“The
result for the first six months of the year is the best in the history of
TORM when excluding the sale of TORM’s shareholding in the shipping
company Norden. We have been favoured by high rates in the tanker market,
and taking the market situation and our coverage into consideration, the
positive development seems to continue in the near future,” says CEO Klaus
Kjærulff. “The integration of new employees and vessels from OMI has been
smooth, however, we are still very focused on creating a global
organisation that is geared for further growth.”
|
||||
●
|
The
pre-tax profit for the first six months of 2008 was USD 199 million. The
result is better than expected and highly satisfactory. The pre-tax profit
for the second quarter of 2008 was USD 146 million.
|
|||
●
|
At
30 June 2008, equity amounted to USD 1,211 million (DKK 5,726 million),
equivalent to USD 17.5 per share (DKK 82.7 per share) excluding treasury
shares.
|
|||
●
|
The
market value of TORM’s fleet, including the order book, exceeded book
value by USD 1,723 million at 30 June 2008, equivalent to USD 24.9 per
share (DKK 117.7 per share), excluding treasury shares.
|
|||
●
|
At
the end of the second quarter, product tanker rates were significantly
higher than expected. In particular, the global demand for transport of
crude oil, imports of gasoline to the USA and imports of naphtha to the
Far East contributed positively. As a result of the high fuel prices, TORM
has, like other shipping companies, reduced the speed of its vessels,
which is expected to continue into 2009. This has reduced the supply of
available tonnage on the market. As at 31 July 2008, TORM had hedged 57%
of the remaining earning days in the Tanker Division at USD 23,494 per
day.
|
|||
●
|
Bulk
rates were also higher than expected in the second quarter. This is
primarily due to growing Chinese imports of iron ore combined with growing
global demand for coal. As at 31 July 2008, TORM had hedged 83% of the
remaining earning days in the Bulk Division at USD 50,039 per
day.
|
|||
●
|
TORM
has sold TORM Gotland in the third quarter, leading to an upgrade of the
full-year profit forecast on 18 July 2008 (announcement no. 15/2008). TORM
has also sold the MR vessel TORM Wabash in the third quarter. The combined
profit from these two sales was USD 30.5 million.
|
|||
●
|
In
the third quarter, TORM has ordered two MR vessels, with an option for an
additional two MR vessels, to be delivered in 2011 and 2012 respectively.
The total order book incl. options for the two MR vessels amounts to 23
vessels.
|
|||
●
|
TORM
forecasts a pre-tax profit for 2008 of USD 355 – 370 million as announced
on 11 August 2008 when the full-year forecast was upgraded (announcement
no. 16/2008).
|
|||
●
|
At
31 July 2008, TORM had hedged a fourth of the total fleets’ earning days
for 2009.
|
|||
Teleconference
|
A
teleconference and webcast (www.torm.com) will take place today,
20 August 2008, at 17:00 Copenhagen time (CET). To participate,
please call 10 minutes before the call on tel.: +45 3271 4607 (from
Europe) or +1 334 323 6201 (from the USA). A replay of the conference will
be available from TORM’s website.
|
|||
Contact
|
A/S
Dampskibsselskabet TORM
|
Telephone:
+45 39 17 92 00
|
||
Tuborg
Havnevej 18
|
Klaus
Kjærulff, CEO
|
|||
DK-2900
Hellerup
|
Mikael
Skov, COO
|
|||
Denmark
|
Roland
M. Andersen, CFO
|
Key
figures
|
Million
USD
|
Q2 2008 | Q2 2007 | Q1-Q2 2008 | Q1-Q2 2007 |
2007
|
||||||||||||||||
Income
statement
|
|||||||||||||||||||||
Net
revenue
|
286.6 | 179.5 | 541.6 | 341.3 | 773.6 | ||||||||||||||||
Time
charter equivalent earnings (TCE)
|
235.9 | 139.5 | 436.0 | 265.0 | 604.3 | ||||||||||||||||
Gross
profit
|
146.4 | 79.8 | 257.0 | 148.5 | 333.9 | ||||||||||||||||
EBITDA
|
181.7 | 70.3 | 276.2 | 130.5 | 294.1 | ||||||||||||||||
Operating
profit
|
158.0 | 53.5 | 220.0 | 99.1 | 199.0 | ||||||||||||||||
Profit
before tax
|
146.4 | 59.0 | 198.5 | 739.2 | 804.2 | ||||||||||||||||
Net
profit
|
145.4 | 66.0 | 197.6 | 740.4 | 791.7 | ||||||||||||||||
Balance
sheet
|
|||||||||||||||||||||
Total
assets
|
3,211.1 | 2,904.1 | 3,211.1 | 2,904.1 | 2,958.9 | ||||||||||||||||
Equity
|
1,210.6 | 1,375.4 | 1,210.6 | 1,375.4 | 1,081.2 | ||||||||||||||||
Total
liabilities
|
2,000.5 | 1,528.7 | 2,000.5 | 1,528.7 | 1,877.7 | ||||||||||||||||
Invested
capital
|
2,888.2 | 2,346.1 | 2,888.2 | 2,346.1 | 2,618.5 | ||||||||||||||||
Net
interest bearing debt
|
1,689.3 | 981.4 | 1,689.3 | 981.4 | 1,548.3 | ||||||||||||||||
Cash
flow
|
|||||||||||||||||||||
From
operating activities
|
89.2 | 72.6 | 152.9 | 119.9 | 187.9 | ||||||||||||||||
From
investing activities
|
-7.4 | -319.8 | -228.6 | -365.3 | -356.6 | ||||||||||||||||
Thereof investment in tangible
fixed assets
|
-78.2 | -115.2 | -181.1 | -144.0 | -252.2 | ||||||||||||||||
From
financing activities
|
-80.3 | 615.1 | 49.0 | 635.4 | 242.1 | ||||||||||||||||
Net
cash flow
|
1.5 | 367.9 | -26.7 | 390.0 | 73.4 | ||||||||||||||||
Key
financial figures
|
|||||||||||||||||||||
Margins:
|
|||||||||||||||||||||
TCE
|
82.3 | % | 77.7 | % | 80.5 | % | 77.6 | % | 78.1 | % | |||||||||||
Gross profit
|
51.1 | % | 44.5 | % | 47.5 | % | 43.5 | % | 43.2 | % | |||||||||||
EBITDA
|
63.4 | % | 39.2 | % | 51.0 | % | 38.2 | % | 38.0 | % | |||||||||||
Operating
profit
|
55.1 | % | 29.8 | % | 40.6 | % | 29.0 | % | 25.7 | % | |||||||||||
Return
on Equity (RoE) (p.a.)*)
|
36.4 | % | 19.1 | % | 30.0 | % | 63.1 | % | 67.1 | % | |||||||||||
Return
on Invested Capital (RoIC) (p.a.)**)
|
16.7 | % | 11.6 | % | 14.1 | % | 11.9 | % | 10.2 | % | |||||||||||
Equity
ratio
|
37.7 | % | 47.4 | % | 37.7 | % | 47.4 | % | 36.5 | % | |||||||||||
Exchange
rate USD/DKK, end of period
|
4.73 | 5.51 | 4.73 | 5.51 | 5.08 | ||||||||||||||||
Exchange
rate USD/DKK, average
|
4.78 | 5.53 | 4.87 | 5.61 | 5.44 | ||||||||||||||||
Share
related key figures
|
|||||||||||||||||||||
Earnings per share, EPS |
USD
|
2.1 | 1.0 | 2.9 | 10.7 | 11.4 | |||||||||||||||
Diluted earnings per share, DEPS |
USD
|
2.1 | 1.0 | 2.9 | 10.7 | 11.4 | |||||||||||||||
Cash flow per share, CFPS |
USD
|
1.3 | 1.0 | 2.2 | 1.7 | 2.7 | |||||||||||||||
Share price, end of
period
(per share of DKK 5
each)
|
DKK
|
167.1 | 207.6 | 167.1 | 207.6 | 178.2 | |||||||||||||||
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.
|
69.2 | 69.2 | 69.2 | 69.2 | 69.2 |
*)
The gain from the sale of the Norden shares is not annualized when
calculating the Return on Equity for Q1-Q2 2007,and the gain from sale
of vessels not is annualized when calculating the Return on
Equity in 2008.
|
**)The
gain from sale of vessels is not annualized when calculating the Return on
Invested Capital in 2008
|
Profit
by division
|
Million
USD
|
Q2
2008
|
Q1-Q2
2008
|
||||||
Tanker
|
Bulk
|
Not
|
Tanker
|
Bulk
|
Not
|
|||
Division
|
Division
|
Allocated
|
Total
|
Division
|
Division
|
Allocated
|
Total
|
|
Revenue
|
215.0
|
71.6
|
0.0
|
286.6
|
415.8
|
125.8
|
0.0
|
541.6
|
Port
expenses, bunkers and commissions
|
-56.9
|
-2.5
|
0.0
|
-59.4
|
-108.7
|
-5.2
|
0.0
|
-113.9
|
Freight
and bunkers derivatives
|
8.7
|
0.0
|
0.0
|
8.7
|
8.3
|
0.0
|
0.0
|
8.3
|
Time
charter equivalent earnings
|
166.8
|
69.1
|
0.0
|
235.9
|
315.4
|
120.6
|
0.0
|
436.0
|
Charter
hire
|
-30.6
|
-13.7
|
0.0
|
-44.3
|
-61.7
|
-28.6
|
0.0
|
-90.3
|
Operating
expenses
|
-41.2
|
-4.0
|
0.0
|
-45.2
|
-80.8
|
-7.9
|
0.0
|
-88.7
|
Gross
Profit
|
95.0
|
51.4
|
0.0
|
146.4
|
172.9
|
84.1
|
0.0
|
257.0
|
Profit
from sale of vessels
|
0.0
|
52.0
|
0.0
|
52.0
|
0.0
|
52.0
|
0.0
|
52.0
|
Administrative
expenses
|
-18.1
|
-1.7
|
0.0
|
-19.8
|
-36.2
|
-3.3
|
0.0
|
-39.5
|
Other
operating income
|
3.1
|
0.0
|
0.0
|
3.1
|
6.7
|
0.0
|
0.0
|
6.7
|
Depreciation
and impairment losses
|
-29.1
|
-2.0
|
0.0
|
-31.1
|
-58.0
|
-3.8
|
0.0
|
-61.8
|
Share
of results of jointly controlled entities
|
1.6
|
0.0
|
5.8
|
7.4
|
2.8
|
0.0
|
2.8
|
5.6
|
Operating
profit
|
52.5
|
99.7
|
5.8
|
158.0
|
88.2
|
129.0
|
2.8
|
220.0
|
Financial
items
|
-
|
-
|
-11.6
|
-11.6
|
-
|
-
|
-21.5
|
-21.5
|
Profit/(Loss)
before tax
|
-
|
-
|
-5.8
|
146.4
|
-
|
-
|
-18.7
|
198.5
|
Tax
|
-
|
-
|
-1.0
|
-1.0
|
-
|
-
|
-0.9
|
-0.9
|
Net
profit
|
-
|
-
|
-6.8
|
145.4
|
-
|
-
|
-19.6
|
197.6
|
Tanker
Division
|
The
Tanker Division achieved an operating profit of USD 52.5 million in the
second quarter of 2008 against USD 35.7 million in the first quarter of
2008. The share of results of jointly controlled entities includes FR8
with USD 8.6 million and OMI with USD -2.9 million.
|
|
Following
a sluggish first quarter during which much of the winter market failed to
materialise, the demand for tonnage increased substantially in the second
quarter, boosting freight rates more than expected. In particular, the
rates in the LR2 segment were high in the second quarter, but also the
rates in the LR1 and MR segments grew more than expected. The rates in the
LR1 and LR2 segments have continued to rise in the early part of the third
quarter, whereas rates for the smaller MR and SR vessels remain at a high
level.
|
||
The
tanker market was affected by the following substantial factors in the
second quarter of 2008:
|
||
Positive
impact:
|
||
●
|
Strong
demand for transport of crude oil increased earnings, especially for the
large LR1 and LR2 product tankers.
|
|
●
|
Increased
demand for naphtha in the Far East, partly from Europe, resulted in higher
earnings from the LR1 and LR2 product tankers.
|
|
●
|
Increased
imports of refined oil products to West Africa.
|
|
●
|
A
more balanced distribution of cargo volumes, primarily of gasoline to the
USA and diesel from the USA to Europe, increased capacity utilisation on
the smaller MR vessels.
|
●
|
As
a result of the high fuel prices, TORM and other shipping companies have
reduced the speed of their vessels, reducing fuel consumption and also the
supply of available tonnage on the market to the benefit of freight
rates.
|
|
●
|
Increase
in the number of port days in 2008, which has increased by approximately
3% for TORM’s fleet, has been an important factor in the balance between
supply and demand.
|
|
Negative
impact:
|
||
●
|
Declining
economic growth, especially in the USA, but also in other parts of the
world.
|
|
●
|
Declining
growth in the global demand for oil.
|
|
●
|
Although
the high fuel costs have indirectly had a favourable impact on the market,
as mentioned above, fuel costs in general were higher in the second
quarter.
|
|
TORM’s
Tanker Division achieved freight rates in the second quarter of 2008 which
were 7% lower than in the second quarter of 2007 for the LR1 segment and
18% lower for the MR segment, whereas the rates obtained for the LR2
segment were 10% higher. As a result of the acquisition of OMI and the
extensive newbuilding programme, capacity and thus the number of earning
days for TORM’s aggregate product tanker fleet increased by 70% in the
second quarter of 2008 compared with the same period of
2007.
|
Tanker
Division
|
Q2
07
|
Q3
07
|
Q4
07
|
Q1
08
|
Q2
08
|
Change
Q1
07
-
Q1 08
|
12
month avg.
|
|
LR2 (Aframax, 90-110,000
DWT)
|
||||||||
Available
earning days
|
767
|
906
|
903
|
908
|
926
|
21%
|
||
TCE
per earning day1)
|
29,073
|
21,841
|
23,316
|
28,538
|
32,084
|
10%
|
26,479
|
|
Operating
days
|
713
|
818
|
864
|
865
|
896
|
26%
|
||
Operating
expenses per operating day2)
|
8,144
|
6,471
|
6,466
|
8,270
|
7,906
|
-3%
|
7,295
|
|
LR1
(Panamax 75-85,000 DWT)
|
||||||||
Available
earning days
|
1.319
|
1.577
|
1.702
|
1.822
|
1.764
|
34%
|
||
TCE
per earning day1)
|
29,059
|
27,448
|
26,548
|
23,533
|
27,036
|
-7%
|
26,080
|
|
Operating
days
|
633
|
685
|
695
|
682
|
687
|
9%
|
||
Operating
expenses per operating day2)
|
6,188
|
4,955
|
5,336
|
6,538
|
7,028
|
14%
|
5,962
|
|
MR
(45,000 DWT)
|
||||||||
Available
earning days
|
1,652
|
2,223
|
2,497
|
2,490
|
2,576
|
56%
|
||
TCE
per earning day1)
|
28,143
|
22,978
|
21,715
|
22,716
|
23,158
|
-18%
|
22,636
|
|
Operating
days
|
1,456
|
2,089
|
2,393
|
2,368
|
2,533
|
74%
|
||
Operating
expenses per operating day2)
|
7,480
|
6,147
|
8,224
|
8,260
|
7,885
|
5%
|
7,679
|
|
SR
(35,000 DWT)
|
||||||||
Available
earning days
|
n.a.
|
732
|
1,104
|
1,088
|
1,092
|
n.a.
|
||
TCE
per earning day1)
|
n.a.
|
16,129
|
17,121
|
21,034
|
21,036
|
n.a.
|
19,065
|
|
Operating
days
|
n.a.
|
732
|
1,104
|
910
|
911
|
n.a.
|
||
Operating
expenses per operating day2)
|
n.a.
|
5,460
|
7,255
|
8,182
|
7,898
|
n.a.
|
7,287
|
1) Time
Charter Equivalent (TCE) = Gross freight income less bunker, commissions
and port expenses. In the second quarter un-allocated earnings amounts to
USD 7.3 million and comprise of fair value adjustment of freight and
bunkers derivatives, which are not designated as hedges, and gains and
losses on freight and bunkers derivatives, which are not entered for hedge
purposes.
|
2) Operating
expenses is related owned vessels. In the second quarter un-allocated
expenses amounted to USD 2.2 million and comprised expenses not relating
to the daily operation of our
vessels.
|
Bulk
Division
|
The
Bulk Division achieved an operating profit of USD 99.7 million in the
second quarter of 2008, of which USD 52 million related to the sale of
TORM Marlene.
|
The
bulk rates continue to be dependent on developments mainly in the Chinese
markets, but also in India, Japan and South America. The rates were better
than expected in the second quarter, primarily as a result of growing
Chinese steel production and imports of iron ore combined with increasing
global demand for coal.
|
|
The
number of available earning days in TORM’s Panamax segment was
12% higher in the second quarter of 2008 than in the second quarter of
2007. Earnings per day have almost doubled since the second quarter of
2007 as a result of higher freight
rates.
|
Bulk
Division
|
Q2
07
|
Q3
07
|
Q4
07
|
Q1
08
|
Q2
08
|
Change
Q1
07
-
Q1 08
|
12
month avg.
|
|
Panamax
(60-80,000 DWT)
|
||||||||
Available
earning days
|
1,222
|
1,258
|
1,287
|
1,394
|
1,367
|
12%
|
||
TCE
per earning day1)
|
25,467
|
27,019
|
27,443
|
36,909
|
50,568
|
99%
|
35,787
|
|
Operating
days
|
493
|
546
|
559
|
565
|
585
|
19%
|
||
Operating
expenses per operating day2)
|
5,562
|
4,580
|
5,392
|
6,940
|
6,647
|
20%
|
5,909
|
1) TCE = Gross freight income less bunker, commissions and port expenses. |
2) Operating
expenses is related owned vessels. In the second quarter un-allocated
expenses amounted to USD 0.1 million and comprised expenses not relating
to the daily operation of our
vessels.
|
Other
activities
|
Other
(non-allocated) activities for the first six months of 2008 consist of
share of result in jointly controlled entities of USD 2.8 million,
financial items of USD -21.5 million and tax of USD -0.9
million.
|
Fleet
development
|
At
the end of the second quarter of 2008, TORM’s owned fleet totalled 64
vessels, 58 of which were product tankers and six bulk carriers. For the
remainder of 2008, TORM has chartered in approximately 15 product tankers
and approximately 9 bulk carriers leading to a total fleet of 88
vessels.
|
Own
vessels
|
T/C
vessels
|
Total
|
|||||
31
March 2008
|
Additions
|
Disposals
|
30
June 2008
|
30
June 2008
|
|||
LR2
/ Aframax
|
9.5
|
1.0
|
-
|
10.5
|
1.4
|
11.9
|
|
LR1
/ Panamax
|
7.5
|
-
|
-
|
7.5
|
10.9
|
18.4
|
|
MR
|
29.0
|
1.0
|
-
|
30.0
|
0.8
|
30.8
|
|
SR
|
10.0
|
-
|
-
|
10.0
|
2.0
|
12.0
|
|
Tanker
|
56.0
|
2.0
|
0.0
|
58.0
|
15.1
|
73.1
|
|
Panamax
|
7.0
|
-
|
1.0
|
6.0
|
9.1
|
15.1
|
|
Bulk
|
7.0
|
0.0
|
1.0
|
6.0
|
9.1
|
15.1
|
|
Total
|
63.0
|
2.0
|
1.0
|
64.0
|
24.2
|
88.2
|
Planned fleet
changes
|
TORM
has ordered two MR vessels in the third quarter, with an option for an
additional two MR vessels, for delivery in 2011 and 2012
respectively.
|
30 June
2008
|
2009
|
2010
|
2011
|
Total
|
|||||||||||||||||
Tanker
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
Order
Book
|
||||||
LR2
|
10.5
|
1
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2
|
|||||
LR1
|
7.5
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0
|
|||||
MR
|
30
|
1
|
-
|
1
|
3
|
3
|
-
|
2
|
2
|
2
|
-
|
-
|
-
|
-
|
-
|
12
|
|||||
SR
|
10
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
|||||
Bulk
|
|||||||||||||||||||||
Kamsarmax
|
0
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
2
|
-
|
-
|
4
|
|||||
Panamax
|
6
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0
|
|||||
Total
|
64
|
2
|
1
|
2
|
3
|
1
|
0
|
2
|
2
|
3
|
0
|
1
|
5
|
0
|
0
|
19
|
Pools
|
At
30 June 2008, the three product tanker pools TORM participates in
comprised 81 vessels. To this should be added 23 vessels which TORM
operates outside pools. At the end of 2008, the three pools are expected
to comprise a total of 94 vessels.
|
Results
|
|
Second
quarter 2008
|
The
second quarter of 2008 showed a gross profit of USD 146 million, against
USD 80 million for the corresponding quarter of 2007. Profit before
depreciation (EBITDA) for the period was USD 182 million, against USD 70
million for the second quarter of 2007. The increase in both gross profit
and EBITDA is primarily due to a larger number of earning days in the
Tanker Division and higher earnings in the Bulk
Division.
|
In
the second quarter of 2008, depreciation amounted to USD 31
million.
|
|
The
operating profit for the second quarter of 2008 was USD 158 million,
against USD 53 million in the same quarter of 2007. The Tanker and Bulk
Divisions contributed USD 53 million and USD 100 million respectively,
whereas USD 6 million is unallocated.
|
|
In
the second quarter of 2008, financial items amounted to USD -12 million,
against USD 6 million in the same quarter of 2007. The difference is
explained by interest income in the second quarter of 2007 following
TORM’s sale of its stake in Norden.
|
|
Profit
after tax in the second quarter was USD 145 million, including a gain of
USD 52 million from the sale of vessels, against USD 66 million in the
second quarter of 2007.
|
|
Assets
|
Total
assets rose in the second quarter of 2008 from USD 3,153 million to USD
3,211 million.
|
Liabilities
|
In
the second quarter of 2008, the Company’s net interest bearing debt
decreased from USD 1,706 million to USD 1,689 million. The item primarily
includes higher net debt in connection with the delivery of vessels, the
effect on liquidity from the distribution of dividend and the positive
cash flow from operations during the period.
|
The
Company has considerable undrawn loan facilities at its
disposal.
|
|
Equity
|
In
the second quarter of 2008, equity rose from USD 1,130 million to USD
1,211 million, which was the result of earnings during the period less
dividends paid. Equity as a percentage of total assets increased from
35.8% at 31 March 2008 to 37.7% at 30 June 2008.
|
At
30 June 2008, TORM held 3,556,364 treasury shares, corresponding to 4.9%
of the Company’s share capital, which was unchanged from 31 March
2008.
|
|
Subsequent
events
|
In
the third quarter of 2008, TORM has sold TORM Gotland for USD 36.1 million
and TORM Wabash for USD 63.4 million. The combined profit was USD 30.5
million.
|
Expectations
|
TORM
forecasts a pre-tax profit for 2008 of USD 355 – 370 million as announced
on 11 August 2008 (announcement no. 16/2008).
|
Sensitivity
|
At
31 July 2008, approximately 83% of the earning days of the Company’s
Panamax bulk carriers were covered for the remainder of the year. For the
Tanker Division, approximately 57% of the remaining earning days were
covered for the rest of the year.
|
Hedging as of 31 July 2008 |
Total
days
|
Days
covered
|
Covered in
%
|
Covered in
USD/day
|
||||||||||||||||||||||||||||||
2008
|
2009
|
2008
|
2009
|
2008
|
2009 |
2008
|
2009
|
||||||||||||||||||||||||||
Tanker
|
|||||||||||||||||||||||||||||||||
LR2
|
2,158 | 5,627 | 475 | 448 | 22 | % | 8 | % | 33,922 | 28,390 | |||||||||||||||||||||||
LR1
|
3,213 | 7,886 | 2,449 | 2,879 | 76 | % | 37 | % | 25,929 | 22,864 | |||||||||||||||||||||||
MR
|
4,749 | 13,728 | 2,628 | 3,734 | 55 | % | 27 | % | 22,341 | 21,797 | |||||||||||||||||||||||
SR
|
1,836 | 4,684 | 1,224 | 1,562 | 67 | % | 33 | % | 17,048 | 17,283 | |||||||||||||||||||||||
Bulk
|
|||||||||||||||||||||||||||||||||
Panamax
|
2,420 | 5,722 | 2,017 | 1,511 | 83 | % | 26 | % | 50,039 | 53,540 |
At
31 July, TORM had hedged the price of 28% of the remaining bunker
requirement for the remainder of 2008 and the market value of the
contracts was USD 0.9 million.
|
|
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 other
statements, which are 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 assure you
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 world economies 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 governmental rules and
regulations 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 obligation to update and change the listed expectations to
the extent required by law.
|
|
The
TORM share
|
|
The
price of a TORM share was DKK 167.1 as of 30 June 2008, against DKK 140.5
at the beginning of the second quarter – equivalent to an increase of DKK
26.6 (19%).
|
|
In
the second quarter, the Company distributed a dividend of DKK 4.5 per
share.
|
|
The
total return to shareholders for the second quarter of 2008 was DKK 31.1
per share (calculated excluding reinvestment), corresponding to a total
return of 22%.
|
Accounting
policies
|
|
The
interim report for the first half of 2008 has been prepared using the same
accounting policies as for the Annual Report 2007, except that the Company
has changed its accounting policy for the recognition of investments in
joint ventures so that these are recognised according to the equity
method. Previously, joint ventures were recognised on a pro rata basis.
The change in accounting policy is due to the fact that the Company finds
it inappropriate to aggregate the items of joint ventures with items of
entities that form an integral part of the Company’s activities. The
change in accounting policies has no effect on the income statement or on
equity, but the profit for the year of joint ventures and the investment
in these are presented in a single line item in the income statement and
the balance sheet, respectively. In addition, the pre-acquisition balance
sheet associated with the acquisition of 50% of OMI in June 2007 has now
been finalized. As a result of the change in accounting policies and the
finalization of the OMI pre-acquisition balance sheet, the operating
profit and net cash flows for 2007 were reduced by USD 5.9 million and USD
11.6 million, respectively, and invested capital at 31 December 2007 was
increased by USD 12.5 million.
|
|
TORM
has also implemented IAS 34, “Interim Financial Reporting". The
implementation has not led to any changes in the income statement or
equity, but has caused minor changes to the presentation and a few
additions to the disclosures.
|
|
The
accounting policies are described in more detail in the Annual Report
2007.
|
|
The
financial report for the first half of 2008 is unaudited, in line with the
normal practice.
|
|
Information
|
|
Teleconference
|
|
TORM
will host a teleconference for financial analysts and investors on 20
August 2008 at 17:00 Copenhagen time (CET), reviewing the interim report
for the second quarter of 2008. The conference call will be hosted by
Klaus Kjærulff, CEO, Mikael Skov, COO and Roland M. Andersen, CFO and will
be conducted in English.
|
|
To
participate, please call 10 minutes before the conference on tel.: +45
3271 4607 (from Europe) or +1 334 323 6201 (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
financial report for the third quarter of 2008 will be released on 21
November 2008.
|
|
Statement
by the Board of Directors and Management on the Interim
Report
|
|
The
Board of Directors and Management have considered and approved the interim
report for the period 1 January – 30 June
2008.
|
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 in IFRS
which are expected to be applicable for the Annual Report
2008.
|
|
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,
20 August 2008
|
Management
|
Board
of Directors
|
||
Klaus
Kjærulff, CEO
|
Niels
Erik Nielsen, Chairman
|
||
Mikael
Skov, COO
|
Christian
Frigast, Deputy Chairman
|
||
Roland
M. Andersen, CFO
|
Peter
Abildgaard
|
||
Lennart
Arrias
|
|||
Margrethe
Bligaard
|
|||
Bo
Jagd
|
|||
Gabriel
Panayotides
|
|||
Michael
Steimler
|
|||
Nicos
Zouvelos
|
|||
About
TORM
|
TORM
is one of the world’s leading carriers of refined oil products as well as
a significant participant in the dry bulk market. The Company operates a
combined fleet of more than 125 modern vessels, principally through a
pooling cooperation with other respected shipping companies who share
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. TORM’s shares are listed on the OMX Nordic
Exchange Copenhagen (symbol: TORM) and on NASDAQ (symbol: TRMD). For
further information, please visit www.torm.com.
|
Income
Statement
|
Million
USD
|
Q2 2008 | Q2 2007 | Q1-Q2 2008 | Q1-Q2 2007 |
2007
|
|||||||||||||||
Revenue
|
286.6 | 179.5 | 541.6 | 341.3 | 773.6 | |||||||||||||||
Port
expenses, bunkers and commissions
|
-59.4 | -39.2 | -113.9 | -76.5 | -172.2 | |||||||||||||||
Freight
and bunkers derivatives
|
8.7 | -0.8 | 8.3 | 0.2 | 2.9 | |||||||||||||||
Time
charter equivalent earnings
|
235.9 | 139.5 | 436.0 | 265.0 | 604.3 | |||||||||||||||
Charter
hire
|
-44.3 | -36.1 | -90.3 | -70.5 | -154.9 | |||||||||||||||
Operating
expenses
|
-45.2 | -23.6 | -88.7 | -46.0 | -115.5 | |||||||||||||||
Gross
profit (Net earnings from shipping activities)
|
146.4 | 79.8 | 257.0 | 148.5 | 333.9 | |||||||||||||||
Profit
from sale of vessels
|
52.0 | 0.0 | 52.0 | 0.0 | 0.0 | |||||||||||||||
Administrative
expenses
|
-19.8 | -12.8 | -39.5 | -24.0 | -55.0 | |||||||||||||||
Other
operating income
|
3.1 | 3.3 | 6.7 | 6.0 | 15.2 | |||||||||||||||
Depreciation
and impairment losses
|
-31.1 | -15.1 | -61.8 | -29.9 | -89.1 | |||||||||||||||
Share
of results of jointly controlled entities
|
7.4 | -1.7 | 5.6 | -1.5 | -6.0 | |||||||||||||||
Operating
profit
|
158.0 | 53.5 | 220.0 | 99.1 | 199.0 | |||||||||||||||
Financial
items
|
-11.6 | 5.5 | -21.5 | 640.1 | 605.2 | |||||||||||||||
Profit
before tax
|
146.4 | 59.0 | 198.5 | 739.2 | 804.2 | |||||||||||||||
Tax
|
-1.0 | 7.0 | -0.9 | 1.2 | -12.5 | |||||||||||||||
Net
profit
|
145.4 | 66.0 | 197.6 | 740.4 | 791.7 | |||||||||||||||
Earnings
per share, EPS
|
||||||||||||||||||||
Earnings
per share, EPS (USD)
|
2.1 | 1.0 | 2.9 | 10.7 | 11.4 | |||||||||||||||
Earnings
per share, EPS (DKK) *)
|
9.9 | 5.3 | 13.9 | 59.9 | 62.3 |
Income
statement by quarter
|
Million
USD
|
Q2 07 | Q3 07 | Q4 07 | Q1 08 | Q2 08 | |||||||||||||||
Revenue
|
179.5 | 208.1 | 224.2 | 255.0 | 286.6 | |||||||||||||||
Port
expenses, bunkers and commissions
|
-39.2 | -46.0 | -49.7 | -54.5 | -59.4 | |||||||||||||||
Freight
and bunkers derivatives
|
-0.8 | 0.3 | 2.4 | -0.4 | 8.7 | |||||||||||||||
Time
charter equivalent earnings
|
139.5 | 162.4 | 176.9 | 200.1 | 235.9 | |||||||||||||||
Charter
hire
|
-36.1 | -42.4 | -42.0 | -46.0 | -44.3 | |||||||||||||||
Operating
expenses
|
-23.6 | -29.9 | -39.6 | -43.5 | -45.2 | |||||||||||||||
Gross
profit (Net earnings from shipping activities)
|
79.8 | 90.1 | 95.3 | 110.6 | 146.4 | |||||||||||||||
Profit
from sale of vessels
|
0.0 | 0.0 | 0.0 | 0.0 | 52.0 | |||||||||||||||
Administrative
expenses
|
-12.8 | -14.3 | -16.7 | -19.7 | -19.8 | |||||||||||||||
Other
operating income
|
3.3 | 3.0 | 6.2 | 3.6 | 3.1 | |||||||||||||||
Depreciation
and impairment losses
|
-15.1 | -26.6 | -32.6 | -30.7 | -31.1 | |||||||||||||||
Share
of results of jointly controlled entities
|
-1.7 | -4.1 | -0.4 | -1.8 | 7.4 | |||||||||||||||
Operating
profit
|
53.5 | 48.1 | 51.8 | 62.0 | 158.0 | |||||||||||||||
Financial
items
|
5.5 | -10.4 | -24.5 | -9.9 | -11.6 | |||||||||||||||
Profit
before tax
|
59.0 | 37.7 | 27.3 | 52.1 | 146.4 | |||||||||||||||
Tax
|
7.0 | -2.9 | -10.8 | 0.1 | -1.0 | |||||||||||||||
Net
profit
|
66.0 | 34.8 | 16.5 | 52.2 | 145.4 |
Assets
|
Million
USD
|
30
June
2008
|
30
June
2007
|
31
December 2007
|
|||||||||
NON-CURRENT
ASSETS
|
||||||||||||
Intangible
assets
|
||||||||||||
Goodwill
|
89.2 | 0.0 | 89.2 | |||||||||
Other
intangible assets
|
3.9 | 1.7 | 7.5 | |||||||||
Total
intangible assets
|
93.1 | 1.7 | 96.7 | |||||||||
Tangible
fixed assets
|
||||||||||||
Land
and buildings
|
3.9 | 0.4 | 4.2 | |||||||||
Vessels
and capitalized dry-docking
|
2,168.7 | 1,251.6 | 2,169.8 | |||||||||
Prepayments
on vessels
|
313.6 | 164.2 | 259.4 | |||||||||
Other
plant and operating equipment
|
6.5 | 3.7 | 5.9 | |||||||||
Total
tangible fixed assets
|
2,492.7 | 1,419.9 | 2,439.3 | |||||||||
Financial
fixed assets
|
||||||||||||
Investment
in jointly controlled entities
|
109.0 | 1.3 | 0.0 | |||||||||
Loans
to jointly controlled entities
|
111.8 | 940.1 | 110.0 | |||||||||
Other
investments
|
11.7 | 10.7 | 11.0 | |||||||||
Other
financial assets
|
46.0 | 0.0 | 46.0 | |||||||||
Total
financial assets
|
278.5 | 952.1 | 167.0 | |||||||||
TOTAL
NON-CURRENT ASSETS
|
2,864.3 | 2,373.7 | 2,703.0 | |||||||||
CURRENT
ASSETS
|
||||||||||||
Bunkers
|
26.1 | 16.3 | 19.7 | |||||||||
Freight
receivables, etc.
|
101.9 | 63.3 | 90.0 | |||||||||
Other
receivables
|
79.9 | 24.2 | 37.0 | |||||||||
Prepayments
|
7.9 | 5.0 | 4.2 | |||||||||
Cash
and cash equivalents
|
78.3 | 421.6 | 105.0 | |||||||||
294.1 | 530.4 | 255.9 | ||||||||||
Non-current
assets held for sale
|
52.7 | 0.0 | 0.0 | |||||||||
TOTAL
CURRENT ASSETS
|
346.8 | 530.4 | 255.9 | |||||||||
TOTAL
ASSETS
|
3,211.1 | 2,904.1 | 2,958.9 |
Equity
and Liabilities
|
Million
USD
|
30
June
2008
|
30
June
2007
|
31
December 2007
|
|||||||||
EQUITY
|
||||||||||||
Common
shares
|
61.1 | 61.1 | 61.1 | |||||||||
Treasury
shares
|
-18.1 | -18.1 | -18.1 | |||||||||
Revaluation
reserves
|
5.2 | 7.2 | 7.3 | |||||||||
Retained
profit
|
1,154.1 | 1,316.1 | 953.6 | |||||||||
Proposed
dividends
|
0.0 | 0.0 | 64.5 | |||||||||
Hedging
reserves
|
4.1 | 4.9 | 8.7 | |||||||||
Translation
reserves
|
4.2 | 4.2 | 4.1 | |||||||||
TOTAL
EQUITY
|
1,210.6 | 1,375.4 | 1,081.2 | |||||||||
LIABILITIES
|
||||||||||||
Non-current
liabilities
|
||||||||||||
Deferred
tax liability
|
55.4 | 56.0 | 55.6 | |||||||||
Mortgage
debt and bank loans
|
1,572.4 | 770.6 | 884.6 | |||||||||
Acquired
liabilities related to options on vessels
|
31.6 | 0.0 | 31.6 | |||||||||
Acquired
time charter contracts
|
8.8 | 0.0 | 16.0 | |||||||||
TOTAL
NON-CURRENT LIABILITIES
|
1,668.2 | 826.6 | 987.8 | |||||||||
Current
liabilities
|
||||||||||||
Mortgage
debt and bank loans
|
195.2 | 632.4 | 768.7 | |||||||||
Trade
payables
|
48.6 | 21.5 | 42.6 | |||||||||
Current
tax liabilities
|
14.1 | 11.3 | 14.5 | |||||||||
Other
liabilities
|
59.4 | 35.5 | 44.2 | |||||||||
Acquired
time charter contracts
|
12.7 | 0.0 | 16.0 | |||||||||
Deferred
income
|
2.3 | 1.4 | 3.9 | |||||||||
TOTAL
CURRENT LIABILITIES
|
332.3 | 702.1 | 889.9 | |||||||||
TOTAL
LIABILITIES
|
2,000.5 | 1,528.7 | 1,877.7 | |||||||||
TOTAL
EQUITY AND LIABILITIES
|
3,211.1 | 2,904.1 | 2,958.9 |
Million
USD
|
Common
shares
|
Treasury
shares
|
Retained
profit
|
Proposed
dividends
|
Revaluation
reserves
|
Hedging
reserves
|
Translation
reserves
|
Total
|
Equity
at 1 January 2008
|
61.1
|
-18.1
|
953.6
|
64.5
|
7.3
|
8.7
|
4.1
|
1,081.2
|
Changes
in equity Q1-Q2 2008:
|
||||||||
Exchange
rate adjustment arising on translation of
entities using a measurement currency different
from USD
|
-
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
Reversal
of deferred gain/loss on hedge instruments
at the beginning of year
|
-
|
-
|
-
|
-
|
-
|
-8.7
|
-
|
-8.7
|
Deferred
gain/loss on hedge instruments at the end of
the period
|
-
|
-
|
-
|
-
|
-
|
4.1
|
-
|
4.1
|
Fair
value adjustment on available for sale investments
|
-
|
-
|
-
|
-
|
-2.1
|
-
|
-
|
-2.1
|
Transfer
to profit or loss on sale of available for sale
Investments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
|
Net
gains/losses recognised directly in equity
|
0.0
|
0.0
|
0.0
|
0.0
|
-2.1
|
-4.6
|
0.1
|
-6.6
|
Net
profit for the period
|
197.6
|
197.6
|
||||||
Total
recognized income/expenses for the period
|
0.0
|
0.0
|
197.6
|
0.0
|
-2.1
|
-4.6
|
0.1
|
191.0
|
Purchase
treasury shares, cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
|
Disposal
treasury shares, cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
|
Dividends
paid
|
-
|
-
|
-
|
-68.6
|
-
|
-
|
-
|
-68.6
|
Dividends
paid on treasury shares
|
-
|
-
|
3.3
|
-
|
-
|
-
|
-
|
3.3
|
Exchange
rate adjustment on dividends paid
|
-
|
-
|
-4.1
|
4.1
|
-
|
-
|
-
|
0.0
|
Share-based
compensation
|
-
|
-
|
3.7
|
-
|
-
|
-
|
-
|
3.7
|
Total
changes in equity Q1-Q2 2008:
|
0.0
|
0.0
|
200.5
|
-64.5
|
-2.1
|
-4.6
|
0.1
|
129.4
|
Equity
at 30 June 2008
|
61.1
|
-18.1
|
1,154.1
|
0.0
|
5.2
|
4.1
|
4.2
|
1,210.6
|
Million
USD
|
Common
shares
|
Treasury
shares
|
Retained
profit
|
Proposed
dividends
|
Revaluation
reserves
|
Hedging
reserves
|
Translation
reserves
|
Total
|
Equity
at 1 January 2007
|
61.1
|
-18.1
|
574.5
|
73.9
|
579.8
|
5.6
|
4.0
|
1,280.8
|
Changes
in equity Q1-Q2 2007:
|
||||||||
Exchange
rate adjustment arising on translation of entities
using a measurement currency different from USD
|
-
|
-
|
-
|
-
|
-
|
-
|
0.2
|
0.2
|
Reversal
of deferred gain/loss on hedge instruments at
the beginning of year
|
-
|
-
|
-
|
-
|
-
|
-5.6
|
-
|
-5.6
|
Deferred
gain/loss on hedge instruments at the end
of the period
|
-
|
-
|
-
|
-
|
-
|
4.9
|
-
|
4.9
|
Fair
value adjustment on available for sale investments
|
-
|
-
|
-
|
-
|
70.7
|
-
|
-
|
70.7
|
Transfer
to profit or loss on sale of available for
sale Investments
|
-
|
-
|
-
|
-
|
-643.3
|
-
|
-
|
-643.3
|
Net
gains/losses recognised directly in equity
|
0.0
|
0.0
|
0.0
|
0.0
|
-572.6
|
-0.7
|
0.2
|
-573.1
|
Net
profit for the period
|
740.4
|
740.4
|
||||||
Total
recognized income/expenses for the period
|
0.0
|
0.0
|
740.4
|
0.0
|
-572.6
|
-0.7
|
0.2
|
167.3
|
Purchase
treasury shares, cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
|
Disposal
treasury shares, cost
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
0.0
|
Dividends
paid
|
-
|
-
|
-
|
-76.4
|
-
|
-
|
-
|
-76.4
|
Dividends
paid on treasury shares
|
-
|
-
|
3.7
|
-
|
-
|
-
|
-
|
3.7
|
Exchange
rate adjustment on dividends paid
|
-
|
-
|
-2.5
|
2.5
|
-
|
-
|
-
|
0.0
|
Total
changes in equity Q1-Q2 2007:
|
0.0
|
0.0
|
741.6
|
-73.9
|
-572.6
|
-0.7
|
0.2
|
94.6
|
Equity
at 30 June 2007
|
61.1
|
-18.1
|
1,316.1
|
0.0
|
7.2
|
4.9
|
4.2
|
1,375.4
|
Million
USD
|
Q2 2008 | Q2 2007 | Q1-Q2 2008 | Q1-Q2 2007 |
2007
|
|||||||||||||||
Cash
flow from operating activities
|
||||||||||||||||||||
Operating
profit
|
158.0 | 53.5 | 220.0 | 99.1 | 199.0 | |||||||||||||||
Adjustments:
|
||||||||||||||||||||
Reversal
of profit from sale of vessels
|
-52.0 | 0.0 | -52.0 | 0.0 | 0.0 | |||||||||||||||
Reversal
of depreciation and impairment losses
|
31.1 | 15.1 | 61.8 | 29.9 | 89.1 | |||||||||||||||
Reversal
of share of results of jointly controlled entities
|
-7.4 | 1.7 | -5.6 | 1.5 | 6.0 | |||||||||||||||
Reversal
of other non-cash movements
|
-2.4 | -3.5 | -7.0 | 2.8 | 2.7 | |||||||||||||||
Dividends
received
|
1.2 | 1.1 | 1.4 | 1.3 | 1.3 | |||||||||||||||
Dividends
received from joint controlled entities
|
0.2 | 2.0 | 1.5 | 2.0 | 2.6 | |||||||||||||||
Interest
received and exchange rate gains
|
2.8 | 13.8 | 12.5 | 14.3 | 19.9 | |||||||||||||||
Interest
paid
|
-18.4 | -14.1 | -42.3 | -23.5 | -70.8 | |||||||||||||||
Income
taxes paid
|
-0.3 | 0.1 | -1.6 | 0.8 | -9.5 | |||||||||||||||
Change
in inventories, accounts receivables and payables
|
-23.6 | 2.9 | -35.8 | -8.3 | -52.4 | |||||||||||||||
Net
cash inflow/(outflow) from operating activities
|
89.2 | 72.6 | 152.9 | 119.9 | 187.9 | |||||||||||||||
Cash
flow from investing activities
|
||||||||||||||||||||
Investment
in tangible fixed assets
|
-78.2 | -115.2 | -181.1 | -144.0 | -252.2 | |||||||||||||||
Investment
in equity interests and securities
|
-15.1 | 0.3 | -133.5 | -0.2 | 0.0 | |||||||||||||||
Loans
to jointly controlled entities
|
0.0 | -909.1 | 0.0 | -925.4 | -31.3 | |||||||||||||||
Acquisition
of enterprises and activities
|
0.0 | 0.0 | 0.0 | 0.0 | -810.2 | |||||||||||||||
Sale
of equity interests and securities
|
17.4 | 704.2 | 17.4 | 704.2 | 736.9 | |||||||||||||||
Sale
of non-current assets
|
68.5 | 0.0 | 68.6 | 0.1 | 0.2 | |||||||||||||||
Net
cash inflow/(outflow) from investing activities
|
-7.4 | -319.8 | -228.6 | -365.3 | -356.6 | |||||||||||||||
Cash
flow from financing activities
|