Torm: Strongest half-year since 2008
In the first six months of 2020, Torm achieved profit before tax of 128.2 million dollars, compared to 28.7 million dollars for the same period of 2019. The result is thethe strongest half-year in 12 years. Solid operational performance in Q3.
“The strong market during the first quarter continued into the second quarter of 2020, which has resulted in the strongest half-year since 2008”, says Jacob Meldgaard, CEO of Torm.
“I am pleased that Torm’s strong financial position allows us to distribute a total of USD 63m, or DKK 397m, in dividends to our shareholders for the half-year”, Jacob Meldgaard says.
“Further, I am pleased that at this point in the third quarter of 2020, TORM’s solid operational platform has secured strong bookings that indicate a positive result for the whole quarter”.
The second quarter of 2020 was characterized by significant market volatility with product tanker rates reaching all-time high levels by the end of April, supported by temporary export boosts and floating storage.
The strong market was a result of the COVID-19 outbreak that dramatically reduced oil demand while the OPEC+ price war at the same time resulted in an increased oil production in March and early April. This led to stock building of an unprecedented scale, including floating storage. Especially operational floating storage due to discharging issues at terminals and refineries tied up product tankers and effectively removed vessels from the market.
However, by the end of June, rates had come off as the oil market started to rebalance, resulting in a significant part of the tonnage in floating storage being released.
Current uncertainties in the product tanker market are driven by the speed towards normalization of the demand and supply situation in the oil market.
Torm’s Board of Directors has decided to declare an ordinary dividend of USD 63.2m, equivalent to USD 0.85 per share. Payment is expected on 10 September 2020 to shareholders of record on 27 August 2020, with the ex-dividend date on 26 August 2020. The distribution corresponds to 50% of net income for the six months ended 30 June 2020 and is in line with the Company’s Distribution Policy.
As of 30 June 2020, 18% of the remaining total earning days in 2020 were covered at an average rate of USD/day 23,027. As of 13 August 2020, the coverage for the third quarter of 2020 was 68% at USD/day 17,928. For the individual segments, the coverage was 86% at USD/day 22,357 for LR2, 69% at USD/day 21,003 for LR1, 64% at USD/day 16,633 for MR and 63% at USD/day 7,100 for Handy.