TORM Plc Q4 FY2024 earnings call

• Business Performance 2024: TCE reached $1.135 billion, net profit was $612 million, and return on invested capital was 24.3%. Fleet-wide rates were strong in the first three quarters but dropped in the fourth quarter.
• 2025 Outlook: Geopolitical developments, trade flow shifts, and oil demand fluctuations require adaptation. Confident in fleet efficiency, cost management, capital management, and commercial strategy. Geopolitical risks introduce earnings uncertainty. Red Sea disruption impact was front-loaded, and the ton-mile effect was non-existent by the start of 2025. Product tanker order book and older fleet age could offset fleet growth. Sustainability efforts: LTAF was 0.42 in 2024, aiming to increase women in leadership to 35% by 2030, 40% CO2 reduction by 2024 meeting IMO 2030 targets, aiming for 45% reduction by 2030 and net zero by 2050.
• Financials: Q4 TCE was $215 million, EBITDA was $142 million, and net profit was $77 million. Dividend per share was $0.60 for Q4 with a 75% payout ratio. Vessel values were down 4.6% in Q4, net interest bearing debt was $948 million, and net loan to value was 26.8%.

In 2024, TCE earnings climbed to a new all-time high of $1.135 billion. The full year net profit was $612 million with a return on invested capital of 24.3%. In the fourth quarter, TCE was $215 million, EBITDA was $142 million, and net profit was $77 million. Fleet-wide average TCE rates in Q4 were close to $26,000 per day, with LR2 slightly above $34,000, LR1s at over $22,000, and MRs at more than $23,000. For the full year, fleet-wide rates were $39,626 per day in the first three quarters, dropping to $25,775 per day in the fourth quarter. Clean product tanker ton miles increased by 9% in 2024, but product tankers benefited from only two-thirds due to crude tankers cleaning up.

Torm forecast TCE earnings of $650 million to $950 million and EBITDA of $350 million to $650 million for 2025. As of 3 March 2025, 84% of the first quarter's earning days were fixed at $26,612 per day, and 27% of the full year's earning days were fixed at $28,916 per day.

Geopolitical risks such as Red Sea normalization, sanctions against Russia, U.S. tariffs on Canada/Mexico oil, and the U.S. port fee proposal on Chinese-built vessels. Market uncertainties from trade disruptions, regulatory changes, and macroeconomic factors. Older fleet with high sanctions and lower utilization.

Q: How does strategy change with more uncertainty in 2025?

A: No change in operations; need agility and preparedness. Fleet strategy remains the same, with older vessels sold. Financial strategy remains the same, maintaining capital structure and dividend policy.

Q: Crude cannibalization and market volatility?

A: Crude tankers cannibalization was due to specific product and trade lane, currently normalized to 3% CPP on water vs peak 8% in Sept 2024. Not expecting frequent back-and-forth but possible in specific circumstances.

Q: Seasonality and U.S. tax on Chinese tonnage?

A: Uncertain on seasonality impact. For the U.S. port fee proposal, Torm has a 41% Chinese ratio, zero new builds, and 20% U.S. trade; no current plans to redirect vessels.

Q: Fleet renewal and S&P activity?

A: Liquidity in the S&P market was lower due to uncertainty, but transactions were expected to creep up as the market recalibrates; Torm sold 3 older MRs recently.