Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TORM PLC (TRMD, Financial) reported strong financial performance with time charter equivalent earnings of $326 million and EBITDA of $251 million.
- The company declared a dividend of $1.80 per share, reflecting a positive dividend yield.
- TORM PLC (TRMD) expanded its fleet by acquiring eight MR vessels, enhancing its operational capacity.
- The company achieved a return on invested capital of 29.5%, underscoring a positive operating environment.
- TORM PLC (TRMD) maintained a stable financial leverage with a net loan to value ratio of 20.4%.
Negative Points
- Geopolitical tensions, particularly in the Middle East, have led to increased volatility in tanker rates.
- There is a risk of cyclical headwinds affecting the market, with concerns about softer economic numbers from China.
- The product tanker market faces potential disruptions from refinery run cuts in Asia.
- The crude tanker fleet's ability to cannibalize the product tanker market poses a threat to TORM PLC (TRMD).
- The company's dividend policy remains discretionary, which may lead to uncertainty among investors.
Q & A Highlights
Q: Given the macro uncertainties and softer numbers from China, do you think the weakness in August could be more than just seasonality?
A: Jacob Meldgaard, CEO: It could be a scenario, but looking back at last year, we saw the same erosion in rates during July, August, and September. I don't see anything pointing to a fundamental issue at this stage, but it's always a risk. The broader view doesn't suggest a transformation away from fossil fuels is impacting us yet.
Q: With the fleet reaching 96 vessels, are you considering more balance in the fleet given the contract market's steadiness compared to the spot market?
A: Jacob Meldgaard, CEO: We are taking an opportunistic approach. We believe the current market situation is seasonal and expect it to rebound. We will make decisions based on market conditions rather than the current environment.
Q: Are refinery run cuts in Asia affecting the spot market, and do you see risks of similar cuts in the Western Hemisphere?
A: Jacob Meldgaard, CEO: Activity in Asia is picking up from recent lows. While China demand has been slow, we might see more exports due to higher production than local consumption. This could benefit the product tanker market.
Q: Regarding the 68 scrubbers installed on your fleet, is the plan to continue with the remaining installations?
A: Jacob Meldgaard, CEO: Yes, the plan is intact and will be done during ordinary dry dockings. We evaluate each case based on financial sense and net present value.
Q: How should we think about the dividend policy? Is it formulaic or more discretionary?
A: Jacob Meldgaard, CEO: It's ultimately at the board's discretion, but we aim to distribute net cash generation per quarter. The approach hasn't changed over recent quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
