Torm narrows loss on mixed markets

The company's tanker division made an operating loss of $9m for the quarter, down from a $42m loss in the same three months last year, while the fortunes of Torm's dry bulk division worsened, its loss increasing from $4m in Q3 2012 to $12m in the last quarter.

Revenues fell from $256m to $231m for the quarter, compared to 2012, as time charter equivalent earnings (TCE) fell from $109.8m to $96.9m.

At the end of the depressed quarter, Torm benefited from China's iron ore restocking, stating in its earnings release, "the month of September marked a seasonal turn-around with a rally in capesize freight rates from $12,000 - $14,000 per day to approx. $40,000 per day driven by restocking of commodities. This had a positive spill-over effect on panamax, and with the start of the US Gulf grain season freight rates increased to approx. $14,000 per day. The handymax market followed a similar pattern, although with a time lag."

"According to plan, Torm reduced its bulk activities during the third quarter of 2013 from 32 vessels to 19 vessels. Going forward, Torm will continue to operate the existing core fleet of approximately ten [dry bulk] vessels."

Torm's owned fleet consists of 60 product tankers and two dry bulk vessels, with a further five product tankers and 17 bulk vessels chartered-in and another 25 product tankers either in pool or under commercial management.

For the larger tanker fleet, LR2 spot rates fell 16% to $11,350 per day in the third quarter compared to the same three moths of last year, while LR1 spot rates were up 13% to $15,282 per day, and Torm's largest sector, MR, was up 37% to $14,585 per day. Handysize rates held steady at $11,389 per day, a 1% increase.

"The results for the third quarter of 2013 were in line with our expectations as Torm continued to benefit from improving market fundamentals and a strong operational platform. Our long-term view of the product tanker market remains positive. EBITDA for the first nine months of 2013 was $71m, which was an improvement of $112m compared to last year," commented ceo Jacob Meldgaard.

The company's available liquidity stood at $99m at the end of the quarter, $31m in cash and $68m in undrawn credit. Torm expects to remain in compliance with the financial covenants for 2013, showing more confidence than earlier this year.

Torm revised its forecast for profit before tax down from a $110m loss to a $120m loss for the full year.