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TORM plc(TRMD) - 2024 Q2 - Earnings Call Transcript
TRMDTORM plc(TRMD)2024-08-15 16:51
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Financial Data and Key Metrics Changes - Time charter equivalent earnings increased to 326million,withEBITDAimprovingto326 million, with EBITDA improving to 251 million, reflecting strong financial performance [3][13] - Net profits reached 194million,withayear−on−yearoperatingresultincreaseofaround30194 million, with a year-on-year operating result increase of around 30% [13][15] - Fleet-wide TCE rates exceeded 42,000 per day, with LR2s close to 52,000perday[13][14]BusinessLineDataandKeyMetricsChanges−Thefleethadatotalof7,749earningdays,upfrom7,451daysinthesamequarterlastyear,indicatingimprovedoperationalefficiency[14]−Thecompanyachievedareturnoninvestedcapitalof29.552,000 per day [13][14] Business Line Data and Key Metrics Changes - The fleet had a total of 7,749 earning days, up from 7,451 days in the same quarter last year, indicating improved operational efficiency [14] - The company achieved a return on invested capital of 29.5%, highlighting a positive operating environment [15] Market Data and Key Metrics Changes - Trade volumes with refined oil products increased by 2% compared to the same quarter last year, driven by higher oil demand [8] - The share of global clean petroleum products trade transiting the Suez Canal declined from 12% to 4%, indicating a significant rerouting of trade [7] Company Strategy and Development Direction - The company remains optimistic about future prospects, expecting supportive fundamentals for a positive rate environment to persist [4] - TORM entered into an agreement to acquire eight secondhand MR vessels for 340 million, indicating a strategy of fleet expansion and replenishment [5] Management's Comments on Operating Environment and Future Outlook - Management noted that geopolitical tensions have reshaped the product tanker trade towards longer distances, contributing to increased ton-mile demand [7][11] - The company expects a seasonally improving crude tanker market in the fourth quarter, which may reduce incentives for crude cannibalization [8] Other Important Information - TORM declared a dividend of 1.80pershareforthequarter,maintainingapositivedividendyield[6][17]−Thenetinterest−bearingdebtdecreasedto1.80 per share for the quarter, maintaining a positive dividend yield [6][17] - The net interest-bearing debt decreased to 737 million, reflecting improved financial leverage [16] Q&A Session Summary Question: Concerns about macroeconomic conditions affecting demand - Management acknowledged potential cyclical headwinds but noted that similar patterns were observed last year, suggesting that current trends may be seasonal [20][21] Question: Impact of refinery run cuts in Asia - Management indicated that while refinery activity in Asia had slowed, there were signs of recovery, and additional export quotas from China were anticipated [26][27] Question: Future of scrubber installations - Management confirmed plans to proceed with the remaining scrubber installations during ordinary dry dock operations, evaluating each case for financial viability [28][29] Question: Dividend policy and distribution - Management clarified that dividend decisions are at the board's discretion, based on net cash generation per quarter, maintaining a consistent approach over recent quarters [30][31] Question: TCE market and chartering activities - Management expressed willingness to engage in longer-term charters at current attractive rates while remaining flexible with spot market opportunities [38][39]