TORM plc Q2 2024 Results Dividend Distribution and Financial Outlook 2024
"Our strong performance continued in the second quarter of 2024, building on the positive momentum from previous quarters,” says Jacob Meldgaard, adding: ”We will once again distribute significant dividends to our shareholders while also selectively expanding our fleet, further positioning us to capitalize on strong market fundamentals.”
Financial Results
In the second quarter of 2024, TORM’s time charter equivalent earnings (TCE) amounted to USD 325.9m (2023, same period: USD 308.0m including unrealized gains on derivatives of USD 37.0m). TORM realized an adjusted EBITDA of USD 251.1m (2023, same period: USD 199.8m) and an adjusted net profit for the period of USD 194.2m (2023, same period: USD 148.4m excluding unrealized gains on derivatives).
In the first six months of 2024, TORM achieved TCE of USD 656.6m including unrealized losses on derivatives of USD 1.4m (2023, same period: USD 572.9m including unrealized gains on derivatives of USD 21.2m ) and an adjusted EBITDA of USD 518.3 m (2023, same period: USD 414.2m) and an adjusted net profit of USD 404.8m (2023, same period: USD 317.9m excluding gains on derivatives), underscoring both strong market fundamentals and the growth of our fleet.
During the second quarter of 2024, the product tanker market remained firm mainly driven by widespread rerouting due to the disruption in the Red Sea as well as ongoing geopolitical tensions. On the supply side, product tanker fleet growth remained at a manageable level. In this market, TORM achieved TCE rates of USD/day 42,057 on average (2023, same period: USD/day 36,360), and available earning days increased to 7,749 (2023, same period: 7,451 ). Our vessel class LR2 achieved TCE rates of USD/day 51,907, the LR1 vessels achieved TCE rates of USD/day 42,338, and the MR vessels achieved TCE rates of USD/day 38,465.
During the quarter, the weighted number of average outstanding shares excluding treasury shares increased to 94.2m shares which combined with the adjusted net profit led to an EPS of USD 2.08 (2023, same period: USD 1.78).
For the second quarter of 2024, Return on Invested Capital amounted to 29.5% (2023, same period: 33.9% including unrealized gains on derivatives) reflecting the strong earnings relative to the increased investments in vessels.
Market
The product tanker market remained at strong levels in the second quarter, mainly driven by widespread rerouting due to continued Houthi attacks against commercial vessels in the Bab al-Mandeb Strait. In addition, trade volumes continued to grow compared to the levels seen a year ago.
Earnings for LR2 vessels remained at strong levels, although less volatility resulted in lower average rate level than in the first quarter. At the same time, MRs transported higher volumes mainly driven by higher exports from the US Gulf and Far East.
Longer sailing distances and higher trade volumes resulted in an overall increase in product tanker ton-miles, which climbed to an all-time high for the second quarter.
Vessel Transactions
TORM acquired nine second hand LR2 vessels from the fourth quarter of 2023 to the first quarter of 2024. Seven of the LR2 vessels acquired were delivered during Q1 2024. During Q2 2024, TORM took delivery of the remaining two LR2 vessels (2011-built TORM Genesis and 2012-built TORM Grace) purchased in November 2023.
During Q1 2024, TORM sold one 2006-bulit MR vessel, TORM Eric, which was delivered in Q2 2024.
During Q2 2024, TORM entered into an agreement to sell another 2006-built MR vessel, TORM Platte, which was delivered to new owners in early Q3 2024.
Further, in early Q3 2024, TORM entered into an agreement to acquire eight second-hand MR vessels. The first vessel, TORM Diwata, has been delivered. The remaining seven vessels are expected to be delivered in the second half of 2024 after which the fleet size will increase to 96 vessels.
Distribution of Dividend for the Second Quarter of 2024
TORM’s Board of Directors has today approved an interim dividend for the second quarter of 2024 of USD 1.80 per share to be paid to the shareholders corresponding to an expected total dividend payment of USD 169.8m. The distribution for the quarter is equivalent to 87% of net profit adjusted for profit from sale of vessels and reflects the Distribution Policy implemented this year. The payment date is 11 September 2024 to all shareholders of record as of 29 August 2024, and the ex-dividend date is 28 August 2024 for the shares listed on Nasdaq OMX Copenhagen and 29 August 2024 for the shares listed on Nasdaq New York.
Financial Outlook 2024
As of 11 August 2024, TORM had covered 68% of the 2024 earning days at USD/day 42,205. Hence, 32% of the 2024 full-year earning days are subject to change. Consequently, as 10,215 earning days in 2024 are unfixed, a change in freight rates of USD/day 1,000 will – all other things being equal – impact the EBITDA by USD 10.2m. Also, as of 11 August 2024, 64% of the Q3 2024 earning days were covered at USD/day 38,340 . For the individual vessel classes, the Q3 2024 coverage was 75% at USD/day 45,332 for LR2, 50% at USD/day 36,324 for LR1 and 63% at USD/day 35,701 for MR.
Based on the earnings realized in the first half of the year TORM narrows its full-year guidance for 2024 by increasing the low end of the guidance range, thus TCE earnings are expected to be USD 1.15 - 1.35bn (previous guidance USD 1.1 - 1.35bn, and EBITDA is expected to be USD 850-1,050m (previous guidance 800 - 1,050m) based on the current fleet size including published acquisitions and divestment of vessels.
Webcast and Conference Call
TORM will host a webcast and conference call for investors and analysts today, Thursday 15 August 2024 at 09:00 am Eastern Time / 03:00 pm Central European Time.
Participants joining webcast:
Please access the webcast here.
Participants joining by telephone:
Please call one of the dial-in numbers (below) at least ten minutes prior to the start (Conference ID: 2415645):
Denmark: +45 32 74 07 10
United Kingdom: +44 20 3481 4247
United States: +1 (646) 307 1963
