TORM plc Q3 FY2025 earnings call

• Q3 delivered strong numbers with TCE of USD 236 million, net profit of USD 78 million, and declared a dividend of USD 0.62 per share. - Advanced fleet optimization with acquisition of 5 vessels (4 2014-built MRs and 1 2010-built LR2) and divestment of a 2007-built MR. - Agreed a 3-year time charter for TORM Lilly at USD 22,234 daily rate. - Market drivers include stable product tanker rates, increased trade volumes, geopolitical developments, and refinery closures impacting product supply. - Broker valuation of fleet at quarter-end was USD 2.9 billion, NAV increased to USD 2.4 billion, net interest-bearing debt at USD 690 million.

In Q3, TORM generated TCE revenues of USD 236 million, with an EBITDA of USD 152 million and a net profit of USD 78 million. Fleet-wide TCE rates were USD 31,012 per day. Breaking down by vessel class: LR2s earned well above $38,000 per day, LR1s around $29,500, and MRs exceeded USD 28,000 per day. Revenue contribution by vessel class wasn't explicitly stated as a percentage, but each class contributed to the overall strong financials.

• Increased the midpoint of TCE guidance and narrowed the range. - Full year 2025 TCE guidance revised to between USD 875 million to USD 925 million. - EBITDA guidance revised to between USD 540 million to USD 590 million. - Entered Q4 with solid momentum supported by firm rates across vessel segments and good visibility on fixtures.

• Geopolitical uncertainty remains a key market driver with ongoing tensions. - Red Sea disruption and sanctions on Russia continue to impact the tanker market. - Refinery maintenance season in Atlantic and Middle East can affect rates. - Sanctions on Russia and OPEC+ production cuts have indirect impacts on tanker rates.

Q: How do you manage to charter out a 2009-built MR for 3 years at a high rate and how repeatable is it?

A: Jacob Meldgaard states it's due to having an integrated platform where customers don't focus on age as all vessels meet the same standards in safety, efficiency, etc. There are ongoing negotiations for longer-term deals, but it's based on financial sense.

Q: On capital deployment, how is the thought process for buying older ships and selling others?

A: Jacob Meldgaard says it's based on meeting return hurdles, IRR, and return on invested capital. The integrated platform allows considering various vessel ages as long as they meet return requirements.

Q: On dividends, thoughts on future payout?

A: Kim Balle says dividends are based on distributing free liquidity generated, correlated to cash flow breakeven levels, and not aimed at a specific payout ratio.

Q: Higher interest expense, is it accounting treatment?

A: Kim Balle says it's due to refinancing accounting effects, and will normalize in future quarters.