Danish shipping company TORM reported a significant rise in its profit in the first quarter of this year, driven by product tanker market recovery.
The company’s profit increased to USD 23.2 million in Q1 2019 from USD 0.7 million in the corresponding period a year earlier.
In addition, revenues stood at USD 186.4 million in Q1 2019, compared to USD 163.1 million posted in Q1 2018, while time charter equivalent (TCE) earnings were USD 116.6 million in Q1 2019, compared to USD 96.5 million reported in the same period last year.
In the first quarter of 2019, TORM achieved TCE rates of USD/day 17,949, compared to USD/day 14,225 recorded in Q1 2018.
The product tanker freight rates started the first quarter of 2019 at strong levels last seen in 2016 before softening throughout the quarter as spring refinery maintenance gained pace, according to the company.
”TORM’s results in the first quarter reflect the company’s strong operating performance in a product tanker market where a significant recovery started in the fourth quarter of 2018,” Jacob Meldgaard, Executive Director at TORM, commented.
“We made a profit before tax of USD 23.5m in the first quarter of 2019, the strongest quarterly result in three years, and the bookings so far in the second quarter indicate a continued positive product tanker market,” he added.
During the first quarter of 2019, TORM entered into agreements to sell two older MR vessels — the 2002-built TORM Amazon and the 2001-built TORM Cecilie. The two vessels were sold for a total consideration of USD 15 million, and a total debt of USD 9 million was repaid in connection with the vessel sales. TORM Amazon was delivered to its new owners during the first quarter of 2019, and TORM Cecilie was delivered during the second quarter of 2019.
In April 2019, TORM decided to install 13 additional scrubbers through retrofit installations. These new scrubbers will be produced by the joint venture ME Production China, in which TORM holds an ownership stake of 27.5%.
Including the 13 additional scrubbers, TORM has committed to scrubber installations on 34 vessels. The remaining newbuilding program with scrubbers and retrofit installations will be delivered throughout 2019 and the first quarter of 2020. Specifically, 32 of the 34 scrubbers will be installed ahead of the IMO 2020 deadline, the company said.
“We have extended our scrubber commitment with an additional 13 units, which will bring the total number of scrubber-fitted vessels to 34, or close to half of our fleet. With this balanced approach, TORM is well-positioned to reap the benefits of the increased demand for clean petroleum products expected from the implementation of the IMO 2020 regulation,” Meldgaard concluded.
As of March 31, 2019, excluding TORM Cecilie that is held for sale, TORM’s fleet consists of 69 owned vessels, three chartered vessels and nine vessels on order. The nine newbuilds, which include two LR1 and seven MR vessels, are expected to be delivered in 2019 and the first quarter of 2020.