Release Date: November 07, 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 rising to $263 million and EBITDA amounting to $191 million.
- The company declared a dividend of $1.20 per share for the quarter, maintaining a strong dividend flow scheme.
- TORM PLC (TRMD) successfully acquired eight second-hand MR vessels, enhancing its fleet and positioning for future growth.
- The company achieved a return on invested capital of 20.3%, demonstrating a healthy business environment.
- TORM PLC (TRMD) maintained a solid financial foundation with a net loan to value ratio of 23.1%, lower than the same quarter last year.
Negative Points
- Freight rates were lower than expected in the latter part of the quarter due to geopolitical tensions and market dynamics.
- A significant portion of increased CPP volumes was carried on uncoded VLCCs and Suezmaxes, temporarily capping rates.
- The product tanker market experienced a decline in rates due to short-term factors such as intensified crude tanker cannibalization.
- Middle East exports fell by 8% month on month in October, impacting the market negatively.
- The current market environment has led to a discrepancy between public market pricing and net asset value, limiting the use of share-based transactions for acquisitions.
Q & A Highlights
Q: How are you thinking about the product market thus far into Q4, considering the impact of VLCCs and Suezmaxes on product tanker demand in Q3?
A: Jacob Meldgaard, CEO: In Q3, crude cannibalization affected the market, but this is no longer the case in Q4. However, product rates have not reacted positively due to an 8% drop in Middle East export volumes in October. The current softness in rates is attributed to lower demand from refinery outages and maintenance.
Q: Given your recent fleet renewal activities, do you plan more transactions, or will you adopt a wait-and-see approach due to the softer market?
A: Jacob Meldgaard, CEO: We are staying agile and could consider both buying or selling assets. However, current market conditions require new clearance prices for assets before engaging in transactions. There are no specific plans at the moment.
Q: With the recent trading down of product tankers, how are you thinking about using shares as currency for acquisitions?
A: Jacob Meldgaard, CEO: Given the current discrepancy between public market pricing and our NAV, using shares as currency is not a potent tool at the moment. If the current market pricing persists, such deals are not realistic.
Q: Can you elaborate on the impact of geopolitical tensions on the product tanker market?
A: Jacob Meldgaard, CEO: Geopolitical tensions have reshaped product tanker trade towards longer distances, affecting rates. The market is susceptible to changes in geopolitical scenarios, which can impact the supply-demand balance.
Q: What are your priorities and commitments moving forward?
A: Kim Balle, CFO: We maintain a strong cash position and secure debt maturity profile, allowing us to seize market opportunities. We focus on investments with higher returns and are committed to delivering value to shareholders by distributing 100% of free cash after debt repayments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
