TORM plc(TRMD) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - TORM reported time charter equivalent (TCE) earnings of US$263 million and EBITDA of US$191 million for Q3 2024, despite lower-than-expected freight rates towards the end of the quarter [2][23] - The net profit for the quarter was US$131 million, slightly up compared to the same quarter last year [23] - The average TCE rates were approximately US$34,000 per day, with LR2s at nearly US$41,000, LR1s over US$33,000, and MRs above US$31,000 [24] - The return on invested capital was 20.3$700 compared to Q3 2023 [25] Market Data and Key Metrics Changes - Clean petroleum product (CPP) trade volumes increased by 2% year-to-date, supported by rising global oil demand and changes in the refinery landscape, leading to a 10% increase in ton-mile demand [7] - However, actual loaded volumes trended down, falling below year-ago levels in October, with Middle East exports down 8% month-on-month [8][10] - The share of global CPP trade transiting the Suez Canal declined from 12% to 4%, with redirected trade taking longer routes [6] Company Strategy and Development Direction - TORM is focused on fleet renewal, having acquired eight second-hand MR vessels for US$340 million, with six already delivered [3][4] - The company aims to maintain a strong cash position and financial flexibility to seize market opportunities [34] - TORM plans to distribute 100$1.11 billion and US$1.16 billion, with EBITDA projected between US$810 million and US$860 million [33] - Management acknowledged the current softness in rates due to lower demand from refinery outages and maintenance [40] Other Important Information - TORM declared a dividend of US$1.20 per share for Q3 2024, with a payout ratio of 89% relative to basic EPS [28] - The net interest-bearing debt remained flat at US$825 million, with a net loan-to-value ratio of 23.1% [26][27] Q&A Session Summary Question: Thoughts on the product market and impact of VLCCs and Suezmaxes - Management indicated that Q3 was affected by crude cannibalization, but normalization is occurring in Q4, with lower volumes from the Middle East contributing to rate softness [38][40] Question: Future fleet renewal transactions - Management stated that they are staying agile and could engage in either acquiring or selling assets, but no specific plans are in place currently [41] Question: Strategy for share-based vessel acquisitions - Management clarified that current public market pricing does not support the type of share-based deals previously executed, indicating a need for market adjustments before considering such transactions again [43]