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Torm lifts first half earnings on profitable rates but trims full year forecast

Torm lifts first half earnings on profitable rates but trims full year forecast
Denmark’s Torm has lifted its first half earnings on the back of profitable rates in the product tanker segment, but trimmed its earnings forecast for the full year 2016.

In the six months ended 30 June 2016, Torm recorded a profit of $45.9m, up 33% from $34.5m in the year-ago period.

Revenue during the period surged by 167.2% year-on-year to $370.6m.

While product tanker freight rates remained at profitable during the second quarter of this year, the rates were at a softer level compared to the previous corresponding period.

The softening market was primarily a result of high gasoline and diesel stocks globally, causing most regions to cover own consumption by drawing down on inventories.

“The fundamental oil demand was high, as expected, in the second quarter of 2016. However, inventory drawdowns and lower naphtha imports to the Far East reduced the transportation requirements and led to generally lower freight rates,” said Jacob Meldgaard, executive director of Torm.

Refinery utilisation overall was at a lower level in the second quarter compared to the first quarter this year mainly due to seasonal maintenance and the high diesel and gasoline stocks.

During the second quarter, Torm’s product tanker fleet realised average spot time-charter earnings of $17,457, down 24% year-on-year, with the LR2 segment at $21,868, the LR1 segment at $18,942, the MR segment at $17,417, and the handysize segment at $14,823.

For the full year 2016, Torm has trimmed its EBITDA interval to a positive range of $210-250m from $250-330m and the profit before tax range to $50-90m from $100-180m.

As at end-June 2016, Torm operated a fleet of 81 product tankers including 77 owned and four chartered-in.

The group has four LR2 newbuildings on order with expected delivery between the fourth quarter of 2017 and the second quarter of 2018. In addition, it has an option to purchase up to six additional vessels within the LR2, LR1 or MR segments with scheduled delivery in 2018 and 2019.