Torm lost 33 mio dollar in 2. quarter
Torm had a loss before tax of 33 million dollar for the second quarter of 2009. In total, the profit before tax for the first six months of 2009 was 7 million dollar, which is lower than expected.
"The result for the first half of 2009 reflects that freight rates were at a historic low due to lower than expected global oil consumption. Our strategic view of the product tanker market is unchanged, and although the number of newbuildings is a challenge short-term, we are positive on the future prospects of the segment", says Torms CEO Mikael Skov.
The second quarter loss before tax of 33 million dollar was negatively affected by low freight rates and negative mark-to-market non-cash adjustments of 25 million dollar, hereof 20 million dollar on financial instruments primarily due to writedowns on options related to vessel values.
The management states, that Product tanker rates were significantly lower than expected in the second quarter. This is primarily due to lower demand for transport of oil products as global consumption of oil was lower than anticipated. Moreover, a historically large number of newbuildings have been delivered, and fuel costs have increased substantially since the beginning of the year.
According to the management, Bulk rates were higher than expected in the second quarter. This is primarily due to growing Chinese imports of iron ore and coal.
Based on broker valuations, the market value of Torm's fleet was below book value at 30 June 2009. However, as the market for product tanker vessels is currently illiquid, broker valuations are uncertain. The Company believes that the value decrease is not of a lasting nature and that future earnings and cash flow from the fleet still substantiate the book value.
At the 30 June 2009, Torm had covered 45% of the remaining operating days in the Tanker Division at 19,918 dollar per day and 69% of the remaining operating days in the Bulk Division at 17,376 dollar per day.
Torm sold three bulk vessels in the second quarter at a total profit of 27 million dollar, of which the profit of 19.5 million dollar on two of the vessels will be recognised in the financial statements for the third quarter. In addition, a purchase option for a modern bulk carrier was exercised, and the vessel was resold at a profit of 5 million dollar, which was recognised in the second quarter.
Torm maintains its forecast for a profit before tax of around break-even for 2009.
Source: Torm
