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Torm posts big jump in earnings for 2015, expects profitable 2016

Torm posts big jump in earnings for 2015, expects profitable 2016
Tanker operator Torm has booked a big jump in earnings for the financial year ended 31 December 2015 compared to 2014, and is expecting another profitable year in 2016.

Net profit for last year was recorded at $126m, skyrocketing from the gain of $13m seen in 2014.

The profit surge was aided by a 200% year-on-year jump in revenue to $540m on the back of a strong tanker shipping market as freight rates rose.

“The positive market sentiments that started in the fourth quarter of 2014 continued throughout 2015 with freight rates reaching the highest levels since 2008,” commented Jacob Meldgaard, ceo of Torm.

For the full year 2016, Torm forecasts an ebitda of $250-330m and a profit before tax of $100-180m.

In July 2015, Torm completed a restructuring and wind down its bulk activities with the sale of its last two bulk vessels, making it a pure-play product tanker company.

“The completion of Torm’s restructuring has provided Torm with financial and strategic flexibility. Torm realised a pro forma ebitda of $319m and a return on invested capital of 14% in 2015, when adjusting for the restructuring,” Meldgaard said.

The Danish shipowner’s return to a healthy financial position was also aided by the rise in product tanker freight rates during the first half of 2015, driven by increasing refinery margins, strong growth in US demand for gasoline, long haul movement of naphtha from Europe to the Far East and newly added Middle East refinery capacity.

In the second half of 2015, refinery margins and freight rates peaked during the third quarter, while rates softened during the fourth quarter though they remained at strong levels, according to Torm.

On 30 November 2015, Torm returned to the newbuilding market for the first time since 2008 and after its restructuring, ordering four fuel-efficient LR2 tankers, with options for six more, at CSSC Offshore & Marine Engineering (Group) Company (Comec), formerly known as Guangzhou Shipyard International (GSI).