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Torm revises forecast to deeper in the red as sell-offs make their mark

Torm revises forecast to deeper in the red as sell-offs make their mark
Struggling Danish shipowner Torm has narrowed its second quarter loss to $22.8m from $30.1m in 2013 as its fleet shrinks and revenues tumble.

The group's current owned fleet of 45 vessels is around a third smaller than the 67 ships the company had at the same point in 2013. The contraction was caused by Torm's lenders exercising the options they were granted in the company's restructuring to force the sale of vessels. Private equity form Oaktree Capital snapped up five MRs from Torm in April 2013, four MRs in November 2013 and 13 product tankers in April this year when Danish Ship Finance triggered a sell off.

Time charter equivalent (TCE) earnings in Torm's main tanker segment, MR, were down by 18% compared to the second quarter 2013, at $13,481 per day. The available earning days in that division were also down 32% due to fleet reduction. The combined effect of lower rates and a smaller fleet meant revenues were down 48% to $148.6m for the quarter. The tanker outfit's operating loss was $7m for the quarter.

In the dry bulk market, Torm's seven panamaxes earned TCE rates of $12,286, a 51% improvement over Q2 2013 that helped operation profit to break even for the period.

The company's full year forecast has been revised down to a pre-tax loss of between $290m and $310m from its previous estimate of a loss of $260m to $290m.

There was good news for Torm outside of the quarter as it received waivers on its debt covenants, and expects to be in compliance with its covenants come September after receiving a six month extension on its working capital facility through to March 2015.

At 30 June 2014 Torm had negative equity of $125m, with net interest bearing debt totalling $1.37bn down from $1.66bn at the end of March largely as result repayment of debt from vessels sold.