TORM Plc Q1 FY2025 earnings call

• TORM achieved a net profit of US$63 million in the first quarter, with TCE at US$214 million, showing stability after market volatility in late 2024. • Successfully divested several older vessels, including three 20-year-old MR vessels in Q1 and one 17-year-old LR2 vessel after Q1. • Market remains dynamic with geopolitical factors and uncertainty, requiring agility. • Refinery landscape in Europe has closures and changes in demand, impacting product tanker market dynamics.

In the first quarter, TCE amounted to US$214 million. EBITDA was US$136 million and net profit was US$63 million. Fleet-wide, average TCE rates were close to US$27,000 per day. LR2s had rates close to US$34,000 per day, LR1s at US$25,000, and MRs slightly lower. These rates contributed to solid financial performance with the segment showing stability in freight rates compared to previous quarters.

• Full-year TCE earnings forecast revised to range of US$700 million to US$900 million (previously US$650 million to US$950 million). • Expected EBITDA revised to range of US$400 million to US$600 million (previously US$350 million to US$650 million). • Outlook incorporates expected year-over-year decline in freight rates aligned with spot and forward market trends.

• Geopolitical uncertainties such as Red Sea disruptions affecting trade volumes. • OPEC+ production increases accelerating timeline for unwinding voluntary production cuts. • U.S. administration's trade policy uncertainties with potential indirect effects on the product tanker market. • Relatively high product tanker order book and aging fleet affecting utilization and supply dynamics.

Q: Regarding capital allocation and strategies given geopolitical uncertainties, has there been a shift?

A: On financial side, discipline is maintained. On business side, monitoring fleet composition and continuing to divest older vessels when appropriate.

Q: About secondary market liquidity, will it improve?

A: Secondary sales are less frequent but sufficient for desired transactions; as market normalizes, more meeting of minds between buyers and sellers expected.

Q: Impact of Red Sea reopening on market?

A: Immediate flurry of cargoes likely as marginal trades were not happening, but over longer term, demand may be neutral.

Q: Impact of incoming LR2 deliveries on market?

A: LR2 newbuilds coming in, but swing factor between clean and dirty trade is dominant, with age profile of Aframax fleet affecting scrapping potential