Torm's operational profits in the first quarter of 2013, at an EBITDA of USD 35.8 million, versus a USD 7.1 million deficit in the same period last year, represents the best quarterly result for the shipping company, which operates the largest product tanker fleet in the world, since the beginning of the financial crisis approximately five years ago.
"We're on the right track, with improved results and a positive operation, and lower costs overall, as well as lower costs on our chartered ships," says Jacob Meldgaard, Torm CEO, to ShippingWatch.
Torm benefits from the significant and partially seasonal rebound in product tank, and thus also benefits from the company's large fleet. The shipping company points to increased arbitrage in the global economy, the unusually cold weather in Northern Asia, and increased import demand from Australia following adjustments to the country's refinery capacities as factors that helped boost product tank rates to the highest level in four years.
"We're not back at our previous level, but there are some companies that are starting to act more freely. We're simply experiencing more financial activity, which helps to maintain the fundamentals of the market. And there's this thing happening in the United States, where the US has gone from being exclusively an import country to acting as both importer and exporter today. Of course a smaller import is a negative thing, but that's somewhat outweighed by the fact that the United States have become more competitive by selling from their refineries," says Jacob Meldgaard:
"To summarize, we've experienced growth in the markets. First quarter is generally a strong quarter in relation to the year as a whole, but we're focusing in particular on the fact that we've delivered the best quarterly operational result since the crisis began."
Torm CEO Jacob Meldgaard isn't worried about the strong focus on product tank, with the the establishing of new fleets in eco designs and at historically low prices at the yards, as evidence by shipping companies such as Scorpio Tankers and d'Amico.
"There may well be a difference in how much money the ships can make. But as soon as the product tank market rebounds we'll still be the shipping company with the biggest exposure, and thus the company that stands to benefit the most from a rate increase. And then it becomes less important whether your ships was built in 2005, 2010 or 2015," says Jacob Meldgaard.
Option rights related to the extensive and complex restructuring of Torm meant that the shipping company had to sell five MR product tankers in April of this year, at a loss of USD 5 million. The ships were sold to a company controlled by private equity fund Oaktree Capital Management, though Torm retains the commercial responsibility of the ships.
Even though there are still option rights left that could force Torm to perform further divestments, Jacob Meldgaard says that there are no plans to do so.
"I see no indications of that being the case."