Niels Erik Nielsen, Chairman
Roland M. Andersen, CFO Christian Frigast, Deputy Chairman
     Peter Abildgaard
  Lennart Arrias
  Margrethe Bligaard Thomasen
  Bo Jagd
  Jesper Jarlbæk
  Gabriel Panayotides
  Angelos Papoulias
  Nicos Zouvelos 

About TORM

TORM is one of the world's leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 140 modern vessels in cooperation with other respected shipping companies sharing TORM's commitment to safety, environmental responsibility and customer service.

TORM was founded in 1889. The Company conducts business worldwide and is headquartered in Copenhagen, Denmark. TORM's shares are listed on NASDAQ OMX Copenhagen (Copenhagen:TORM) and on NASDAQ in New York (Nasdaq:TRMD). For further information, please visit www.torm.com .
Income statement          
 
           
USD million Q3 2010 Q3 2009 Q1-Q3 2010 Q1-Q3 2009 2009
           
Revenue 225.7 208.8 632.5 661.2 862.3
Port expenses, bunkers and commissions -77.4 -56.1 -207.9 -163.0 -217.4
Freight and bunkers derivatives 0.9 -3.3 2.3 -11.5 -12.0
           
Time charter equivalent earnings 149.2 149.4 426.9 486.7 632.9
           
Charter hire -61.3 -56.3 -167.4 -165.5 -220.9
Operating expenses -38.6 -38.7 -113.2 -130.4 -169.5
           
Gross profit (net earnings from shipping activities)  49.3 54.4 146.3 190.8 242.5
           
Profit from sale of vessels 0.0 20.7 18.2 33.2 33.1
Administrative expenses -24.5 -17.9 -60.1 -60.5 -78.2
Other operating income 0.9 1.5 3.9 6.3 7.4
Share of results of jointly controlled entities -3.1 0.5 -6.8 0.7 -2.3
           
EBITDA 22.6 59.2 101.5 170.5 202.5
           
Impairment losses on jointly controlled entities 0.0 0.0 0.0 0.0 -20.0
Depreciation and impairment losses -35.1 -35.0 -104.5 -100.3 -132.7
           
Operating profit/loss (EBIT) -12.5 24.2 -3.0 70.2 49.8
           
Financial items -14.2 -19.8 -45.5 -59.1 -68.8
           
Profit/loss before tax -26.7 4.4 -48.5 11.1 -19.0
           
Tax 0.2 -2.3 0.2 -3.0 1.6
           
Net profit/loss for the period -26.5 2.1 -48.3 8.1 -17.4
           
Earnings per share, EPS           
Earnings per share, EPS (USD) -0.4 0.0 -0.7 0.1 -0.3
Earnings per share, EPS (DKK) *)  -2.2 0.2 -4.0 0.6 -1.3
           
*) The key figures have been translated from USD to DKK using the average USD/DKK exchange change rate for the period in question. 
           
Statement of comprehensive income          
           
           
USD million Q3 2010 Q3 2009 Q1-Q3 2010 Q1-Q3 2009 2009
           
Net profit/loss for the period -26.5 2.1 -48.3 8.1 -17.4
           
Other comprehensive income:          
           
Exchange rate adjustment arising on translation of entities using a measurement currency different from USD 0.0 0.0 0.0 0.0 0.0
           
Fair value adjustment on hedging instruments -6.3 0.5 -16.0 25.0 26.5
           
Value adjustment on hedging instruments transferred to income statement  1.7 0.1 5.6 3.9 4.1
           
Value adjustment on hedging instruments transferred to assets  0.0 0.0 0.0 -1.2 -1.2
           
Fair value adjustment on available for sale investments  0.3 1.5 -0.2 2.2 1.6
           
Transfer to income statement on sale of available for sale investments 0.0 0.0 0.0 0.0 -3.7
           
Other comprehensive income after tax -4.3 2.1 -10.6 29.9 27.3
           
Total comprehensive income  -30.8 4.2 -58.9 38.0 9.9
           
           
Income statement quarter by quarter          
 
USD million Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
           
Revenue 208.8 201.1 205.5 201.3 225.7
Port expenses, bunkers and commissions -56.1 -54.4 -59.9 -70.6 -77.4
Freight and bunkers derivatives -3.3 -0.5 1.9 -0.5 0.9
           
Time charter equivalent earnings 149.4 146.2 147.5 130.2 149.2
           
Charter hire -56.3 -55.4 -51.7 -54.4 -61.3
Operating expenses -38.7 -39.1 -39.9 -34.7 -38.6
           
Gross profit (net earnings from shipping activities)  54.4 51.7 55.9 41.1 49.3
           
Profit from sale of vessels 20.7 -0.1 18.2 0.0 0.0
Administrative expenses -17.9 -17.7 -18.1 -17.5 -24.5
Other operating income 1.5 1.1 1.7 1.3 0.9
Share of results of jointly controlled entities 0.5 -3.0 -2.4 -1.3 -3.1
           
EBITDA 59.2 32.0 55.3 23.6 22.6
           
Impairment losses on jointly controlled entities 0.0 -20.0 0.0 0.0 0.0
Depreciation and impairment losses -35.0 -32.4 -35.0 -34.4 -35.1
           
Operating profit/loss (EBIT) 24.2 -20.4 20.3 -10.8 -12.5
           
Financial items -19.8 -9.7 -17.7 -13.6 -14.2
           
Profit/loss before tax 4.4 -30.1 2.6 -24.4 -26.7
           
Tax -2.3 4.6 -0.3 0.3 0.2
           
Net profit/loss for the period 2.1 -25.5 2.3 -24.1 -26.5
           
           
Earnings per share, EPS           
Earnings per share, EPS (USD) 0.0 -0.4 0.0 -0.3 -0.4
       
       
Assets      
 
USD million 30 September 30 September 31 December
  2010 2009 2009
       
NON-CURRENT ASSETS      
       
Intangible assets      
Goodwill 89.2 89.2 89.2
Other intangible assets 2.1 2.3 2.2
Total intangible assets 91.3 91.5 91.4
       
Tangible fixed assets      
Land and buildings 3.6 3.7 3.7
Vessels and capitalized dry-docking 2,484.2 2,421.4 2,390.4
Prepayments on vessels 237.7 293.0 273.9
Other plant and operating equipment 8.7 9.9 10.7
Total tangible fixed assets 2,734.2 2,728.0 2,678.7
       
       
Financial assets      
Investment in jointly controlled entities 115.4 132.3 123.0
Loans to jointly controlled entities 36.0 39.2 38.7
Other investments 3.0 8.6 3.2
Other financial assets 6.0 8.5 8.5
Total financial assets 160.4 188.6 173.4
       
TOTAL NON-CURRENT ASSETS 2,985.9 3,008.1 2,943.5
       
       
CURRENT ASSETS      
       
Bunkers 33.5 21.0 24.6
Freight receivables, etc. 76.7 62.8 62.1
Other receivables 18.5 52.3 16.8
Other financial assets 0.0 4.3 0.4
Prepayments 18.7 15.3 13.6
Cash and cash equivalents 143.2 196.3 121.8
  290.6 352.0 239.3
       
Non-current assets held for sale 0.0 0.0 44.4
       
TOTAL CURRENT ASSETS 290.6 352.0 283.7
       
TOTAL ASSETS 3,276.5 3,360.1 3,227.2
       
       
Equity and liabilities      
       
USD million 30 September 30 September 31 December
  2010 2009 2009
       
EQUITY      
       
Common shares 61.1 61.1 61.1
Treasury shares -17.9 -18.1 -18.1
Revaluation reserves -2.4 2.1 -2.2
Retained profit 1,158.7 1,230.1 1,205.1
Proposed dividends 0.0 0.0 0.0
Hedging reserves -13.7 -5.0 -3.3
Translation reserves 4.1 4.1 4.1
TOTAL EQUITY 1,189.9 1,274.3 1,246.7
       
LIABILITIES      
       
Non-current liabilities      
Deferred tax liability 54.5 55.1 55.0
Mortgage debt and bank loans 1,671.2 1,702.2 1,629.2
Finance lease liabilities 31.4 32.1 31.7
Acquired liabilities related to options on vessels 0.5 2.3 1.9
Acquired time charter contracts 0.0 0.1 0.1
TOTAL NON-CURRENT LIABILITIES 1,757.6 1,791.8 1,717.9
       
Current liabilities      
Mortgage debt and bank loans 176.3 142.0 141.5
Finance lease liabilities 2.0 1.9 1.8
Trade payables 51.5 32.6 25.0
Current tax liabilities 2.6 11.2 5.7
Other liabilities 94.8 97.5 82.9
Acquired liabilities related to options on vessels 1.8 1.8 1.8
Acquired time charter contracts 0.0 6.3 3.8
Deferred income 0.0 0.7 0.1
TOTAL CURRENT LIABILITIES 329.0 294.0 262.6
       
TOTAL LIABILITIES 2,086.6 2,085.8 1,980.5
       
TOTAL EQUITY AND LIABILITIES 3,276.5 3,360.1 3,227.2
 
 
Equity 1 January - 30 September 2010
 
USD million Common Treasury Retained Proposed Revaluation Hedging Translation Total
  shares shares profit dividends reserves reserves reserves  
                 
Equity at 1 January 2010 61.1 -18.1 1,205.1 0.0 -2.2 -3.3 4.1 1,246.7
Changes in equity Q1-Q3 2010:                
Purchase treasury shares, cost -- -- -- -- -- -- -- 0.0
Disposal treasury shares, cost -- 0.2 -- -- -- -- -- 0.2
Gain/loss from disposal treasury shares -- -- -0.2 -- -- -- -- -0.2
Share-based compensation -- -- 2.1 -- -- -- -- 2.1
Comprehensive income for the period -- -- -48.3 -- -0.2 -10.4 0.0 -58.9
Total changes in equity Q1-Q3 2010 0.0 0.2 -46.4 0.0 -0.2 -10.4 0.0 -56.8
Equity at 30 September 2010 61.1 -17.9 1,158.7 0.0 -2.4 -13.7 4.1 1,189.9
 
Equity 1 January - 30 September 2009
 
USD million Common Treasury Retained Proposed Revaluation Hedging Translation Total
  shares shares profit dividends reserves reserves reserves  
                 
Equity at 1 January 2009 61.1 -18.1 1,209.5 55.1 -0.1 -32.7 4.1 1,278.9
Changes in equity Q1-Q3 2009:                
Dividends paid -- -- -- -51.2 -- -- -- -51.2
Dividends paid on treasury shares -- -- 2.5 -- -- -- -- 2.5
Exchange rate adjustment on dividends paid -- -- 3.9 -3.9 -- -- -- 0.0
Share-based compensation -- -- 6.1 -- -- -- -- 6.1
Comprehensive income for the period -- -- 8.1 -- 2.2 27.7 0.0 38.0
Total changes in equity Q1-Q3 2009 0.0 0.0 20.6 -55.1 2.2 27.7 0.0 -4.6
Equity at 30 September 2009 61.1 -18.1 1,230.1 0.0 2.1 -5.0 4.1 1,274.3
           
           
Statement of cash flows          
           
USD million          
  Q3 2010 Q3 2009 Q1-Q3 Q1-Q3 2009
      2010 2009  
           
Cash flow from operating activities          
Operating profit/loss -12.5 24.2 -3.0 70.2 49.8
           
Adjustments:          
Reversal of profit from sale of vessels 0.0 -20.7 -18.2 -33.2 -33.1
Reversal of depreciation and impairment losses 35.1 35.0 104.5 100.3 132.7
Reversal of impairment of jointly controlled entities 0.0 0.0 0.0 0.0 20.0
Reversal of share of results of jointly controlled entities 3.1 -0.5 6.8 -0.7 2.3
Reversal of other non-cash movements -0.3 -0.6 -8.1 4.7 1.3
           
Dividends received 0.0 0.0 0.0 0.0 0.1
Dividends received from jointly controlled entities 0.2 0.0 1.4 2.8 3.0
Interest received and exchange rate gains 2.2 0.1 2.6 4.3 5.1
Interest paid and exchange rate losses -14.0 -14.4 -40.9 -44.1 -56.9
Income taxes paid/repaid -0.3 -0.1 -3.2 -1.9 -2.7
Change in bunkers, accounts receivables and payables 7.8 -0.8 0.1 -7.2 -5.3
Net cash flow from operating activities 21.3 22.2 42.0 95.2 116.3
           
Cash flow from investing activities          
Investment in tangible fixed assets -66.8 -87.1 -160.0 -261.3 -288.8
Investment in equity interests and securities 0.0 0.0 0.0 0.0 0.0
Loans to jointly controlled entities 0.4 0.5 2.7 2.9 4.7
Payment of liability related to options on vessels 0.0 0.0 0.0 1.5 0.0
Received share on options on vessels 0.0 0.0 0.0 0.0 1.5
Sale of equity interests and securities 0.0 0.0 0.0 0.0 4.7
Sale of non-current assets 0.0 52.4 63.7 78.4 78.5
Net cash flow from investing activities -66.4 -34.2 -93.6 -178.5 -199.4
           
Cash flow from financing activities          
Borrowing, mortgage debt and finance lease liabilities 92.1 110.5 172.6 373.9 368.0
Repayment/redemption, mortgage debt and finance lease liabilities -24.9 -14.8 -99.6 -213.9 -282.7
Dividends paid 0.0 0.0 0.0 -48.7 -48.7
Purchase/disposals of treasury shares 0.0 0.0 0.0 0.0 0.0
Net cash flow from financing activities 67.2 95.7 73.0 111.3 36.6
           
Net cash flow from operating, investing and financing activities 22.1 83.7 21.4 28.0 -46.5
           
Cash and cash equivalents, beginning balance 121.1 112.6 121.8 168.3 168.3
           
Cash and cash equivalents, ending balance 143.2 196.3 143.2 196.3 121.8
 
 
Statement of cash flows by quarter
 
USD million          
  Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
           
           
Cash flow from operating activities          
Operating profit/loss 24.2 -20.4 20.3 -10.8 -12.5
           
Adjustments:          
Reversal of profit from sale of vessels -20.7 0.1 -18.2 0.0 0.0
Reversal of depreciation and impairment losses 35.0 32.4 35.0 34.4 35.1
Reversal of impairment of jointly controlled entities 0.0 20.0 0.0 0.0 0.0
Reversal of share of results of jointly controlled entities -0.5 3.0 2.4 1.3 3.1
Reversal of other non-cash movements -0.6 -3.4 -4.0 -3.8 -0.3
           
Dividends received 0.0 0.1 0.0 0.0 0.0
Dividends received from jointly controlled entities 0.0 0.2 0.3 0.9 0.2
Interest received and exchange rate gains 0.1 0.8 0.1 0.3 2.2
Interest paid and exchange rate losses -14.4 -12.8 -14.2 -12.7 -14.0
Income taxes paid/repaid -0.1 -0.8 -2.9 0.0 -0.3
Change in bunkers, accounts receivables and payables -0.8 1.9 2.1 -9.8 7.8
Net cash flow from operating activities 22.2 21.1 20.9 -0.2 21.3
           
Cash flow from investing activities          
Investment in tangible fixed assets -87.1 -27.5 -23.6 -69.6 -66.8
Investment in equity interests and securities 0.0 0.0 0.0 0.0 0.0
Loans to jointly controlled entities 0.5 1.8 1.1 1.2 0.4
Payment of liability related to options on vessels 0.0 -1.5 0.0 0.0 0.0
Received share on options on vessels 0.0 1.5 0.0 0.0 0.0
Sale of equity interests and securities 0.0 4.7 0.0 0.0 0.0
Sale of non-current assets 52.4 0.1 63.6 0.1 0.0
Net cash flow from investing activities -34.2 -20.9 41.1 -68.3 -66.4
           
Cash flow from financing activities          
Borrowing, mortgage debt and finance lease liabilities 110.5 -5.9 25.7 54.8 92.1
Repayment/redemption, mortgage debt and finance lease liabilities -14.8 -68.8 -23.2 -51.5 -24.9
Dividends paid 0.0 0.0 0.0 0.0 0.0
Purchase/disposals of treasury shares 0.0 0.0 0.0 0.0 0.0
Net cash flow from financing activities 95.7 -74.7 2.5 3.3 67.2
           
Net cash flow from operating, investing and financing activities 83.7 -74.5 64.5 -65.2 22.1
           
Cash and cash equivalents, beginning balance 112.6 196.3 121.8 186.3 121.1
           
Cash and cash equivalents, ending balance 196.3 121.8 186.3 121.1 143.2
CONTACT:  TORM A/S          Jacob Meldgaard, CEO          Roland M. Andersen, CFO          +45 39 17 92 00          Tuborg Havnevej 18           DK-2900 Hellerup, Denmark