Updated at 12:40 pm CET with comments from Executive Director Jacob Meldgaard
2017 did not look set to be a strong market for carriers operating in product tanker, and this trend was confirmed Wednesday by Torm's second quarter interim report.
With an operating profit of USD 36 million and a net loss of USD 2 million, Torm made it through a second quarter that was weak for the global product tanker market overall.
For the first half of the year, Torm achieved an operating profit of USD 80 million and pre-tax profit of USD 3 million.
According to Torm Executive Director Jacob Meldgaard, this development has generally continued into the third quarter.
"I don't see any significant change in the third quarter compared to the first half of the year," he tells ShippingWatch.
"We haven't seen the turning point where demand grows enough to trigger higher rates. We think this will happen at some point, but the large deposits of petroleum products have not yet been reduced noticeably, even though the underlying demand for oil products remain healthy. This means that demand remains flat, hovering around zero," says Meldgaard.
Pleased with smaller deficit
Flat development or not, Meldgaard is optimistic in light of the carrier's operating results. Torm delivers, and the carrier is typically ranked among the best earning companies in the sector.
"I am satisfied that we have been able to deliver a profit for the first six months of 2017 despite a difficult product tanker market. Over the summer, we have utilized our strong capital structure to pursue two attractive vessel growth opportunities totaling six vessels at what we believe is an opportune time in the cycle," he says in a comment on Wednesday's results.
After the second quarter ended, Torm has completed two vessel transactions to acquire a total of six new MR vessels currently under construction for a total USD 185 million. The first covers four MR vessels scheduled for delivery in 2019. This order comes with an option for another four MR vessels, expected delivered in late 2019.
Continuing fleet renewal
Torm's combined fleet had a book value of around USD 1.4 billion as per end June 2017.
"We've created a balance and a position, in terms of our capital contingency, that enables us to act quickly when opportunities arise. We will continue to do so. We're renewing our fleet and continuously selling some of our older vessels, without feeling pressured to do so, and we don't have a specific target for how many ships we have to buy and sell," says Meldgaard.
English Edit: Daniel Logan Berg-Munch