As a result of the challenging tanker market, Danish shipping company TORM ended the first quarter of this year with a profit of USD 4.6 million, considerably lower from a profit of USD 30.9 million recorded in the same period a year earlier.

In addition, EBITDA for the quarter dropped to USD 44 million from USD 70 million posted in 1Q 2016.

“I am encouraged that TORM remained profitable in a challenging first quarter of 2017 … The results are attributable both to our strong commercial performance and an attractive cost structure. So far, TORM has remained profitable in the second quarter, where the product tanker market continues to be volatile,” Jacob Meldgaard, TORM’s Executive Director, commented.

During the first quarter of 2017, product tanker freight rates started out at weak levels similar to the fourth quarter of 2016 but strengthened towards the end of the first quarter, according to the company. As disclosed, the freight rate improvement was primarily driven by increased demand for clean petroleum products in the western markets, which resulted in stronger time charter equivalent (TCE) earnings for the first quarter of 2017 compared to the preceding quarter.

In 1Q 2017, TORM’s product tanker fleet realized average TCE earnings of USD/day 15,264 for 7,004 earning days compared to USD/day 19,845 for 6,973 earning days seen during the three-month period ended March 31, 2016.

As informed earlier, TORM sold one vessel, TORM Anne, and completed sale and leaseback transactions for two vessels, TORM Helene and TORM Mary.

Additionally, following the balance sheet date, TORM has sold two vessels, TORM Madison and TORM Trinity and completed a sale and leaseback transaction for one vessel, TORM Vita. The three transactions are treated as financial leases without purchase obligation, the company said.

As of 31 March 2017, net interest-bearing debt amounted to USD 596 million. As previously announced, TORM finalized a new term facility of up to USD 130 million in January 2017 which was fully drawn on March 31.

Furthermore, TORM had undrawn credit facilities and cash of around USD 405 million at the end of the first quarter of 2017.

As of 31 March 2017, TORM had covered 14% of the remaining tanker earning days in 2017 at USD/day 19,873. Up until May 6, the company had covered 27% of the remaining tanker earning days in 2017 at USD/day 16,801.

In its outlook for 2017, the company expects that a change in freight rates of USD/day 1,000 will impact the profit before tax by USD 13.2 million, as 13,166 earning days in 2017 are unfixed as of May 5.

Currently, the company’s fleet comprises around 80 tankers on the water. In addition, TORM’s orderbook stands at four LR2 newbuildings with expected delivery in 2017 and 2018.