Core Viewpoint - TORM plc has successfully completed a capital reduction of USD 180 million and the cancellation of 493,371 A-shares, as confirmed by the High Court of Justice in England and Wales [1][2]. Group 1: Capital Reduction Details - The capital reduction was approved by shareholders during the Annual General Meeting held on April 16, 2025, and does not involve any distribution or payment of capital by the company [2]. - Following the capital reduction and cancellation, TORM's share capital is now USD 979,411.95, divided into 97,941,193 A-shares, one B-share, and one C-share, with a total of 97,941,193 votes attached to the A-shares [3]. Group 2: Company Overview - TORM is recognized as one of the world's leading carriers of refined oil products, operating a fleet of product tanker vessels with a strong commitment to safety, environmental responsibility, and customer service [3]. - The company was founded in 1889 and conducts business globally, with shares listed on Nasdaq in Copenhagen and New York [3].

Core Viewpoint - TORM plc's CEO Jacob Balslev Meldgaard executed a transaction involving the exercise of restricted share units, acquiring 33,559 shares at a price of DKK 0.08 per share on May 19, 2025, totaling DKK 2,684.72 [1]. Company Overview - TORM is recognized as one of the world's leading carriers of refined oil products, operating a fleet of product tanker vessels with a strong emphasis on safety, environmental responsibility, and customer service [2]. - The company was founded in 1889 and has a global business presence, with shares listed on Nasdaq in Copenhagen and New York under the tickers TRMD A and TRMD [2].

Group 1 - The global shipping market is experiencing a temporary relief due to a 90-day truce between the US and China, allowing market participants more time to adjust to higher worldwide tariff rates [1] - Despite the truce, uncertainty remains in the market, indicating that challenges may still persist for shipping companies [1]

Group 1 - The article discusses TORM plc (NASDAQ: TRMD) and its stock performance amidst challenges in the shipping sector due to trade tensions [1] - The author emphasizes a value-focused investment strategy, targeting stocks that are undervalued and have upcoming catalysts [1] - The investment horizon mentioned ranges from one quarter to two years, indicating a medium-term investment approach [1] Group 2 - The author has over three years of active investing experience, including roles as a buy-side analyst at boutique research firms and family offices [1]

[Q1 2025 Performance Highlights](index=2&type=section&id=Highlights) This section summarizes TORM's Q1 2025 financial, market, and operational results, highlighting key performance indicators and forward coverage [Financial Performance](index=2&type=section&id=Financial%20Performance) TORM's Q1 2025 net profit and TCE earnings declined significantly from the prior year due to lower freight rates Q1 2025 vs Q1 2024 Financial Results | Metric | Q1 2025 (USDm) | Q1 2024 (USDm) | | :--- | :--- | :--- | | TCE Earnings | 214.0 | 330.7 | | Adjusted EBITDA | 137.7 | 267.2 | | Net Profit | 62.9 | 209.2 | Q1 2025 Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Average TCE Rate | USD 26,807/day | USD 43,152/day | | Return on Invested Capital | 10.3% | 33.8% | | Basic EPS | USD 0.64 | USD 2.34 | [Market and Operational Highlights](index=2&type=section&id=Market%20and%20Operational%20Highlights) Geopolitical factors influenced market conditions while the company divested three older vessels, adjusting its fleet size - Trade volumes on routes affected by the Red Sea disruption **declined by about one-third** by early 2025, negating distance-driven gains, though a rebound began in March 2025[4](index=4&type=chunk) - Potential market influences include the reopening of the Red Sea, easing of Russian sanctions, and tighter U.S. sanctions on Iran and Venezuela, which could redirect trade and **reduce crude tanker cannibalization** of the clean petroleum products (CPP) market[5](index=5&type=chunk)[6](index=6&type=chunk) - TORM sold three MR vessels (TORM Ragnhild, TORM Resilience, TORM Thames) during Q1 2025, resulting in a **current fleet size of 91 vessels**[11](index=11&type=chunk) Fleet Valuation (as of 31 March 2025) | Metric | Value (USDm) | | :--- | :--- | | Fleet Market Value | 3,112.4 | | Net Asset Value (NAV) | 2,511.1 | [Forward Coverage](index=2&type=section&id=Coverage) The company has secured substantial charter coverage for Q2 and the full year 2025, providing earnings visibility - As of May 5, 2025, **57% of Q2 2025 earning days were covered** at an average rate of USD 28,026/day[9](index=9&type=chunk) - For the full year 2025, **43% of earning days have been fixed** at an average rate of USD 27,829/day[10](index=10&type=chunk) [Key Financial Figures](index=3&type=section&id=Key%20Figures) This section presents a detailed breakdown of TORM's consolidated financial data and key performance ratios for Q1 2025 [Consolidated Financial Data](index=3&type=section&id=Consolidated%20Financial%20Data) Key financial metrics for Q1 2025 are presented, showing a decline in profitability compared to the prior-year period Key Financial Data (USDm) | Metric | Q1 2025 | Q1 2024 | FY 2024 | | :--- | :--- | :--- | :--- | | **Income Statement** | | | | | Revenue | 329.1 | 444.1 | 1,559.2 | | TCE Earnings | 214.0 | 330.7 | 1,134.8 | | Adjusted EBITDA | 137.7 | 267.2 | 844.2 | | Net Profit | 62.9 | 209.2 | 611.5 | | **Balance Sheet** | | | | | Total Assets | 3,486.7 | 3,507.8 | 3,469.6 | | Equity | 2,142.2 | 2,065.0 | 2,074.8 | | Net Interest-Bearing Debt | 831.7 | 757.9 | 947.6 | Key Financial Ratios and Share Data | Metric | Q1 2025 | Q1 2024 | FY 2024 | | :--- | :--- | :--- | :--- | | Return on Equity (ROE) | 11.9% | 44.9% | 32.7% | | Return on Invested Capital (ROIC) | 10.3% | 33.8% | 24.3% | | TCE per day (USD) | 26,807 | 43,152 | 36,061 | | OPEX per day (USD) | 7,891 | 7,260 | 7,477 | | Loan-to-value (LTV) ratio | 27.0% | 21.6% | 26.8% | | Basic EPS (USD) | 0.64 | 2.34 | 6.54 | | Dividend per share (USD) | 0.40 | 1.50 | 5.10 | | NAV per share (USD) | 25.7 | 34.5 | 29.3 | [Financial Review](index=4&type=section&id=Financial%20Review) This section provides an in-depth analysis of TORM's Q1 2025 performance, balance sheet, cash flow, and dividend distribution [Performance Analysis](index=4&type=section&id=Performance%20Analysis) Financial performance declined in Q1 2025, driven primarily by a significant drop in daily Time Charter Equivalent rates - The **TCE rate per day decreased by 38%** to USD 26,807 in Q1 2025 from USD 43,152 in Q1 2024[18](index=18&type=chunk) - **Revenue decreased by 26%** (USD 115.0m) to USD 329.1m, mainly because freight rates in Q1 2025 were below the exceptionally high levels of Q1 2024, which were boosted by Houthi attacks and rerouting around the Cape of Good Hope[19](index=19&type=chunk) [Balance Sheet and Liquidity](index=4&type=section&id=Balance%20Sheet%20and%20Liquidity) The company maintained a robust balance sheet with increased equity and a strong liquidity position of USD 679.3 million - **Total assets increased by USD 17.1m** to USD 3,486.7m as of March 31, 2025, mainly due to a USD 71.1m increase in cash, offset by a USD 57.4m reduction in the carrying amount of vessels[21](index=21&type=chunk) - The market value of TORM's fleet was USD 3,112.4m, which is **12% above its carrying value**[23](index=23&type=chunk) - **Total liquidity as of March 31, 2025 was USD 679.3m**, including USD 317.0m in undrawn credit facilities[23](index=23&type=chunk) - **Equity increased by USD 67.4m** to USD 2,142.2m, primarily from the net profit of USD 62.9m for the period[24](index=24&type=chunk) - Total liabilities decreased, mainly driven by a **USD 44.0m reduction in borrowings** from ordinary debt repayments and repayments related to divested vessels[25](index=25&type=chunk) [Cash Flow Statement](index=4&type=section&id=Cash%20Flow%20Statement) Operating cash flow decreased due to lower profit, while investing activities generated a net inflow from vessel sales Net Cash Flow Summary (USDm) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Activities | 83.1 | 186.6 | | Investing Activities | 43.4 | -160.9 | | Financing Activities | -47.3 | 252.8 | [Dividend Distribution](index=5&type=section&id=Distribution) The Board of Directors approved a Q1 2025 interim dividend in line with the company's distribution policy - An **interim dividend of USD 0.40 per share** was approved for Q1 2025, totaling an expected payment of USD 39.1m[30](index=30&type=chunk) - The dividend represents **62% of the net profit** and will be paid on June 4, 2025[30](index=30&type=chunk) [Market Analysis](index=6&type=section&id=The%20Product%20Tanker%20Market) This section examines product tanker market developments in Q1 2025 and provides an outlook on key future drivers [Product Tanker Market Developments Q1 2025](index=6&type=section&id=Market%20Developments%20in%20Q1%202025) The Q1 2025 product tanker market saw lower trade volumes and rates compared to the prior year amid geopolitical shifts - Clean petroleum product **trade volumes fell 4% YoY** in Q1 2025, neutralizing the positive ton-mile effect from the Red Sea disruption[33](index=33&type=chunk) - Product flows on Middle East/India to Europe routes, affected by the Red Sea situation, **remained 11% below YoY levels** despite climbing from Q4 2024 lows[34](index=34&type=chunk) - US product exports were impacted by refinery maintenance but saw **strong gains towards the end of the quarter**[35](index=35&type=chunk) - Competition from new crude tankers carrying clean products ('crude cannibalization') increased during the quarter but **stayed below the peak levels of Q3 2024**[35](index=35&type=chunk) [Market Outlook](index=6&type=section&id=Market%20Outlook) The market outlook is shaped by geopolitical uncertainty, European refinery closures, and potential US policy changes - The closure of three refineries in Northwest Europe is expected to create a **higher diesel deficit**, likely leading to increased imports and ton-miles[36](index=36&type=chunk) - Geopolitical factors, including the new US administration's policies on trade and sanctions, are expected to **continue driving market uncertainty** and could have indirect effects on the product tanker market[36](index=36&type=chunk)[37](index=37&type=chunk) [Full Year 2025 Outlook](index=7&type=section&id=Outlook%20for%202025) This section details TORM's narrowed financial guidance and charter coverage for the full year 2025 [Financial Guidance](index=7&type=section&id=Financial%20Outlook%202025) TORM has narrowed its full-year 2025 guidance for TCE earnings and EBITDA based on year-to-date performance Full-Year 2025 Guidance | Metric | 2025 Guidance (USDm) | 2024 Actual (USDm) | | :--- | :--- | :--- | | TCE Earnings | 700 - 900 | 1,135 | | EBITDA | 400 - 600 | 851 | - Key macroeconomic factors affecting the outlook include geopolitical conflicts, global economic growth, refinery activities, oil price development, and global fleet growth[44](index=44&type=chunk) [2025 Coverage Details](index=8&type=section&id=Coverage%202025) A detailed breakdown of fixed earning days and rates for 2025 shows 43% of total earning days are covered 2025 Coverage as of 05 May 2025 | Vessel Class | Q2 2025 Coverage | Q2 2025 Rate (USD/day) | FY 2025 Coverage | FY 2025 Rate (USD/day) | | :--- | :--- | :--- | :--- | :--- | | LR2 | 64% | 36,831 | 51% | 35,535 | | LR1 | 46% | 29,714 | 36% | 26,079 | | MR | 57% | 24,150 | 41% | 24,665 | | **Total** | **57%** | **28,026** | **43%** | **27,829** | [Operational Performance](index=9&type=section&id=Operational%20Performance) This section reviews detailed earnings data by vessel segment and outlines recent fleet development activities [Detailed Earnings Data by Segment](index=9&type=section&id=Earnings%20Data) Operational metrics show a year-over-year decrease in spot rates across all vessel classes alongside rising operating expenses Tanker Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Available earning days | 8,061 | 7,697 | +5% | | Spot rates (USD/day) | 25,519 | 44,274 | -42% | | TCE per earning day (USD/day) | 26,807 | 43,152 | -38% | | Operating expenses per day (USD/day) | 7,891 | 7,260 | +9% | [Fleet Development](index=10&type=section&id=TORM%20Fleet%20Development) The company continued its fleet management strategy by divesting three older MR vessels, reducing the total fleet to 91 - TORM's fleet management strategy involves regularly divesting older vessels and acquiring high-quality second-hand vessels to maintain a **stable and attractive average fleet age**[52](index=52&type=chunk) Fleet Composition Change (Q4 2024 to Q1 2025) | Fleet Type | Q4 2024 | Changes | Q1 2025 | | :--- | :--- | :--- | :--- | | Owned Vessels | 70 | -3 | 67 | | Leaseback Vessels | 24 | 0 | 24 | | **Total Fleet** | **94** | **-3** | **91** | [Condensed Consolidated Financial Statements](index=13&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited Q1 2025 financial statements, including segment reporting and explanatory notes [Financial Statements Overview](index=13&type=section&id=Financial%20Statements%20Overview) The core unaudited financial statements for Q1 2025 are presented, including income, balance sheet, and cash flow - The Income Statement shows a **net profit of USD 62.9m** for Q1 2025, down from USD 209.2m in Q1 2024[65](index=65&type=chunk) - The Balance Sheet as of March 31, 2025, reports **total assets of USD 3,486.7m** and total equity of USD 2,142.2m[69](index=69&type=chunk) - The Cash Flow Statement indicates a **net cash flow from operating activities of USD 83.1m** for Q1 2025[74](index=74&type=chunk) - Segment reporting reveals that the **Tanker segment generated an operating profit (EBIT) of USD 79.1m**, while the Marine Engineering segment contributed USD 4.1m in Q1 2025[76](index=76&type=chunk) [Notes to the Financial Statements](index=22&type=section&id=Notes%20to%20the%20Financial%20Statements) Key disclosures provide context on the going concern basis, vessel sales, debt covenants, and subsequent events - The financial statements are prepared on a **going concern basis**, with the Board confident in the company's ability to operate and meet covenants until at least June 30, 2026[87](index=87&type=chunk) - During Q1 2025, TORM **sold and delivered three vessels for USD 44.9m**, resulting in a profit of USD 9.4m[98](index=98&type=chunk) - As of March 31, 2025, TORM was in **compliance with all financial covenants** related to its borrowings[103](index=103&type=chunk) - Subsequent to Q1 2025, TORM sold a 2008-built LR2 vessel and the Board declared the **Q1 2025 dividend of USD 0.40 per share**[113](index=113&type=chunk)[114](index=114&type=chunk) [Glossary and Alternative Performance Measures (APMs)](index=26&type=section&id=Glossary) This section defines key terms and non-IFRS financial metrics used in the report, providing reconciliations for clarity [Definitions and Reconciliations](index=26&type=section&id=Definitions%20and%20Reconciliations) Key financial figures and Alternative Performance Measures are defined and reconciled to their comparable IFRS figures - **Time Charter Equivalent (TCE) earnings** are defined as revenue less port expenses, bunkers, and commissions and is a standard industry metric to compare performance irrespective of charter type[141](index=141&type=chunk) - **EBITDA** is defined as earnings before financial income and expenses, depreciation, impairment, amortization, and taxes, while Adjusted EBITDA further removes unrealized gains/losses on derivatives[125](index=125&type=chunk)[128](index=128&type=chunk) - **Net Asset Value (NAV)** is calculated using broker valuations for vessels and is used to measure the development of assets and liabilities; as of March 31, 2025, NAV per share was USD 25.7[137](index=137&type=chunk) [Disclaimers and Statements](index=11&type=section&id=Disclaimers%20and%20Statements) This section contains the management responsibility statement and a safe harbor statement regarding forward-looking information [Responsibility and Safe Harbor Statements](index=11&type=section&id=Responsibility%20and%20Safe%20Harbor%20Statements) Management confirms the accuracy of the financial statements and provides a safe harbor caution for forward-looking statements - The Responsibility Statement confirms that the interim report gives a **true and fair view** of the Group's financial position and performance, prepared in accordance with IAS 34[56](index=56&type=chunk)[59](index=59&type=chunk) - The Safe Harbor Statement warns that **forward-looking statements are subject to risks** that could cause actual results to differ materially, including market fluctuations, geopolitical events, and regulatory changes[60](index=60&type=chunk)[62](index=62&type=chunk)

分组1 - TORM PLC reported quarterly earnings of $0.62 per share, missing the Zacks Consensus Estimate of $0.64 per share, and down from $2.26 per share a year ago, representing an earnings surprise of -3.12% [1] - The company posted revenues of $218.7 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.26%, but down from $444.1 million year-over-year [2] - TORM has surpassed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates three times as well [2] 分组2 - TORM shares have lost about 15.1% since the beginning of the year, compared to the S&P 500's decline of -4.3% [3] - The current consensus EPS estimate for the coming quarter is $0.58 on revenues of $205.2 million, and for the current fiscal year, it is $3.01 on revenues of $887.5 million [7] - The Transportation - Shipping industry, to which TORM belongs, is currently in the bottom 11% of the Zacks industry rankings, indicating potential underperformance compared to higher-ranked industries [8]

Group 1 - The shipping industry has been significantly impacted by the ongoing trade war initiated by the US, leading to a decline in shipping stocks [1] - Many shipping stocks are experiencing a normalization of Time Charter Equivalent (TCE) rates, indicating a shift in market dynamics [1]

Core Points - TORM plc has increased its share capital by 262,294 A-shares, resulting from the exercise of Restricted Share Units, with a nominal value of USD 2,622.94 [1] - The new shares are issued at DKK 0.08 per A-share and are expected to be listed on Nasdaq Copenhagen [1][3] - After the capital increase, TORM's total share capital is USD 982,518.10, consisting of 98,251,808 A-shares, one B-share, and one C-share [4] Company Overview - TORM is a leading carrier of refined oil products, operating a fleet of product tanker vessels with a focus on safety, environmental responsibility, and customer service [5] - The company was founded in 1889 and conducts business globally, with shares listed on Nasdaq Copenhagen and Nasdaq New York [5]

Core Insights - TORM plc reported earnings for the quarter ended December 31, 2024, showing satisfactory results with revenue and earnings per share (EPS) exceeding expectations [1] Financial Performance - The earnings release indicated a beat on both revenue and EPS, although many metrics experienced a decline [1]

Financial Data and Key Metrics Changes - TORM reported TCE earnings of $1.135 billion for the full year 2024, achieving a net profit of $612 million and a return on invested capital of 24.3% [6][24][25] - In Q4 2024, TCE amounted to $215 million, with EBITDA of $142 million and net profit of $77 million [23][24] - Fleet-wide rates decreased to $25,775 per day in Q4, down from $39,626 per day in the first three quarters [5][30] Business Line Data and Key Metrics Changes - Clean product tanker ton miles increased by 9% in 2024, but due to crude clean-ups, product tankers benefited from only two-thirds of that increase [11][12] - Fleet-wide rates declined by about 40% from Q1 to Q4, while TCE saw a smaller decline of 35% [30] Market Data and Key Metrics Changes - European diesel imports are down by 30%, affecting trade volumes on routes impacted by the Red Sea disruption [13] - The average age of the fleet is the highest in two decades, with 50% of the fleet being more than 20 years old [18] Company Strategy and Development Direction - The company remains focused on fleet efficiency, disciplined cost management, and a well-executed commercial strategy despite geopolitical risks [7][8] - TORM plans to maintain its fleet strategy, selling older vessels and ensuring the average age aligns with the global product tanker fleet [52][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that geopolitical developments and trade flow shifts will shape market conditions, impacting freight rates and fleet utilization [8][20] - For 2025, TORM forecasts TCE earnings of $650 million to $950 million and EBITDA of $350 million to $650 million, reflecting expectations of lower freight rates year-on-year [45] Other Important Information - The Board of Directors declared a dividend of $0.60 per share for Q4 2024, maintaining a payout ratio of 75% [28][39] - TORM has made significant strides in sustainability reporting, aiming for a 45% reduction in carbon intensity by 2030 and net zero CO2 emissions by 2050 [40][43] Q&A Session Summary Question: How does TORM's strategy change with the current market uncertainty? - Management confirmed that there will be no change in strategy regarding operations, fleet evolution, or capital structure, emphasizing agility and preparedness for various scenarios [49][54] Question: What is the current state of crude cannibalization on traditional product trades? - Management indicated that currently, 3% of CPP on water is on VLs and Suezmaxes, down from 8% at the peak last year, suggesting a return to normalized levels [65] Question: How does TORM view seasonality in the current market? - Management acknowledged that while seasonality exists, geopolitical factors are currently more impactful, and they do not have a specific view on how it will play out this year [71][72] Question: Has the U.S. proposal of taxing Chinese tonnage affected TORM's operations? - Management stated that TORM has no new builds and a relatively low percentage of Chinese-built vessels, indicating no immediate plans to change operations due to the proposal [76][79] Question: What is TORM's outlook on fleet renewal and market activity? - Management expects an uptick in transactions as the market recalibrates to new price levels, indicating that liquidity will return as earning potential stabilizes [85][86]