Q1 2021 RESULTS TELECONFERENCE
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1 2 M AY 2 0 2 1
Q1 2021 RESULTS TELECONFERENCE
1
SAFE HARBOR STATEMENTS
Matters discussed in this release may constitute forward-looking statements. Forward-looking
statements reflect our current views with respect to future events and financial performance and
may include statements concerning plans, objectives, goals, strategies, future events or
performance, and underlying assumptions and statements other than statements of historical
facts. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,”
“potential,” “may,” “should,” “expect,” “pending” and similar expressions generally identify
forward-looking statements.
The forward-looking statements in this release are based upon various assumptions, many of
which are based, in turn, upon further assumptions, including without limitation, management’s
examination of historical operating trends, data contained in our records and other data available
from third parties. Although the Company believes that these assumptions were reasonable
when made, because these assumptions are inherently subject to significant uncertainties and
contingencies that are difficult or impossible to predict and are beyond our control, the Company
cannot guarantee that it will achieve or accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of the world economy and
currencies, general market conditions, including fluctuations in charter hire rates and vessel
values, the duration and severity of the COVID-19, including its impact on the demand for
petroleum products and the seaborne transportation thereof, the operations of our customers
and our business in general, changes in demand for “ton-miles” of oil carried by oil tankers and
changes in demand for tanker vessel capacity, the effect of changes in OPEC’s petroleum
production levels and worldwide oil consumption and storage, changes in demand that may
affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in
TORM’s operating expenses, including bunker prices, dry-docking and insurance costs, changes
in the regulation of shipping operations, including actions taken by regulatory authorities,
potential liability from pending or future litigation, domestic and international political conditions,
potential disruption of shipping routes due to accidents, political events including “trade wars,” or
acts by terrorists. In light of these risks and uncertainties, you should not place undue reliance
on forward-looking statements contained in this release because they are statements about
events that are not certain to occur as described or at all. These forward-looking statements are
not guarantees of our future performance, and actual results and future developments may vary
materially from those projected in the forward-looking statements.
Except to the extent required by applicable law or regulation, the Company undertakes no
obligation to release publicly any revisions to these forward-looking statements to reflect events
or circumstances after the date of this release or to reflect the occurrence of unanticipated
events.
2
TODAY’S PRESENTERS
Jacob Meldgaard
▪ Executive Director of TORM plc
▪ CEO of TORM A/S since April 2010
▪ Chairman of the Board of Danish Shipping and member of the Board of Danish Ship Finance
▪ Previously Executive Vice President of the Danish shipping company NORDEN, where he
was in charge of the company’s dry cargo division
▪ Prior to that, he held various positions with J. Lauritzen and A.P. Moller-Maersk
▪ More than 30 years of shipping experience
Kim Balle
▪ Chief Financial Officer of TORM A/S since December 2019
▪ Previously CFO of CASA A/S and DLG
▪ Prior to that, he held various positions with Danske Bank
▪ More than 30 years of finance experience
3
Q1 2021 HIGHLIGHTS
Q1 FINANCIAL HIGHLIGHTS
CORPORATE EVENTS
Purchase of eight 2007-2012 built MR
EBITDA of USD 18.9m TCE Q1 2021 of USD/day 13,493
Inproduct tanker
early 2020, vessels
TORM for a total
refinanced USDcash
496m of
consideration
existing debt. of USD 82.5m and the issuance
of 5.97 million shares
Loss before tax of USD 21.1m MR TCE Q1 2021 of USD/day 12,935 In Q2 TORM refinanced USD 35m on five
The cash
vessels, element will
postponing the be financed
maturity fromwith
2021USD
to
82m of new bank debt
2025.
RoIC of -2.7% Q2 bookings of USD/day 14,821 In Q3 TORM refinanced USD 150m on eight
vessels, postponing
Purchase the maturity
of three 2015-built to 2027,fitted
scrubber
providing additional financial flexibility
LR2 vessels for a total cash consideration and of
Earnings/ (loss) per share of USD -0.29 (DKK -1.8) USD 12m in
USD 120.8m liquidity. The refinancing includes
a CO2 emission-linked pricing mechanism
aligned with will
Financing IMO’s emission
partly be banktarget
debtfor
and 2030
sales
and lease structures
Sold the older MR vessel TORM Carina
Note: Adjusted net profit: Net profit adjusted for impairments, sales gains and provisions. 4THE THREE LR2 PURCHASES BUILD ON TORM’S
COVERAGE AND S&P STRATEGY OVER THE PAST YEAR
MR freight rates, USD/day # Vessels on the water • TORM has actively managed the
spot exposure in the recent volatile
market development through
coverage strategy as well as sales
80,000 and purchase activities:
76 78 78 73 72 73 80
(85 incl. NB) • Coverage strategy:
• From Q2 2020 onwards, TORM
50,000 has had a strategic focus on
increasing cover through both
physical contracts and derivatives
20,000 • As of 07 May 2021, TORM has
covered 78% of the Q2 earning
days
Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug- • Sales and purchase activities:
19 20 20 20 20 20 20 21 21 21 21
• During the market spike in the
Coverage Primarily spot, opportunistic Increasing cover over period through TC-outs Increased cover to second quarter of 2020, TORM
strategy cover and FFA’s run-off capitalized on the market and sold
seven older vessels at attractive
levels
Sale of seven older
S&P activities
Opportunistic
vessels to capitalize
Opportunistic sales of older vessels and purchase of 11
Opportunistic • During the first months of 2021,
fleet renewal younger vessels to increase operational leverage TORM has purchased 11 younger
strong market
vessels adding to TORM’s
operational leverage and future
performance
Source: Clarksons. Spot earnings, MR average is basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->Sydney. 5DYNAMIC COVID-19 SITUATION CONTINUES TO AFFECT
THE PRODUCT TANKER MARKET
USD/day Q1 2021
190,000 • Renewed lockdowns in several regions
LR2 (avg.) temporarily reversed oil demand
MR (avg.) recovery and capped trade flows
TORM MR (spot) • The extremely cold weather in mid-
90,000 February led to severe outages in the
TORM MR covered Q2 2021 as of 7 May 2021
85,000 US Gulf refinery sector and
80,000 consequently boosted transatlantic flows
75,000 as well as East to West flows, bringing
70,000 US clean product imports to the highest
65,000 monthly level since 2010
• Despite LR2 clean-ups and high crude
60,000
cannibalization as a result of the weak
55,000 crude tanker market, LR2s were
50,000 supported by increased East to West
45,000 trade in March
40,000
35,000 Q2 2021 – to date
30,000 • East to West trade flows have eased
from the spike in end-Q1 along with peak
25,000
refinery maintenance in Asia and
20,000 returned US supply
15,000 • Progressing vaccine rollout in the US
10,000 and Europe is supporting oil product
5,000 demand
0 • Increasing COVID-19 cases in Asia
Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- (most notably in India) can potentially
19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21 lead to increased exports from the region
Source: TORM, Clarksons. Spot earnings: LR2: average of Clarksons LR2 East combination (Ras Tanura->Chiba->Ulsan->Singapore) and East-West combination (Ulsan->Singapore->Mina Al
Ahmadi->Rotterdam->Skikda->Chiba); MR: average basket of Rotterdam->NY, Bombay->Chiba, Mina Al Ahmadi->Rotterdam, Amsterdam->Lome, Houston->Rio de Janeiro, Singapore->Sydney. 6THE OIL MARKET HAS MOVED FROM STOCKBUILDING TO
STOCKDRAWING
• The COVID-19 pandemic led to an
unprecedented oil demand destruction
Pre-COVID-19
• Initially, refinery runs lagged declines in
demand, leading to unprecedented
inventory builds bringing the onshore
Refined product spare storage capacity to its limits
stocks build
• The demand started to recover, but
weak refinery margins capped refinery
runs, leading to stock draws
Refined product
stocks build • Increasing new COVID-19 cases
especially in the West but also in Asia
Refined product
stocks draw led to a temporary reversal in the oil
demand recovery in Q1 2021
• Vaccine rollouts are supporting
recovery in oil demand, although local
Apr 2021
increases in COVID-19 cases remain a
Jan 2020 Apr 2020 Jul 2020 Oct 2020 Jan 2021
risk
Oil product demand
Refinery production
Source: TORM. 7OIL DEMAND IN CHINA HAS REBOUNDED, ILLUSTRATING THE
POTENTIAL POST-COVID-19 SITUATION
While the oil demand recovery in the West stalled on increased COVID-19 cases over the year-shift…
Oil demand growth
vs 2019, % • China’s oil demand (~14% of the
Europe United States
10 10 global oil demand) has recovered
0 0 to pre-COVID-19 levels due to
-4 -3 -4 -3 successful control of the virus
-10 -10 -5
-8 -10 -10 -11 -10 -10 -10 -12 -8
-13 -14
-16
-13 -13 -15 -15 -13 -12 -13 -11 • India’s demand (~5% of the
-20 -16 -20
-20 -19 global oil demand) has also done
-30 -24 -30 -24
-28 -31 relatively well before the recent
-40 -40 abrupt increase in COVID-19
-50 -50 cases
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug-Sep- Oct- Nov-Dec- Jan- Feb- Mar- Apr- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr-
20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 • The second wave of COVID-19
cases in especially Europe (~15%
… the demand has shown comeback in China as well as in India before the recent surge in COVID of the global oil demand) but also
cases. in the US (~20% of the global oil
China India
10 5 6 6 10 demand) put a break on the oil
3 3 3 4 4 3 3
1 0 1 1 0 demand recovery, although the
0 0
-1 0 -1 -1 -3
well-progressing vaccine rollout in
-3 -2 -4
-10 -8 -10 -8 the latter is already showing signs
-11 of improvements in oil demand
-20 -15 -20 -16 -15
-19
• Accelerating vaccine rollouts
-30 -30
leading to a wider recovery in
-32
-40 -40 macroeconomic activity and oil
-45 demand, supporting both the
-50 -50
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug-Sep- Oct- Nov-Dec- Jan- Feb- Mar- Apr- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- product tanker and crude tanker
20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21
trades
Note: March/April 2021 data are estimates.
Source: WoodMackenzie, JBC, EIA, compiled by TORM. 8TORM HAS IMPLEMENTED PRECAUTIONARY MEASURES IN INDIA
WHERE THE COVID-19 DEVELOPMENT IS AFFECTING OIL DEMAND
No of cases India new COVID cases
400,000 • The recent increase in COVID-19 cases in
300,000 India has caused TORM to implement
200,000 precautionary measures to safeguard both
100,000 the shore based staff and the seafarers
0
Jan- May-
• The development poses operational
20 21 challenges as crew changes have become
more difficult in the region and for Indian
Index India mobility indicator seafarers. Further, vessels with recent port
200
calls in India have restrictions in certain
150 countries
100
• TORM is carefully monitoring the
50 development and expects to fully maintain
0
Jan- May-
operations
20 21
• For the product tanker market, the
India CPP exports and imports increase in COVID-19 cases have led to
Kb/d
Exports Imports new local lockdowns and reduced oil
product demand
1,000
• So far, refineries in the country have
500 continued to run at elevated levels, which
has resulted in higher daily clean product
0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21
exports
Sources: Apple, Kpler, Our World in Data, TORM. May-21 data as per 5 May. 9SUCCESSFUL VACCINE ROLLOUT IN THE US LEADING TO
IMPROVED OIL DEMAND
Weekly US Vehicle-Miles Travelled (VMT) vs 2019 respective week US Flight Traveler Throughput (7d avg)
%
All vehicles Passenger vehicles Trucks 2019 2020 2021
20 3,000,000
10
2,500,000
0
2,000,000
-10
-20 1,500,000
-30
1,000,000
-40
500,000
-50
-60 0
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20 20 20 20 20 20 20 20 20 20 20 20 21 21 21 21 21
• With ~60% of the adult population in the US having commenced vaccination, demand for core products (gasoline, jet fuel, diesel) in the US in April 2021 climbed to
5% below the 2019 seasonal level, up from -14% in January
• Diesel demand (~20% of total demand) has recently showed strong gains vs 2019, while gasoline (~45% of total demand) still remains ~5-6% below the respective
2019 level
• Although jet fuel demand has remained ~30% below the 2019 level, the US flight traveler throughput has improved in recent months to the levels last seen in mid-
March 2020 (jet accounts for ~9% of US oil demand)
• In late April, US Gulf refinery utilization climbed to above 90% for the first time since March 2020
Sources: EIA, US DOT, US TSA. 10THE UNWINDING FLOATING STORAGE IS DONE, ONSHORE
INVENTORIES SIMILARLY ON THE WAY DOWN
Onshore CPP inventories in key trading hubs* and global CPP floating storage
• Onshore CPP inventories in key
Mln bbl Mln dwt trading hubs (~20% of global
90 16
Floating storage (RHS) stocks) have declined from the
15 peak of 15% above 5-year
80 Light distillate stocks (vs 2015-2019 avg)
14 average in June 2020 to 3% in
70 Middle distillate stocks (vs 2015-2019 avg)
13 the first months of 2021,
60 12 followed by a large decline in
11 stockpiles induced by the
50
10 refinery outages in the US Gulf
40
The effect of the 9
Polar Vortex as a result of the extremely cold
30 8 weather
7
20
6
• On a global scale, onshore
10
5
stockpiles are still above
0 4
historical levels but excess
3
stocks have come down to a
-10
2
third of the peak levels in mid-
-20
1
2020
-30 0 • Floating storage has come down
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21
from 14% at the peak to 4% of
the clean trading fleet, slightly
above the pre-COVID-19 levels
Note: Onshore inventories: based on weekly data for the US, Amsterdam-Rotterdam-Antwerp (ARA) area and Singapore, and monthly/weekly data for Japan (the US accounts for
75-80% of the combined stockpiles). Shown countries/regions together account for around 20% of the global product stockpiles.
Sources: EIA, PAJ, Reuters, WoodMackenzie, TORM. 11COVID-19 HAS LED TO A NEW WAVE OF REFINERY CLOSURES,
INCREASING TON-MILES IN THE MEDIUM- AND LONG-TERM
Announced refinery closures and capacity additions in 2020-2023*
130 kb/d 116 kb/d
58 kb/d
55 kb/d 485 kb/d
220 kb/d
137 kb/d
335 kb/d 200 kb/d 80 kb/d
190 kb/d 235 kb/d
267 kb/d 1,030 kb/d
250 kb/d
200 kb/d 1,250 kb/d
110 kb/d
445 kb/d
690 kb/d 220 kb/d
80 kb/d
100 kb/d
30 kb/d 250 kb/d
Planned closure
15 kb/d
Closure under consideration
236 kb/d 109 kb/d
New/expanded capacity 120 kb/d 110 kb/d
135 kb/d
• 2.3 mb/d of refinery capacity has been announced to shut down in recent months, with another 1.0 mb/d under consideration
• 3.3 mb/d of potential refinery closures compared to a global capacity expansion of 4.9 mb/d during 2020-2023
• Most of the capacity to be shut down is in the net importing regions, while new capacity comes online mainly in the Middle East and Asia,
boding well for the ton-mile development in the medium and long term
Note: Includes Total’s 100 kb/d Grandpruits refinery, Eni’s 80 kb/d Livorno refinery, and Phillips 66’s 120 kb/d Rodeo refinery which will be closed down temporarily in order to be converted into
renewable fuel plants.
Source: TORM, industry sources. 12LOW TONNAGE SUPPLY GROWTH SUPPORTING MARKET
RECOVERY
The product tanker order book at a historical low level as % of the
total fleet
• The product tanker order
56 book to fleet ratio is at a
historical low of 7%
• This is supported by
historically low crude tanker
order book at 9% of the fleet,
37
which combined with returning
OPEC barrels suggests less
crude cannibalization in the
24 medium-/long-term
22
19 19 • Due to the recent record high
15 16 ordering activity in the
14
11 12 10
container vessels segment,
10 10
8 7 7 ordering of product tankers
with delivery before 2024 has
become more difficult. This
will limit the fleet growth in
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 5Y 10Y
YTD avg. avg. 2022-2023 even further, in
addition to already record low
order book ratio
Source: TORM. 13TORM COMMERCIALLY OUTPERFORMS PEERS IN ITS KEY
MR SEGMENT CORRESPONDING TO USD 12M IN Q1 2021
MR reported TCE, USD/day
Q1 2021 performance:
• TORM: USD/day 12,935
• Peer average: USD/day 10,337
TORM MR USD
USD 14m USD 36m USD 20m USD 24m USD 39m
premium* 12m
Note: Peer group is based on Ardmore, d’Amico (composite of LR1, MR and Handy), Diamond S, Frontline 2012, Hafnia Tankers, NORDEN, Maersk Tankers, Teekay Tankers, Scorpio and
International Seaways.
For Q1 2021, the peer group only consists of Ardmore, d’Amico, Diamond S, International Seaways and Scorpio. Earning releases from other peers are pending.
* TORM’s premium calculation is based on the individual quarters with those vessels in TORM’s MR fleet earning TORM’s TCE rate compared to the peer average. 14TORM’S COMMERCIAL CAPABILITIES ARE FOCUSED ON
OPTIMIZING GEOGRAPHICAL POSITIONING
USD/day (%)
14,000 80
West outperformance
Majority of TORM’s
MRs west of Suez
12,000
10,000 70
8,000
6,000
60
4,000
2,000
0 50
-2,000
East outperformance
Majority of TORM’s
-4,000
MRs east of Suez
40
-6,000
-8,000
30
-10,000
-12,000
-14,000 20
Q1-17 Q3-17 Q1-18 Q3-18 Q1-19 Q3-19 Q1-20 Q3-20 Q1-21
TORM % of MRs positioned west of Suez (right axis) West premium of benchmark earnings* (left axis)
* West premium calculated as spread between Atlantic triangulation (TC2 & TC14) and Transpacific voyage (TC10).
Source: Clarksons, TORM. 15INCREASED COVERAGE DE-RISK Q2 2021 RESULT
Open earning days per segment as of 31 March 2021
28,903 29,246
4,189 4,211
3,093 3,234 LR2
14,236 LR1
1,599 689 MR
20,895 21,102
Handy
11,427
521 725 698
2021 2022 2023
Q2 2021 coverage
USD/day Q1 2021 TCE per day Q2 2021 cover as of 7 May 2021*
% of total days TCE per day
LR2 16,455 112 15,781
LR1 14,750 87 14,781
MR 12,935 72 14,660
Handy 7,362 47 11,624
Total 13,493 78 14,821
* Part of the cover is conducted through freight derivatives using FFA for TC5 which is allocated according to owned vessels days to the LR1 and LR2 segments. In total TORM’s coverage for the 16
LR segments is at 100%TORM USES FREIGHT DERIVATIVES TO OBTAIN
ATTRACTIVE COVERAGE
Freight derivatives* are a natural element of … and TORM has historically benefitted from the use of freight derivatives but M-
TORM’s coverage strategy… t-M of unrealized element impacts TORM’s P&L statement
ROY 2021 cover as of 31 March 2021 Historical P&L contribution from freight derivatives (USDm)
12.2
ROY covered days for 2021: 6,815 days
10.8
• FFAs: 2,765 days
• Physical: 4,050 days 6.6 7.0
5.7
ROY covered rate for 2021: 14,982 USD/day 5.1
• FFAs: 14,358 USD/day
4.0
• Physical: 15,409 USD/day
0.9
1.8
1.1
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Total Unrealized Total April 2021 Total 2020
realized end Q1 2020 and (realized and Jan. -
2021 Q1 2021 and Apr. 2021
unrealized)
Notes:
Before 2020, TORM did not use freight derivatives in meaningful size.
As freight derivatives are not hedge accounted in TORMs financial statement, the unrealized element impacts the TCE. It is
included in TORM’s coverage table, but as it relates to future rates, it does not impact the realized freight rates (TCE/day)
for the quarter.
* Freight derivatives includes FFAs and its associated bunker derivatives
17NET ASSET VALUE ESTIMATED AT USD 788M WHILE NET
LOAN-TO-VALUE OF JUST 55%
31 March 2021 figures, USDm
Net LTV of 55%
1,705
858
788
210 22 13
117
Value of vessels Outstanding debt Committed Cash Working Capital Other* Net Asset Value
(incl. newbuildings) CAPEX
• Net Loan-to-Value was 55%
• Net Asset Value (NAV) was estimated at USD 788m (USD 10.6/DKK 67.1 per share)
• Market cap as of 31 March 2021 was USD 679m, or DKK 57.8 per share**
• Market cap as of 7 May 2021 was USD 704m, or DKK 57.0 per share***
** Other includes Other plant and operating equipment and total financial assets.
** Calculated based on 74,476,483 shares and USD/DKK FX rate of 6.34.
*** Calculated based on 76,192,653 shares and USD/DKK FX rate of 6.17. 18WELL-POSITIONED TO SERVICE FUTURE CAPEX COMMITMENTS
AND FURTHER LEVERAGE MARKET OPPORTUNITIES
Liquidity and CAPEX as of 31 March 2021
Available liquidity, USDm Cash CAPEX commitments, USDm
Expected closed
during Q2 2021 3x 2015-built LR2 Team Tankers1
Newbuildings incl. scrubber
446
24
92
329
Purchased
during Q2 2021
76 276
92 121 121
155
117 45 116 38
86 86
48
69 69 69
Cash Available Team LR2 Total 2015-built Additional Total 2021 2022 Total CAPEX 3x 2015- Proforma
position Working Tankers Newbuilding Available LR2 sale-and- Available as of Q1 2021 built LR2 CAPEX
Capital Financing Financing Liquidity Financing leaseback Liquidity
Facility (as of Q1 Financing (proforma)
2021)
1) Does not include the share-based consideration to Team Tankers of USD 55m 19FAVORABLE FINANCING PROFILE WITH NO MAJOR NEAR-
TERM MATURITIES
Scheduled debt repayments as of 31 March 2021
USDm
849 10
69 16 Financial lease
144
92 16 Mortgage debt
92 13
90 55
705 72
33
289
Oustanding debt as ROY 2021 2022 2023 2024 2025 Hereafter
of 31 March 20211
Ample headroom under our attractive covenant package:
• Minimum liquidity: USD 45m
• Minimum book equity ratio: 25% (adjusted for market value of vessels)
1) Financial lease excludes non-vessel related IFRS16 liabilities of USD 7.4m and is adjusted for loan receivables of USD 4.6m and debt repayment in connection with the sale of TORM Carina 20You can also read
