Diving rates pull Torms profit down in Q3
SHIPPING: Diving tanker and bulker rates sent Torm's profit before tax for the third quarter down to USD 4 million, including a positive impact of USD 21 million from the sale of two bulk carriers. Profit before tax for the first nine months of 2009 was USD 11 million.
"Profit for third quarter 2009 is in line with expectations and better than the second quarter. Despite the continued low freight rates for product tankers we are satisfied with TORM's success in securing earnings above average market levels and at the same time deliver the planned cost reductions. We see, however, no signs of immediate market recovery, but our long-term strategic focus on the product tanker market remains", CEO Mikael Skov says.
Management says, that the product tanker rates in the third quarter, remained at the low levels seen at the end of the second quarter. The market is still suffering from the negative impact of low global oil demand and the addition of new tonnage. However, on routes to and from Asia, rates picked up considerably towards the end of the quarter, benefiting Torm's LR1 and LR2 vessels.
Third quarter spot earnings in Torm's MR Pool were USD/day 12,580, which was higher than the average rate levels seen on the main routes in the MR market. In the negative market conditions, the pools focused on optimising the transport patterns of the global fleet and its access to cargo contracts. This resulted in more effective utilisation of the fleet and, consequently, higher earnings.
Bulk Panamax rates fell back in mid third quarter, but regained some ground toward the end of the quarter. Due to Torm's high coverage of earning days, the developments in bulk rates had limited impact on Torm's earnings.
At 30 September 2009, TORM had covered 49% of the remaining earning days for 2009 in the Tanker Division at USD/day 19,227 and 85% of the remaining earning days in the Bulk Division at USD/day 17,050. For 2010, coverage at 30 September 2009 was 24% at USD/day 20,033 in the Tanker Division and 46% at USD/day 16,650 in the Bulk Division.
Torm maintains its forecast of a profit before tax of around break-even for 2009.
Source: Torm
