Torm posted pretax loss 22m dollar in 1H
SHIPPING: Torm posted a loss before tax of 22 million dollar for the first six months of 2010. For Q2 the loss was 24 million dollar, in line with expectations and better than the same period a year ago. The management saw positive signs of recovery late in the quarter.
"In Q2, the product tanker market was affected by seasonality, however positive signs of recovery were seen late in the quarter. We believe underlying demand is improving and will support the product tanker segment going forward," says CEO Jacob Meldgaard.
The result before tax for the second quarter of 2010 was a loss of USD 24 million, compared to a loss of USD 33 million in the same period last year. The result for the second quarter of 2010 was positively impacted by mark-to-market non-cash adjustments of USD 2 million.
A loss of USD 22 million before tax was recorded for the first six months of 2010. The result for the first quarter of 2010 includes a profit of USD 18 million from the sale of two bulk vessels.
In the second quarter of 2010, product tanker rates were negatively impacted by seasonality, influx of new tonnage and continued discharge of vessels from floating storage. The demand for refined products in the West remained slow, and the freight rate weakness seen in the crude oil markets did not spur additional demand for the larger LR tonnage. The demand for vegetable oil to China and Europe and for naphtha in the Far East did not offer sufficient rate support until the end of Q2, where also demand for gasoline in the West showed an upward trend.
Panamax bulk rates remained volatile in the second quarter of 2010. Up to mid-May, the rates increased to USD 37,100/day, but then fell to USD 22,100/day at the end of the quarter. Due to Torms high coverage of earning days, the volatility in bulk spot rates had limited impact on Torms earnings.
On a quarterly basis, Torm calculates the long-term earnings potential of its fleet based on discounted expected future cash flows. The calculated value of the fleet at 30 June 2010 supports book value.
At 30 June 2010, Torm had covered 33% of the remaining earning days for 2010 in the Tanker Division at USD 16,470/day and 81% of the remaining earning days in the Bulk Division at USD 19,725/day.
Torm forecasts a loss before tax of USD 40-60 million for 2010.
Source: Torm / maritimedanmark.dk
