d1125300_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 August 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. 8 - 2010 issued by TORM A/S to The Copenhagen Stock Exchange on August 19, 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: August 19, 2010
 
By:
/s/ Jacob Meldgaard
Name: Jacob Meldgaard
Title:   Chief Executive Officer





 
 

 

Exhibit 99.1



 
TORM posted a loss before tax of USD 24 million for Q2 2010. The result was in line with expectations and better than the same period a year ago. "In Q2, the product tanker market was affected by seasonality, however positive signs of recovery were seen late in the quarter. We believe underlying demand is improving and will support the product tanker segment going forward," says CEO Jacob Meldgaard.
     
 
The result before tax for the second quarter of 2010 was a loss of USD 24 million, compared to a loss of USD 33 million in the same period last year. The result for the second quarter was in line with expectations. The result for the second quarter of 2010 was positively impacted by mark-to-market non-cash adjustments of USD 2 million.
     
 
A loss of USD 22 million before tax was recorded for the first six months of 2010. The result for the first quarter of 2010 includes a profit of USD 18 million from the sale of two bulk vessels.
     
 
In the second quarter of 2010, product tanker rates were negatively impacted by seasonality, influx of new tonnage and continued discharge of vessels from floating storage. The demand for refined products in the West remained slow, and the freight rate weakness seen in the crude oil markets did not spur additional demand for the larger LR tonnage. The demand for vegetable oil to China and Europe and for naphtha in the Far East did not offer sufficient rate support until the end of Q2 where also demand for gasoline in the West showed an upward trend.
     
 
Panamax bulk rates remained volatile in the second quarter of 2010. Up to mid-May, the rates increased to USD 37,100/day, but then fell to USD 22,100/day at the end of the quarter. Due to TORM's high coverage of earning days, the volatility in bulk spot rates had limited impact on TORM's earnings.
     
 
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 June 2010 supports book value.
     
 
At 30 June 2010, equity amounted to USD 1,220 million, equivalent to USD 17.6 per share (DKK 106.9 per share), excluding treasury shares, corresponding to an equity ratio of 38%.
     
 
TORM's undrawn credit facilities and cash totalled approximately USD 600 million at the end of the second quarter. Capex relating to the order book amounted to USD 372 million.
     
 
Net interest-bearing debt totalled USD 1,691 million at 30 June 2010, compared to USD 1,622 million at 31 March 2010. The increase is due to borrowing in connection with the newbuilding programme.
     
 
At 30 June 2010, TORM had covered 33% of the remaining earning days for 2010 in the Tanker Division at USD 16,470/day and 81% of the remaining earning days in the Bulk Division at USD 19,725/day.
     
 
TORM forecasts a loss before tax of USD 40-60 million for 2010.

Telecon-ference
TORM will host a teleconference and webcast (www.torm.com) today, at 3:00 pm 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. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
1 / 20
 
 
 

 



Key figures
 
                        Q1-Q2        Q1-Q2          
Million USD
 
    Q2 2010       Q2 2009       2010       2009       2009  
Income statement
                                         
Revenue
      201.3       193.6       406.8       452.4       862.3  
Time charter equivalent earnings (TCE)
      130.2       138.2       277.7       337.3       632.9  
Gross profit
      41.1       38.9       97.0       136.4       242.5  
EBITDA
      23.6       30.6       78.9       111.3       202.5  
Operating profit (EBIT)
      -10.8       -2.9       9.5       46.0       49.8  
Profit/(loss) before tax
      -24.4       -32.5       -21.8       6.7       -19.0  
Net profit
 
    -24.1       -33.6       -21.8       6.0       -17.4  
Balance sheet
                                         
Total assets
      3,210.2       3,255.7       3,210.2       3,255.7       3,227.2  
Equity
      1,219.9       1,269.8       1,219.9       1,269.8       1,246.7  
Total liabilities
      1,990.3       1,985.9       1,990.3       1,985.9       1,980.5  
Invested capital
      2,908.6       2,932.6       2,908.6       2,932.6       2,926.0  
Net interest bearing debt
 
    1,691.4       1,669.9       1,691.4       1,669.9       1,682.5  
Cash flow
                                         
From operating activities
      -0.2       11.8       20.7       73.0       116.3  
From investing activities
      -68.3       -17.6       -27.2       -144.3       -199.4  
  Thereof investment in tangible fixed assets
      -69.6       -44.7       -93.2       -174.2       -288.8  
From financing activities
      3.3       19.7       5.8       15.6       36.6  
Total net cash flow
 
    -65.2       13.9       -0.7       -55.7       -46.5  
Key financial figures
                                         
Gross margins:
                                         
  TCE
      64.7 %     71.4 %     68.3 %     74.6 %     73.4 %
  Gross profit
      20.4 %     20.1 %     23.8 %     30.2 %     28.2 %
  EBITDA
      11.7 %     15.8 %     19.4 %     24.6 %     23.5 %
  Operating profit
      -5.4 %     -1.5 %     2.3 %     10.2 %     5.8 %
Return on Equity (RoE) (p.a.)*)
      -7.8 %     -8.0 %     -5.2 %     -0.3 %     -1.3 %
Return on Invested Capital (RoIC) (p.a.)**)
      -1.5 %     -1.7 %     0.0 %     1.9 %     1.7 %
Equity ratio
      38.0 %     39.0 %     38.0 %     39.0 %     38.6 %
Exchange rate USD/DKK, end of period
      6.07       5.27       6.07       5.27       5.19  
Exchange rate USD/DKK, average
 
    5.86       5.48       5.62       5.60       5.36  
Share related key figures
                                         
Earnings per share, EPS
USD
    -0.3       -0.5       -0.3       0.1       -0.3  
Diluted earnings per share, EPS
USD
    -0.3       -0.5       -0.3       0.1       -0.3  
Cash flow per share, CFPS
USD
    0.0       0.2       0.3       1.1       1.7  
Share price, end of period (per share of DKK 5 each)
DKK
    46.1       54.0       46.1       54.0       50.7  
Number of shares, end of period
Million
    72.8       72.8       72.8       72.8       72.8  
Number of shares (excl. treasury shares), average
Million
    69.3       69.2       69.3       69.2       69.2  

*)
Gains from sale of vessels and the mark-to-market adjustments of 'Other financial assets' have not been annualised when calculating the   Return on Equity.
 
**)
Gain from sale of vessels has not been annualised when calculating the Return on Invested Capital.


ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
2 / 20
 
 
 

 



Profit by division



Million USD
Q2 2010
Q1-Q2 2010
 
Tanker
Bulk
Non
 
Tanker
Bulk
Non
 
 
Division
Division
allocated
Total
Division
Division
allocated
Total
Revenue
180.3
21.0
0.0
201.3
364.4
42.4
0.0
406.8
Port expenses, bunkers and commissions
-69.3
-1.3
0.0
-70.6
-128.3
-2.2
0.0
-130.5
Freight and bunkers derivatives
-0.5
0.0
0.0
-0.5
1.4
0.0
0.0
1.4
Time charter equivalent earnings
110.5
19.7
0.0
130.2
237.5
40.2
0.0
277.7
Charter hire
-40.3
-14.1
0.0
-54.4
-78.9
-27.2
0.0
-106.1
Operating expenses
-33.9
-0.8
0.0
-34.7
-72.2
-2.4
0.0
-74.6
Gross Profit
36.3
4.8
0.0
41.1
86.4
10.6
0.0
97.0
Profit/(loss) from sale of vessels
0.0
0.0
0.0
0.0
0.0
18.2
0.0
18.2
Administrative expenses
-15.3
-2.2
0.0
-17.5
-32.1
-3.5
0.0
-35.6
Other Operating income
1.3
0.0
0.0
1.3
3.0
0.0
0.0
3.0
Share of results of jointly controlled entities
0.6
0.0
-1.9
-1.3
1.6
0.0
-5.3
-3.7
EBITDA
22.9
2.6
-1.9
23.6
58.9
25.3
-5.3
78.9
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
-33.7
-0.7
0.0
-34.4
-68.1
-1.3
0.0
-69.4
Operating profit (EBIT)
-10.8
1.9
-1.9
-10.8
-9.2
24.0
-5.3
9.5
Financial items, net
-
-
-13.6
-13.6
-
-
-31.3
-31.3
Profit/(Loss) before tax
-
-
-15.5
-24.4
-
-
-36.6
-21.8
Tax
-
-
0.3
0.3
-
-
0.0
0.0
Net profit/(loss)
-
-
-15.2
-24.1
-
-
-36.6
-21.8
 
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 11 million for the second quarter of 2010, compared to a loss of USD 12 million in the same period in 2009.
   
 
In line with seasonality, rates were generally low in the second quarter of 2010. Compared to the same period a year ago rate levels have improved as the global economy is regaining strength.
   
 
Influx of newbuildings, freed-up floating storage and a continued negative market sentiment kept the rates at low levels, also in a historical perspective.
   
 
In the second quarter of 2010, the fleet grew by approx. 2%. The significant delay in deliveries of new tonnage experienced in 2009 and the first quarter of 2010 continued in the second quarter, with slippage of more than 40%.
   
 
In the second quarter of 2010, the MR segment was negatively impacted by poor gasoline demand in the USA. The market players therefore sought alternative cargoes and destinations for the MR fleet, e.g. distilled oil products from the USA to South America, vegetable oil from South America to China and palm oil from Indonesia/Malaysia to the European continent.
   
 
The strengthening of the transatlantic trading route, seen late June, was partly driven by these changes in transport patterns, as this implied fewer vessels available on the European continent at the same time as the gasoline arbitrage from Europe to the USA opened.
   
 
 

ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
3 / 20

 
 

 


 

 
 
The LR segment continued to show some strength, as naphtha demand from the Far East remained firm throughout the second quarter of 2010 despite added tonnage from newbuildings and notably freed-up tonnage from floating storage. The weaker dirty market implied that the tonnage balance was not supported by vessels swapping into dirty.
 
The continued reduction in floating storage during the second quarter of 2010 has impacted the tonnage supply for the larger LR vessels, and thus rates. At the end of June, floating storage has been reduced to some 3% of the total fleet, which is a more natural level. The level of and movements in floating storage are volatile and impacted by the forward curve for the various refined products.
   
 
At 30 June, coverage for the remaining part of 2010 was 33% at USD 16,470/day.


Tanker Division
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
 
Change
Q2 09
- Q2 10
12 month
avg.
 
LR2 (Aframax, 90-110,000 DWT)
             
Available earning days
1,179
1,190
1,173
1,163
1,122
-5%
 
TCE per earning day from the LR2 Pool
17,145
18,401
20,331
19,270
17,185
0%
 
TCE per earning day1)
15,785
17,406
18,356
18,456
15,505
-2%
17,431
Operating days
1,092
1,104
1,104
1,080
1,092
0%
 
Operating expenses per operating day2)
7,556
6,496
6,933
6,908
6,301
-17%
6,660
 
LR1 (Panamax 75-85,000 DWT)
     
 
 
   
Available earning days
1,756
1,835
2,025
1,748
1,777
1%
 
TCE per earning day from the LR1 Pool
15,577
15,036
14,304
16,273
14,903
-4%
 
TCE per earning day1)
18,491
16,514
16,516
16,686
15,509
-16%
16,306
Operating days
819
828
828
810
749
-9%
 
Operating expenses per operating day2)
7,142
6,706
5,986
6,454
5,420
-24%
6,142
 
MR (45,000 DWT)
   
 
 
 
   
Available earning days
3,344
3,602
3,829
3,755
3,916
17%
 
TCE per earning day from the MR Pool
14,712
14,974
11,521
14,179
12,567
-15%
 
TCE per earning day1)
15,363
15,349
12,417
14,700
12,363
-20%
13,707
Operating days
2,548
 2,707
2,832
2,790
2,951
16%
 
Operating expenses per operating day2)
7,458
6,621
6,770
6,883
6,053
-19%
6,582
 
SR (35,000 DWT)
   
 
 
 
   
Available earning days
1,135
1,160
1,103
1,002
979
-14%
 
TCE per earning day1)
17,483
18,378
16,894
18,034
16,099
-8%
17,351
Operating days
1,001
1,012
1,012
990
1,001
0%
 
Operating expenses per operating day2)
6,600
6,105
6,326
6,041
4,821
-27%
5,823
 
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
Operating profit for the second quarter of 2010 was USD 2 million, compared to USD 10 million in the second quarter of 2009.
   
 
The number of earning days for the Bulk Division was 29% lower in the second quarter of 2010 than in the same period last year due to the sale of vessels.
   
 
The dry bulk market stayed at a relatively strong level throughout most of the second quarter of 2010, with Panamax spot rates peaking at around USD/day 37,100 in mid-May. Rates continued to be driven by the Chinese demand for iron ore and coal as well as high port congestion.
   
 
 

ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
4 /20


 
 

 



 
However, towards the end of the quarter and at the beginning of the third quarter, rates decreased sharply and did not stabilise until the end of July. By then, Panamax spot rates were down to around USD 16,000/day. The decline in rates was driven by the continued high influx of new vessels, especially in the Capesize segment, in combination with declining Chinese demand for coal and uncertainty surrounding the future Chinese demand for iron ore. Total fleet growth in the dry bulk segment came to about 4% in the second quarter of 2010.
 
As TORM seeks high 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 June, coverage for the remaining part of 2010 was 81% at USD 19,725/day.
 

Bulk Division
Q2 09
Q3 09
Q4 09
Q1 10
 
Q2 10
 
Change
Q2 09
- Q2 10
12 month
avg.
 
Panamax (60-80,000 DWT)
               
Available earning days
1,496
1,255
1,204
 1,119
 
1,060
-29%
 
TCE per earning day1)
13,756
17,968
19,690
 18,298
 
18,611
35%
18,642
Operating days
636
392
368
 315
 
182
-71%
 
Operating expenses per operating day2)
5,106
4,477
4,066
 5,187
 
4,603
-10%
 4,583
 
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 were a loss on investments in jointly controlled entities of USD 2 million, financial expenses of USD 14 million and tax of USD 0 million.
   
Fleet developments
In the second quarter, TORM took delivery of two MR newbuildings, TORM Alice and TORM Alexandra. At the end of the quarter, TORM's fleet of owned vessels comprised 66 tankers and two bulk carriers. In addition to these, TORM had 25 tankers and 11 bulk carriers on time charter. Another 37 tankers were either in pools or under commercial management.

 
 
Owned vessels
 
 
 
31 Mar 10
   
Addition
   
Disposal
   
30 Jun 10
 
LR2 / Aframax
    12.5       -       -       12.5  
LR1 / Panamax
    7.5       -       -       7.5  
MR
    33.0       2.0       -       35.0  
SR
    11.0       -       -       11.0  
Product tankers
    64.0       2.0       -       66.0  
Panamax dry bulk
    2.0       -       -       2.0  
Total
    66.0       -       -       68.0  
 
 

ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
5 / 20


 
 

 

Planned fleet changes
No vessels were contracted in the second quarter of 2010, and at the end of the quarter the order book thus comprised nine MR vessels and four Kamsarmax vessels. Capex relating to the order book amounted to USD 372 million.
   

 
 
New buildings to be delivered
 
 
 
2010
   
2011
   
2012
   
2013
       
 
    Q3       Q4       Q1       Q2       Q3       Q4       Q1       Q2       Q3       Q4       Q1    
Total
 
LR2 / Aframax
    -       -       -       -       -       -       -       -       -       -       -       -  
LR1 / Panamax
    -       -       -       -       -       -       -       -       -       -       -       -  
MR
    3,0       -       2,0       -       1,0       1,0       -       1,0       1,0       -       -       9,0  
SR
    -       -       -       -       -       -       -       -       -       -       -       -  
Tank
    3,0       -       2,0       -       1,0       1,0       -       1,0       1,0       -       -       9,0  
Kamsarmax dry bulk
    -       -       2,0       -       -       -       -       -       -       1,0       1,0       4,0  
I alt
    3,0       -       4,0       -       1,0       1,0       0,0       1,0       1,0       1,0       1,0       13,0  
 
 
In July 2010, TORM took delivery of the MR vessel TORM Aslaug from the Chinese shipyard GSI Guangzhou.
   
 
ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
6 / 20


 
 

 



 
Second quarter 2010
   
Results
Gross profit for the second quarter of 2010 was USD 41 million, up from USD 39 million for the corresponding period of 2009. Administrative expenses were USD 18 million, against USD 23 million for the second quarter of 2009, corresponding to a reduction of 22%. Profit before depreciation and amortisation (EBITDA) for the period was USD 24 million, against USD 31 million for the second quarter of 2009. The primary reason for the decline in EBITDA is that the second quarter of 2009 was positively affected by a profit of USD 13 million from sale of vessels.
   
 
Depreciation was USD 34 million during the second quarter of 2010.
   
 
Operating profit for the second quarter of 2010 was a loss of USD 11 million, compared to a loss of USD 3 million for the same quarter of 2009.
   
 
The second quarter of 2010 was impacted by mark-to-market non-cash adjustments of USD 2 million related to FFA/bunker derivatives.
   
 
In the second quarter of 2010, financial items amounted to an expense of USD 14 million, against an expense of USD 30 million in the same quarter of 2009. The second quarter of 2009 was influenced by a negative non-cash fair value adjustment of USD 23 million on the value of options related to vessel values acquired in connection with the acquisition of OMI.
   
 
The result after tax was a loss of USD 24 million in the second quarter of 2010, against a loss of USD 34 million in the second quarter of 2009. The result in the second quarter of 2009 was impacted by a profit of USD 13 million from sale of vessels. No vessels were sold during the second quarter of 2010.
   
Assets
Total assets fell from USD 3,226 million at 31 March 2010 to USD 3,210 million at 30 June 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 June 2010 supports book value.
   
Liabilities
During the second quarter of 2010, net interest-bearing debt increased to USD 1,691 million from USD 1,622 million at 31 March 2010. The increase in debt is due to borrowing in connection with the newbuilding programme. More than 74% of the debt is due after 2012.
   
Total equity
In the second quarter of 2010, equity decreased from USD 1,248 million at 31 March 2010 to USD 1,220 million, which was primarily due to the loss during the period. Equity as a percentage of total assets was 38% at 30 June 2010, compared to 39% at 31 March 2010.
   
 
At 30 June 2010, TORM held 3,461,580 treasury shares, corresponding to 4.8% of the Company's share capital, which is unchanged since 31 March 2010.
   
Liquidity
TORM's undrawn credit facilities and cash totalled about USD 600 million at the end of the second quarter of 2010.
   
Outlook
TORM forecasts a loss before tax of USD 40-60 million for 2010.
   
Coverage
At 30 June 2010, TORM had covered 33% of the remaining earning days for 2010 in the Tanker Division at USD/day 16,470 and 81% of the remaining earning days in the Bulk Division at USD/day 19,725.
   
 
 

ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
7 / 20


 
 

 


 
 
The table below shows the figures for 2010 for the period 1 July to 31 December 2010, and full year 2011 and 2012.
 
 
                   
 
 
 
                               
                                     
   
2010
   
2011
   
2012
   
2010
   
2011
   
2012
 
   
Owned days
                   
LR2
    2,196       4,380       4,392                    
LR1
    1,282       2,555       2,562                    
MR
    6,754       14,758       15,690                    
SR
    1,966       4,015       4,026                    
Tanker Division
    12,198       25,708       26,670                    
Bulk Division
    366       1,437       1,495                    
Total
    12,564       27,145       28,165                    
                                           
   
T/C in days
   
T/C in costs (USD/day)
 
LR2
    -       -       -       -       -       -  
LR1
    2,559       5,303       4,334       21,879       22,219       22,485  
MR
    1,647       3,619       3,108       16,976       17,007       16,399  
SR
    -       -       -       -       -       -  
Tanker Division
    4,206       8,922       7,442       19,959       20,105       19,943  
Bulk Division
    2,003       3,581       4,228       15,793       15,477       15,954  
Total
    6,209       12,503       11,670       18,615       18,780       18,498  
                                                 
   
Total physical days
(owned + T/C in)
   
Covered days
 
LR2
    2,196       4,380       4,392       610       456       40  
LR1
    3,841       7,858       6,896       1,109       365       366  
MR
    8,401       18,377       18,798       2,517       1,775       412  
SR
    1,966       4,015       4,026       1,228       1,059       40  
Tanker Division
    16,404       34,630       34,112       5,464       3,655       858  
Bulk Division
    2,369       5,018       5,723       1,907       581       -  
Total
    18,773       39,648       39,835       7,371       4,236       858  
                                                 
   
Coverage %
   
Coverage rates (USD/day)
 
LR2
    28       10       1       24,184       28,648       32,660  
LR1
    29       5       5       16,145       15,690       15,690  
MR
    30       10       2       15,768       16,283       15,348  
SR
    62       26       1       14,055       14,268       15,128  
Tanker Division
    33       11       3       16,399       17,182       16,298  
Bulk Division
    81       12       -       19,725       16,507       -  
Total
    39       11       2       17,259       17,089       16,298  

Fair value of freight rate contracts that are mark-to-market in the income statement (USD m):
Contracts not included above
-1.2
       
Contracts included above
0.2
       

Notes

Actual no. of days can vary from projected no. of days primarily due to vessel sales and timing of vessel deliveries. T/C in costs do not include potential extra payments from profit split arrangements.

Post balance sheet events
No subsequent events have occurred after the balance sheet date which would change TORM's expectations for its financial performance for either 2010 or any subsequent period.
 
 

 
ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
8 / 20
 
 
 

 



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 a TORM share was DKK 46.1 at 30 June 2010, against DKK 57.0 at 31 March 2010, equivalent to a decrease of DKK 10.9 (19%).
   
Accounting policies
This interim report for the second 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 second 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 19 August 2010 at 3:00 pm Copenhagen time (CET), reviewing the interim report for the first six months 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 nine months of 2010 will be published on 18 November 2010.




ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
9 / 20



 
 

 



 
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 June 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, 19 August 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 (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit www.torm.com.







ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
10 / 20



 
 

 



Income statement

                                         
Million USD
    Q2 2010       Q2 2009       Q1-Q2 2010       Q1-Q2 2009       2009  
 
                                       
Revenue
    201.3       193.6       406.8       452.4       862.3  
Port expenses, bunkers and commissions
    -70.6       -48.1       -130.5       -106.9       -217.4  
Freight and bunkers derivatives
    -0.5       -7.3       1.4       -8.2       -12.0  
                                         
Time charter equivalent earnings
    130.2       138.2       277.7       337.3       632.9  
                                         
Charter hire
    -54.4       -55.1       -106.1       -109.2       -220.9  
Operating expenses
    -34.7       -44.2       -74.6       -91.7       -169.5  
                                         
Gross profit (Net earnings from shipping activities)
    41.1       38.9       97.0       136.4       242.5  
                                         
Profit from sale of vessels
    0.0       12.5       18.2       12.5       33.1  
Administrative expenses
    -17.5       -22.5       -35.6       -42.6       -78.2  
Other operating income
    1.3       2.4       3.0       4.8       7.4  
Share of results of jointly controlled entities
    -1.3       -0.7       -3.7       0.2       -2.3  
                                         
EBITDA
    23.6       30.6       78.9       111.3       202.5  
                                         
Impairment losses on jointly controlled entities
    0.0       0.0       0.0       0.0       -20.0  
Depreciation and impairment losses
    -34.4       -33.5       -69.4       -65.3       -132.7  
 
                                       
Operating profit (EBIT)
    -10.8       -2.9       9.5       46.0       49.8  
                                         
Financial items
    -13.6       -29.6       -31.3       -39.3       -68.8  
                                         
Profit before tax
    -24.4       -32.5       -21.8       6.7       -19.0  
                                         
Tax
    0.3       -1.1       0.0       -0.7       1.6  
                                         
Net profit/(loss) for the period
    -24.1       -33.6       -21.8       6.0       -17.4  
                                         
                                         
Earnings per share, EPS
                                       
Earnings per share, EPS (USD)
    -0.3       -0.5       -0.3       0.1       -0.3  
Earnings per share, EPS (DKK) *)
    -2.0       -2.7       -1.8       0.5       -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. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
11 / 20
 
 
 

 



Statement of comprehensive income

                                         
Million USD
    Q2 2010       Q2 2009       Q1-Q2 2010       Q1-Q2 2009       2009  
 
                                       
Net profit/(loss) for the period
    -24.1       -33.6       -21.8       6.0       -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       0.0       0.0  
                                         
Fair value adjustment on hedging instruments
    -5.4       8.1       -9.7       24.5       26.5  
                                         
Value adjustment of hedging instruments transferred
   to income statement
    2.3       -1.0       3.9       3.8       4.1  
 
                                       
Value adjustment of hedging instruments transferred
to assets
    0.0       0.0       0.0       -1.2       -1.2  
                                         
Fair value adjustment of available for sale investments
    -0.3       1.7       -0.5       0.7       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
    -3.4       8.9       -6.3       27.8       27.3  
                                         
Total comprehensive income
    -27.5       -24.7       -28.1       33.8       9.9  


ANNOUNCEMENT NO. 8 – 2010
19 AUGUST 2010
TORM – SECOND QUARTER REPORT 2010
12 / 20


 
 

 



Income statement by quarter
 
                                         
Million USD
    Q2 09       Q3 09       Q4 09       Q1 10       Q2 10  
                                         
Revenue
    193.6       208.8       201.1       205.5       201.3  
Port expenses, bunkers and commissions
    -48.1       -56.1       -54.4       -59.9       -70.6  
Freight and bunkers derivatives
    -7.3       -3.3       -0.5       1.9       -0.5  
                                         
Time charter equivalent earnings
    138.2       149.4       146.2       147.5       130.2  
                                         
Charter hire
    -55.1       -56.3       -55.4       -51.7       -54.4  
Operating expenses
    -44.2       -38.7       -39.1       -39.9       -34.7  
                                         
Gross profit (Net earnings from shipping activities)
    38.9       54.4       51.7       55.9       41.1  
                                         
Profit from sale of vessels
    12.5       20.7       -0.1       18.2       0.0  
Administrative expenses
    -22.5       -17.9       -17.7       -18.1       -17.5  
Other operating income
    2.4       1.5       1.1       1.7       1.3  
Share of results of jointly controlled entities
    -0.7       0.5       -3.0       -2.4       -1.3  
                                         
EBITDA
    30.6       59.2       32.0       55.3       23.6  
                                         
Impairment losses on jointly controlled entities
    0.0       0.0       -20.0       0.0       0.0  
Depreciation and impairment losses
    -33.5       -35.0       -32.4       -35.0       -34.4  
 
                                       
Operating profit (EBIT)
    -2.9       24.2       -20.4       20.3