d1101329_6-k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13A-16 OR 15D-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month May 2010

Commission File Number:  000-49650

 
TORM A/S
 
(Translation of registrant's name into English)

Tuborg Havnevej 18
DK-2900 Hellerup
Denmark
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [x]       Form 40-F [  ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [  ].

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [  ].

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 
 

 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Set forth herein as Exhibit 99.1 is a copy of Announcement No. 6 - 2010 issued by TORM A/S to The Copenhagen Stock Exchange on May 20, 2010.


 
 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
TORM A/S
(registrant)
 
Dated: May 20, 2010
 
By:
/s/ Jacob Meldgaard
Name: Jacob Meldgaard
Title:   Chief Executive Officer





 
 

 

Exhibit 99.1

 


 
 
TORM posted a profit before tax of USD 3 million in the first quarter of 2010 under continued difficult market conditions. "During the first quarter of 2010, the winter market and the increased industry throughput in the Far East supported the product tanker market. We continue to believe that the underlying growth in global oil demand will support the product tanker rates in the longer term, however we do not expect this to have significant effect on our 2010 results," CEO Jacob Meldgaard states.
   
 
·
Profit before tax for the first three months of 2010 was USD 3 million, compared to USD 39 million in the same period last year. The result for the first quarter was in line with expectations and the full-year forecast for 2010.
     
 
·
The result was positively impacted by USD 18 million from the sale of two bulk carriers, as earlier announced. The vessels were sold during the fourth quarter of 2009, but the profit is recognised in this quarter in which delivery took place.
     
 
·
The cash flow from operating activities for the first quarter of 2010 was USD 21 million.
     
 
·
Product tanker rates remained low during the first quarter of 2010. The positive impact on the LR segment from continued naphtha demand in the Far East was somewhat offset by discharging of floating storage, freeing up tonnage. The cold winter in the Northern Hemisphere increased demand for heating oil and supported the MR segment despite the continued low demand for gasoline in the USA. Influx of new tonnage has continued in 2010 though considerable delays in new deliveries are seen.
     
 
·
The Panamax bulk rates have remained strong during the first quarter of 2010. Due to TORM’s high coverage of earning days, the developments in bulk spot rates had limited impact on TORM’s earnings.
     
 
·
TORM’s efficiency improvement programme – Greater Efficiency Power – remains on track to deliver the projected annual USD 50 million cost savings in 2010 compared to 2008 operating levels.
     
 
·
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 as of 31 March 2010 supports book values.
     
 
·
At 31 March 2010, equity amounted to USD 1,248 million, equivalent to USD 18.0 per share (DKK 99.4 per share), excluding treasury shares, corresponding to an equity ratio of 39%.
     
 
·
TORM’s unutilised loan facilities and cash totalled approximately USD 700 million at the end of the first quarter. The remaining capex relating to the order book amounts to USD 435 million.
     
 
·
Net interest-bearing debt totalled USD 1,622 million at 31 March 2010 compared to USD 1,683 million by year-end 2009.
     
 
·
At 31 March 2010, TORM had covered 26% of the remaining earning days for 2010 in the Tanker Division at USD/day 18,821 and 81% of the remaining earning days in the Bulk Division at USD/day 18,972.
     
 
·
TORM maintains its forecast of a loss before tax of USD 15 to 60 million for 2010, however towards the lower end of the range given the estimated product tanker rates for the remainder of 2010.
     
Telecon-ference
A teleconference and webcast (www.torm.com) will take place today, at 15:00 Copenhagen time (CET), see details on page 9.
   
Contact
TORM A/S
Telephone: +45 39 17 92 00
 
Tuborg Havnevej 18
Jacob Meldgaard, CEO
 
DK-2900 Hellerup, Denmark
Roland M. Andersen, CFO



ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
1/ 19
 
 
 

 
 

 
Key figures
 
Million USD
   
Q1 2010
     
Q1 2009
     
2009
 
Income statement
                       
Revenue
   
205.5
     
258.8
     
862.3
 
Time charter equivalent earnings (TCE)
   
147.5
     
199.1
     
632.9
 
Gross profit
   
55.9
     
97.5
     
242.5
 
EBITDA
   
55.3
     
80.7
     
202.5
 
Operating profit (EBIT)
   
20.3
     
48.9
     
49.8
 
Profit before tax
   
2.6
     
39.2
     
-19.0
 
Net profit
   
2.3
     
39.6
     
-17.4
 
Balance sheet
                       
Total assets
   
3,225.7
     
3,286.6
     
3,227.2
 
Equity
   
1,247.7
     
1,340.7
     
1,246.7
 
Total liabilities
   
1,978.0
     
1,945.9
     
1,980.5
 
Invested capital
   
2,866.3
     
2,950.7
     
2,926.0
 
Net interest bearing debt
   
1,621.6
     
1,615.4
     
1,682.5
 
Cash flow
                       
From operating activities
   
20.9
     
61.2
     
116.3
 
From investing activities
   
41.1
     
-126.7
     
-199.4
 
Thereof investment in tangible fixed assets
   
-23.6
     
-129.5
     
-288.8
 
From financing activities
   
2.5
     
-4.1
     
36.6
 
Net cash flow
   
64.5
     
-69.6
     
-46.5
 
Key financial figures
                       
Margins:
                       
TCE
   
71.8
%
   
76.9
%
   
73.4
%
Gross profit
   
27.2
%
   
37.7
%
   
28.2
%
EBITDA
   
26.9
%
   
31.2
%
   
23.5
%
Operating profit
   
9.9
%
   
18.9
%
   
5.8
%
Return on Equity (RoE) (p.a.)*)
   
-2.9
%
   
12.1
%
   
-1.3
%
Return on Invested Capital (RoIC) (p.a.)**)
   
0.9
%
   
6.8
%
   
1.7
%
Equity ratio
   
38.7
%
   
40.8
%
   
38.6
%
Exchange rate USD/DKK, end of period
   
5.52
     
5.60
     
5.19
 
Exchange rate USD/DKK, average
   
5.38
     
5.72
     
5.36
 
Share related key figures
                       
Earnings per share, EPS 
USD
   
0.0
     
0.6
     
-0.3
 
Diluted earnings per share, DEPS
USD
   
0.2
     
0.6
     
-0.3
 
Cash flow per share, CFPS 
USD
   
0.3
     
0.9
     
1.7
 
Share price, end of period (per share of DKK 5 each)
DKK
   
57.0
     
43.5
     
50.7
 
Number of shares, end of period 
Million
   
72.8
     
72.8
     
72.8
 
Number of shares (excl. treasury shares), average
Million
   
69.2
     
69.2
     
69.2
 
 
*) The gain from sale of vessels and the mark-to-market adjustments of other financial assets are not annualised when calculating the Return on Equity.
**) The gain from sale of vessels is not annualised when calculating the Return on Invested Capital.
 

ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
2/ 19
 
 
 

 

 

 
Profit by division
 
Million USD    Q1 2010
   
Tanker Division
   
Bulk
Division
   
Not-
Allocated
   
Total
 
Revenue
    184.1       21.4       0.0       205.5  
Port expenses, bunkers and commissions
    -59.0       -0.9       0.0       -59.9  
Freight and bunkers derivatives
    1.9       0.0       0.0       1.9  
Time charter equivalent earnings
    127.0       20.5       0.0       147.5  
Charter hire
    -38.6       -13.1       0.0       -51.7  
Operating expenses
    -38.3       -1.6       0.0       -39.9  
Gross Profit
    50.1       5.8       0.0       55.9  
Profit from sale of vessels
    0.0       18.2       0.0       18.2  
Administrative expenses
    -16.8       -1.3       0.0       -18.1  
Other Operating income
    1.7       0.0       0.0       1.7  
Share of results of jointly controlled entities
    1.0       0.0       -3.4       -2.4  
EBITDA
    36.0       22.7       -3.4       55.3  
Impairment losses on joint controlled entities
    0.0       0.0       0.0       0.0  
Depreciation and impairment losses
    -34.4       -0.6       0.0       -35.0  
Operating profit (EBIT)
    1.6       22.1       -3.4       20.3  
Financial items, net
    -       -       -17.7       -17.7  
Profit/(Loss) before tax
    -       -       -21.1       2.6  
Tax
    -       -       -0.3       -0.3  
Net profit
    -       -       -21.4       2.3  
 
The activity that TORM owns in a 50/50 joint venture with Teekay and the 50% ownership of FR8 Holding Pte. Ltd. is included in "Not-allocated".
 
 
Tanker Division
The operating profit for the first quarter of 2010 is USD 2 million, compared to USD 26 million in the same period in 2009.
   
 
Despite the fact that the world from a macroeconomic perspective is in recovery mode, the product tanker rates have generally been at a low level.
   
 
The rate development in the first quarter of 2010 was impacted by continued influx of new tonnage, although the significant delay in deliveries experienced in 2009 has continued in the first quarter of 2010. The actual delivery in the first quarter of 2010 was approximately 60 vessels compared to an order book of more than 100 vessels in the product tanker market.
   
 
For the larger LR vessels the market and rates were impacted by a significant reduction in floating storage, which has freed up tonnage. The general reduction of floating storage has continued during April. The movement in and level of floating storage is relatively volatile and driven by the contango curves for the various products.
   
 
The LR segment has shown some strength as the naphtha demand in the Far East remained strong throughout the first quarter and due to extension of some floating storage contracts fixed at the end of 2009 at higher rates. For the LR2s the tonnage balance was supported by a swap of a number of vessels into dirty.


ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
3/ 19


 
 

 

 

 
   
 
The MR fleet has generally been negatively impacted by the continued low gasoline demand in the USA. In the first quarter of 2010, the hard winter in the Northern Hemisphere had a positive impact on rates, increasing the demand for heating oil. In the USA, the demand in January for heating oil was up by 65% year-on-year. For the ice-class vessels, better rates were naturally seen during the hard winter.
   
 
As a consequence of the late delivery of TORM Alice and the postponement of some T/C-in vessels, the number of earning days for the first quarter, and thereby for the full year 2010, is below plan at the beginning of the year. Hence operating costs and charter hire have been lower than expected.
   
 
At 31 of March, the coverage for the remaining part of 2010 is 26% at USD/day 18,821.


Tanker Division
Q1 09
Q2 09
Q3 09
Q4 09
 
Q1 10
 
Change
Q1 09
- Q1 10
 
12 month
avg.
 
LR2 (Aframax, 90-110,000 DWT)
                 
Available earning days
1,167
1,179
1,190
1,173
 
1,163
0
 
TCE per earning day from the LR2 Pool
24,192
17,145
18,401
20,331
 
22,216
-8
 
TCE per earning day1)
21,977
15,785
17,406
18,356
 
18,456
-16
18,387
Operating days
1,080
1,092
1,104
1,104
 
1,080
0
 
Operating expenses per operating day2)
7,507
7,556
6,496
6,933
 
6,908
-8
6,972
LR1 (Panamax 75-85,000 DWT)
                 
Available earning days
1,864
1,756
1,835
2,025
 
1,748
-6
 
TCE per earning day from the LR1 Pool
22,503
15,577
15,036
14,304
 
15.858
-30
 
TCE per earning day1)
21,755
18,491
16,514
16,516
 
16,686
-23
17,982
Operating days
810
819
828
828
 
810
0
 
Operating expenses per operating day2)
7,852
7,142
6,706
5,986
 
6,454
-18
6,571
MR (45,000 DWT)
                 
Available earning days
3,174
3,344
3,602
3,829
 
3,755
18
 
TCE per earning day from the MR Pool
20.201
14,712
14,974
11,521
 
13.961
-31
 
TCE per earning day1)
19,802
15,363
15,349
12,417
 
14,700
-26
15,378
Operating days
2,497
2,548
 2,707
2,832
 
2,790
12
 
Operating expenses per operating day2)
8,227
7,458
6,621
6,770
 
6,883
-16
6,923
SR (35,000 DWT)
                 
Available earning days
1,145
1,135
1,160
1,103
 
1,002
-12
 
TCE per earning day1)
20,963
17,483
18,378
16,894
 
18,034
-14
18,371
Operating days
969
1,001
1,012
1,012
 
990
2
 
Operating expenses per operating day2)
7,662
6,600
6,105
6,326
 
6,041
-21
6,268
 
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.

Bulk Division
The operating profit for the first quarter of 2010 was USD 22 million, compared to USD 24 million in the first quarter of 2009.
   
 
The number of earning days for the Bulk Division in the first quarter of 2010 was 23% lower than in the first quarter of 2009 due to sale of vessels. In the first quarter of 2010, two bulk carriers, sold in the fourth quarter of 2009, were delivered to the buyers.
   
 
Throughout the first quarter of 2010, the Chinese demand for iron ore and coal remained strong compared to 2009, which supported the bulk market rates. The Panamax spot rates were volatile in the first quarter of 2010, but to a lesser degree than usual. The Panamax rates fluctuated between USD/day 25,000 and 34,000 compared to a span between 4,000 and 19,000 in the first quarter of 2009.

ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
4/ 19

 
 
 

 
 

 

 
The influx of new tonnage and the order book for bulk carriers are significant, even when taking slippage into account. During first quarter of 2010, the bulk carrier fleet grew by 4%.
   
 
The current driver for the bulk market continues to be high imports of both iron ore and coal into China and the high congestion. When taking the significant order book into consideration TORM does expect that the net fleet growth will outpace demand growth and therefore impact rates adversely.
   
 
As TORM, in line with its strategy, seeks high coverage of earning days for the Bulk Division, the development in bulk spot rates has limited impact on TORM’s earnings in 2010.
   
 
At 31 of March, 81% of the remaining earning days in 2010 for the Bulk Division is covered at USD/day 18,972.


Bulk Division
    Q1 09       Q2 09       Q3 09       Q4 09       Q1 10    
Change
Q1 09
- Q1 10
   
12 month
avg.
 
 
Panamax (60-80,000 DWT)
                                                   
Available earning days
    1,458       1,496       1,255       1,204       1,119       -23 %      
TCE per earning day1)
    13,929       13,756       17,968       19,690       18,298       31 %     17,208  
Operating days
    622       636       392       368       315       -49 %        
Operating expenses per operating day2)
    6,798       5,106       4,477       4,066       5,187       -24 %     4,753  
 
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.


Other activities
Other (non-allocated) activities are a loss on investments in joint ventures of USD 3 million, financial expenses of USD 18 million and tax of USD 0 million.
   
Fleet development
In the first quarter, TORM delivered the two sold Panamax bulk carriers TORM Charlotte and TORM Rotna to their new owners. At the end of the quarter, TORM's fleet of owned vessels comprised 64 tankers and two bulk carriers. In addition to these, TORM had 25 tankers and 9 bulk carriers on time charter. Additional 39 tankers were either in pools or under commercial management.

   
Owned vessels
 
   
31 Dec 09
   
Addition
   
Disposal
   
31 Mar 10
 
LR2 / Aframax
    12.5       -       -       12.5  
LR1 / Panamax
    7.5       -       -       7.5  
MR
    33.0       -       -       33.0  
SR
    11.0       -       -       11.0  
Tankers
    64.0       -       -       64.0  
Panamax dry bulk
    4.0       -       2.0       2.0  
Total
    68.0       -       2.0       66.0  


ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
5/ 19



 
 

 

 

 
Planned fleet changes
No vessels were contracted in the first quarter of 2010, and at the end of the quarter the order book thus comprised 11 MR vessels and 4 Kamsarmax vessels. The remaining Capex relating to the order book amounted to USD 435 million.
   

   
Newbuilding to be delivered
 
   
2010
   
2011
   
2012
   
2013
 
LR2 / Aframax
    -       -       -       -  
LR1 / Panamax
    -       -       -       -  
MR
    5.0       4.0       2.0       -  
SR
    -       -       -       -  
Tankers
    5.0       4.0       2.0       0.0  
Kamsarmax dry bulk
    0.0       2.0       1.0       1.0  
Total
    5.0       6.0       3.0       1.0  


   
   
 
In April 2010, TORM has taken delivery of TORM Alice, the first of the 11 MR sister vessels which TORM will be taking delivery of from GSI Guangzhou.






ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
6/ 19
 
 
 

 
 

 

 
Results
   
First quarter 2010
The gross profit for the first quarter of 2010 was USD 56 million, compared to USD 98 million for the same period in 2009. The administration expenses were USD 18 million, against USD 20 million for the first quarter of 2009, corresponding to a reduction of 10%. Profit before depreciation (EBITDA) for the period was USD 55 million, against USD 81 million for the first quarter of 2009. The decline in gross profit and EBITDA is due to lower rates in first quarter of 2010 compared to same period last year. The result in the first quarter of 2009 was positively impacted by coverage taken at historically higher rates.
   
 
Depreciation was USD 35 million during the first quarter of 2010.
   
 
The operating profit for the first quarter of 2010 was USD 20 million, compared to USD 49 million for the same quarter of 2009. The Tanker and Bulk Divisions contributed profits of USD 2 million and USD 22 million, respectively, and the non-allocated operating income was a loss of USD 3 million.
   
 
In the first quarter of 2010, financials amounted to an expense of USD 18 million, against an expense of USD 10 million in the same quarter of 2009. The increase was driven by a negative non-cash mark-to-market adjustment of USD 2 million in first quarter of 2010, compared to a positive non-cash mark-to-market adjustment of USD 6 million in first quarter of 2009.
   
 
Profit after tax was USD 2 million in the first quarter of 2010, against USD 40 million in the first quarter of 2009.
   
Assets
Total assets felt slightly from USD 3,227 million by year-end 2009 to USD 3,226 million in the first quarter of 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 as of 31 March 2010 supports book values.
   
Liabilities
During the first quarter of 2010, the net interest-bearing debt fell to USD 1,622 million from USD 1,683 million at 31 December 2009.
   
Total equity
In the first quarter of 2010, equity increased from USD 1,247 million at 31 December 2009 to USD 1,248 million, which is principally the result of earnings during the period. Equity as a percentage of total assets was steady at 39% from 31 December 2009 to 31 March 2010.
   
 
At 31 March 2010, TORM held 3,461,580 treasury shares, corresponding to 4.8% of the Company's share capital, which corresponds to a decrease of 94,784 no. of shares since 31 December 2009. The decrease corresponds to the number of shares TORM has allocated to employees in connection with the incentive programme for the period 2007-2009.
   
Liquidity
TORM's unutilised loan facilities and cash totalled approximately USD 700 million at the end of the first quarter of 2010.
   
Outlook
TORM maintains its forecast of a loss before tax of USD 15 - 60 million, however towards the lower end of the range given the estimated product tanker rates for the remainder of 2010. There is though considerable uncertainty around the expectations due to the relatively low coverage for the Tanker Division.


ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
7/ 19


 
 

 
 


Coverage
At 31 March 2010, TORM had covered 26% of the remaining earning days for 2010 in the Tanker Division at USD/day 18,821 and 81% of the remaining earning days in the Bulk Division at USD/day 18,972.
   

The table below shows the figures for 2010 for the period 1 April to 31 December 2010.

   
2010
   
2011
   
2012
   
2010
   
2011
   
2012
 
   
Owned days
                   
LR2
    3,268       4,389       4,392                    
LR1
    1,873       2,533       2,539                    
MR
    9,974       14,637       15,561                    
SR
    2,943       3,982       3,993                    
Tanker Division
    18,058       25,541       26,486                    
Bulk Division
    548       1,426       1,483                    
   
T/C in days
   
T/C in costs (USD/day)
 
LR2
    273       -       -       24,500       -       -  
LR1
    3,563       4,815       4,131       22,001       22,797       23,091  
MR
    2,455       3,740       3,297       16,997       16,805       16,127  
SR
    -       -       -       -       -       -  
Tanker Division
    6,291       8,554       7,428       20,157       20,177       20,000  
Bulk Division
    2,847       3,579       4,227       15,813       15,475       15,949  
   
Total physical days
   
Covered days
 
LR2
    3,541       4,389       4,392       931       457       42  
LR1
    5,436       7,347       6,671       1,045       730       532  
MR
    12,429       18,377       18,858       3,175       1,338       368  
SR
    2,943       4,015       4,026       1,099       730       40  
Tanker Division
    24,349       34,128       33,947       6,250       3,255       982  
Bulk Division
    3,084       4,920       5,710       2,751       581    
 
   
Coverage %
   
Coverage rates (USD/day)
 
LR2
    26       10       1       23,903       28,882       32,658  
LR1
    19       10       8       19,088       18,582       17,495  
MR
    26       7       2       17,992       17,749       15,364  
SR
    37       18       1       16,657       15,128       15,128  
Tanker Division
    26       10       3       18,821       18,910       17,245  
Bulk Division
    81       12       0       18,972       16,517    
 

Fair value of freight rate contracts that are mark-to-market in the income statement (USD m):
Contracts not included above
-3.1
Contracts included above
0.0

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.

Subsequent events
Since the balance sheet date no subsequent events have taken place which change TORM’s expectations to the outlook for either 2010 or any subsequent periods.
   
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.

ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
8/ 19


 
 

 
 
 


 
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 57.0 at 31 March 2010, against DKK 50.5 at the beginning of the year, equivalent to an increase of DKK 6.5 (13%).
   
Accounting policies
This interim report for the first quarter of 2010 has been prepared in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and additional Danish regulations governing the presentation of interim reports by listed companies. The interim report for the first quarter of 2010 is unaudited and follows the same accounting policies as the Annual Report for 2009.
   
Information
Teleconference
   
 
TORM will host a telephone conference for financial analysts and investors on 20 May 2010 at 15:00 Copenhagen time (CET), reviewing the interim report for the first quarter of 2010. The conference call will be hosted by Jacob Meldgaard, CEO, Roland M. Andersen, CFO and Sune S. Mikkelsen, VP IR 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 financial report for the first half of 2010 will be released on 19 August 2010.
   
 
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 – 31 March 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 in IFRS which are expected to be applicable for the Annual Report 2010.




ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
9/ 19




 
 

 
 

 

 
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 May 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 participant in the dry bulk market. The Company runs a fleet of approximately 140 modern vessels, through a 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, Denmark. TORM's shares are listed on the NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit www.torm.com.







ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
10/ 19


 
 

 
 

 
Income statement


Million USD
   
Q1 2010
     
Q1 2009
     
2009
 
 
Revenue
   
205.5
     
258.8
     
862.3
 
Port expenses, bunkers and commissions
   
-59.9
     
-58.8
     
-217.4
 
Freight and bunkers derivatives
   
1.9
     
-0.9
     
-12.0
 
Time charter equivalent earnings
   
147.5
     
199.1
     
632.9
 
Charter hire
   
-51.7
     
-54.1
     
-220.9
 
Operating expenses
   
-39.9
     
-47.5
     
-169.5
 
Gross profit (Net earnings from shipping activities)
   
55.9
     
97.5
     
242.5
 
Profit from sale of vessels
   
18.2
     
0.0
     
33.1
 
Administrative expenses
   
-18.1
     
-20.1
     
-78.2
 
Other operating income
   
1.7
     
2.4
     
7.4
 
Share of results of jointly controlled entities
   
-2.4
     
0.9
     
-2.3
 
 
EBITDA
   
55.3
     
80.7
     
202.5
 
Impairment losses in jointly controlled entities
   
0.0
     
0.0
     
-20.0
 
Depreciation and impairment losses
   
-35.0
     
-31.8
     
-132.7
 
 
Operating profit (EBIT)
   
20.3
     
48.9
     
49.8
 
Financial items
   
-17.7
     
-9.7
     
-68.8
 
Profit before tax
   
2.6
     
39.2
     
-19.0
 
Tax
   
-0.3
     
0.4
     
1.6
 
 
Net profit
   
2.3
     
39.6
     
-17.4
 
Earnings per share, EPS
                       
Earnings per share, EPS (USD)
   
0.0
     
0.6
     
-0.3
 
Earnings per share, EPS (DKK)*)
   
0.2
     
3.3
     
-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.






ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
11/ 19


 
 

 

 
Statement of comprehensive income

 
                   
Million USD
   
Q1 2010
     
Q1 2009
     
2009
 
                         
Net profit for the period
   
2.3
     
39.6
     
-17.4
 
                         
Other comprehensive income:
                       
                         
Exchange rate adjustment arising on translation of entities using a measurement currency different from USD
   
0.0
     
-0.1
     
0.0
 
                         
Fair value adjustment on hedging instruments
   
-4.3
     
16.4
     
26.5
 
                         
Value adjustment on hedging instruments transferred to income statement
   
1.6
     
4.8
     
4.1
 
                         
Value adjustment on hedging instruments transferred to vessels
   
0.0
     
-1.2
     
-1.2
 
                         
Fair value adjustment on available for sale investments
   
-0.2
     
-1.0
     
1.6
 
                         
Transfer to income statement on sale of available for sale Investments
   
0.0
     
0.0
     
-3.7
 
                         
Other comprehensive income after tax
   
-2.9
     
18.9
     
27.3
 
                         
Total comprehensive income
   
-0.6
     
58.5
     
9.9
 

 

 

ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
12/ 19




 
 

 
 

 
Income statement by quarter

Million USD
    Q1 09       Q2 09       Q3 09       Q4 09       Q1 10  
 
Revenue
    258.8       193.6       208.8       201.1       205.5  
Port expenses, bunkers and commissions
    -58.8       -48.1       -56.1       -54.4       -59.9  
Freight and bunkers derivatives
    -0.9       -7.3       -3.3       -0.5       1.9  
Time charter equivalent earnings
    199.1       138.2       149.4       146.2       147.5  
Charter hire
    -54.1       -55.1       -56.3       -55.4       -51.7  
Operating expenses
    -47.5       -44.2       -38.7       -39.1       -39.9  
Gross profit (Net earnings from shipping activities)
    97.5       38.9       54.4       51.7       55.9  
Profit from sale of vessels
    0.0       12.5       20.7       -0.1       18.2  
Administrative expenses
    -20.1       -22.5       -17.9       -17.7       -18.1  
Other operating income
    2.4       2.4       1.5       1.1       1.7  
Share of results of jointly controlled entities
    0.9       -0.7       0.5       -3.0       -2.4  
EBITDA
    80.7       30.6       59.2       32.0       55.3  
Impairment losses in jointly controlled activities
    0.0       0.0       0.0       -20.0       0.0  
Depreciation and impairment losses
    -31.8       -33.5       -35.0       -32.4       -35.0  
Operating profit (EBIT)
    48.9       -2.9       24.2       -20.4       20.3  
Financial items
    -9.7       -29.6       -19.8       -9.7       -17.7  
Profit before tax
    39.2       -32.5       4.4       -30.1       2.6  
Tax
    0.4       -1.1       -2.3       4.6       -0.3  
Net profit
    39.6       -33.6       2.1       -25.5       2.3  
                                         
Earnings per share, EPS
                                       
Earnings per share, EPS (USD)
    0.6       -0.5       0.0       -0.4       0.0  



ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
13/ 19


 
 

 
 
 

 
Assets

Million USD
 
31 Mar 2010
   
31 Mar 2009
   
31 Dec 2009
 
NON-CURRENT ASSETS
                 
Intangible assets
                 
Goodwill
    89.2       89.2       89.2  
Other intangible assets
    2.2       2.4       2.2  
Total intangible assets
    91.4       91.6       91.4  
Tangible fixed assets
                       
Land and buildings
    3.7       3.6       3.7  
Vessels and capitalized dry-docking
    2,358.9       2,421.4       2,390.4  
Prepayments on vessels
    295.0       273.0       273.9  
Other plant and operating equipment
    9.9       9.9       10.7  
Total tangible fixed assets
    2,667.5       2,707.9       2,678.7  
Financial assets
                       
Investment in jointly controlled entities
    120.6       134.6       123.0  
Loans to jointly controlled entities
    37.7       40.9       38.7  
Other investments
    3.0       5.4       3.2  
Other financial assets
    6.0       27.8       8.5  
Total financial assets
    167.3       208.7       173.4  
TOTAL NON-CURRENT ASSETS
    2,926.2       3,008.2       2,943.5  
CURRENT ASSETS
                       
Bunkers
    26.5       19.0       24.6  
Freight receivables, etc.
    56.8       73.5       62.1  
Other receivables
    13.0       61.1       16.8  
Other financial assets
    0.0       10.7       0.4  
Prepayments
    16.9       15.4       13.6  
Cash and cash equivalents
    186.3       98.7       121.8  
      299.5       278.4       239.3  
                         
Assets held for sale
    0.0       0.0       44.4  
TOTAL CURRENT ASSETS
    299.5       278.4       283.7  
TOTAL ASSETS
    3,225.7       3,286.6       3,227.2  


ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
14/ 19



 
 

 
 

 
Equity and liabilities
 

Million USD
31 Mar 2010
31 Mar 2009
31 Dec 2009
EQUITY
     
Common shares
61.1
61.1
61.1
Treasury shares
-17.9
-18.1
-18.1
Revaluation reserves
-2.4
-1.1
-2.2
Retained profit
1,208.8
1,252.4
1,205.1
Proposed dividends
0.0
55.1
0.0
Hedging reserves
-6.0
-12.7
-3.3
Translation reserves
4.1
4.0
4.1
TOTAL EQUITY
1,247.7
1,340.7
1,246.7
LIABILITIES
     
Non-current liabilities
     
Deferred tax liability
54.8
55.0
55.0
Mortgage debt and bank loans
1,631.3
1,501.7
1,629.2
Finance lease liabilities
31.6
0.0
31.7
Acquired liabilities related to options on vessels
1.5
3.4
1.9
Acquired time charter contracts
0.0
2.1
0.1
TOTAL NON-CURRENT LIABILITIES
1,719.2
1,562.2
1,717.9
       
Current liabilities
     
Mortgage debt and bank loans
143.2
212.4
141.5
Finance lease liabilities
1.8
0.0
1.8
Trade payables
27.3
28.8
25.0
Current tax liabilities
3.2
7.9
5.7
Other liabilities
80.1
122.0
82.9
Acquired liabilities related to options on vessels
1.8
1.7
1.8
Acquired time charter contracts
1.4
9.7
3.8
Deferred income
0.0
1.2
0.1
TOTAL CURRENT LIABILITIES
258.8
383.7
262.6
TOTAL LIABILITIES
1,978.0
1,945.9
1,980.5
TOTAL EQUITY AND LIABILITIES
3,225.7
3,286.6
3,227.2
 



ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
15/ 19


 
 

 
 

 
Equity 1 January – 31 March  2010

 
Million USD
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 2010:
               
Disposal treasury shares, cost
-
0.2
-
-
-
-
-
0.2
Gain/loss from disposal treasury shares
-
-
-0.2
-
-
-
-
-0.2
Share-based compensation
-
-
1.6
-
-
-
-
1.6
Comprehensive income for the period
-
-
2.3
-
-0.2
-2.7
-
-0.6
Total changes in equity Q1 2010
0.0
0.2
3.7
0.0
-0.2
-2.7
0.0
1.0
Equity at 31 March 2010
61.1
-17.9
1,208.8
0.0
-2.4
-6.0
4.1
1,247.7








ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
16/ 19


 
 
 

 
 



Equity 1 January - 31 March 2009



Million USD
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 2009:
               
Disposal treasury shares, cost
-
-
-
-
-
-
-
0.0
Gain/loss from disposal treasury shares
-
-
-
-
-
-
-
0.0
Share-based compensation
-
-
3.3
-
-
-
-
3.3
Comprehensive income for the period
-
-
39.6
-
-1.0
20.0
-0.1
58.5
Total changes in equity Q1 2009
0.0
0.0
42.9
0.0
-1.0
20.0
-0.1
61.8
Equity at 31 March 2009
61.1
-18.1
1,252.4
55.1
-1.1
-12.7
4.0
1,340.7




ANNOUNCEMENT NO. 6 – 2010
20 MAY 2010
TORM – FIRST QUARTER REPORT 2010
17/ 19


 
 

 
 

 
Statement of cash flows
 
Million USD
    Q1 2010       Q1 2009       2009  
Cash flow from operating activities
                       
Operating profit
    20.3       48.9       49.8  
Adjustments:
                       
Reversal of profit from sale of vessels
    -18.2       0.0       -33.1  
Reversal of depreciation and impairment losses
    35.0       31.8       132.7  
Reversal of impairment of jointly controlled entities
    0.0       0.0       20.0  
Reversal of share of results of jointly controlled entities
    2.4       -0.9       2.3  
Reversal of other non-cash movements
    -4.0       -0.3       1.3  
                         
Dividends received
    0.0       0.0       0.1  
Dividends received from joint controlled entities
    0.3       0.7       3.0  
Interest received and exchange rate gains
    0.1       1.8       5.1  
Interest paid and exchange rate losses
    -14.2       -17.6       -56.9  
Income taxes paid/repaid
    -2.9       -1.7       -2.7  
Change in bunkers, accounts receivables and payables
    2.1       -1.5       -5.3  
Net cash flow from operating activities
    20.9       61.2       116.3  
Cash flow from investing activities
                       
Investment in tangible fixed assets
    -23.6       -129.5       -288.8  
Investment in equity interests and securities
    0.0       0.0       0.0  
Loans to jointly controlled entities
    1.1       1.3