Profit before tax amounted to $5.2 mill, compared to a loss of $8.6 mill in 2Q18.
Cash flow from operating activities was positive at $37.6 mill in 2Q19, compared to $25.1 mill in 2Q18.
EBITDA for the six months of this year was $102.1 mill, compared to $66.7 mill in 1H18. Profit before tax for 1H19 amounted to $28.7 mill, compared to $7.5 mill in the same period of 2018.
Cash flow from operating activities was positive with $93 mill in the first six months of 2019, compared with $43 mill in 1H18.
TORM’s Board said that it believed that at this time the continued modernisation of the fleet through newbuildings, purchase of modern secondhand tonnage and scrubber installations will provide for the optimal capital allocation.
In 2Q19, TORM achieved daily TCE rates of $15,405, compared with $12,944 per day for 1H18. Product tanker freight rates started the first quarter of this year at strong levels, last seen in 2016, before softening throughout the quarter, as spring refinery maintenance gained pace.
Refinery maintenance in the second quarter was particularly pronounced, and coupled with a series of unplanned outages, the volume of global refinery capacity that was offline was 23% higher than during the same period last year.
During 2Q19, TORM purchased four 2011-built MRs for a total consideration of $83 mill. The vessels are expected to be delivered this month.
To finance the purchase and to support TORM’s solid capital structure, the company agreed six sale and leaseback transactions, which are expected to be executed during the third quarter of 2019. The transactions cover:
*Four recently purchased 2011-built MRs providing proceeds of $66 mill. The transaction was concluded with Chinese interests and included a purchase obligation in 2025.
*In addition, the 2016-built MRs ‘TORM Torino’ and ‘TORM Titan’ are providing total proceeds of $52 mill, and in connection with the transactions, $18 mill of the existing debt will be repaid. These transactions are with two separate Japanese counterparts and include a purchase obligation in 2024 and in 2026, respectively.
TORM also took delivery of two MR newbuildings during 2Q19, sold the MR ‘TORM Gunhild’ (built in 1999) for a consideration of $6 mill and repaid $4 mill debt in connection with the vessel sale.
After the quarter ended, TORM took delivery of one MR newbuilding and sold two additional vessels, the MR ‘TORM San Jacinto’ (built in 2002) and the Handysize ‘TORM Saone’ (built in 2004), for a total consideration of $16 mill.
TORM will repay $9 mill in debt in connection with the vessel sales and expects to deliver the vessels to the new owners during the third quarter of 2019.
As of 30th June, 2019, 11% of the remaining total earning days in 2019 were covered at an average rate of $15,197 per day. As of 12th August, 2019, 60% of the total earning days in 3Q19 were covered at $13,636 per day. Around 31% of the total earning days for 2H19 was covered at $13,738 per day.
TORM’s joint venture, ME Production China, a joint venture with ME Production, a leading scrubber manufacturer, and Guangzhou Shipyard International (GSI), which is part of the China State Shipbuilding Corp Group, has provided TORM with the flexibility to make timely decisions on retrofit installations, as the compliance strategy is developed, the company said.
With close to half of the fleet being retrofitted with scrubbers and half of the fleet using compliant fuels, TORM claimed it has a balanced approach to the new regulation and has developed customised schedules for the vessels that will be using compliant fuels from 1st January, 2020.
As of 15th August, 2019, TORM has conducted six scrubber installations, and by 1st January, 2020, 28 out of 34 scheduled installations are expected to be finalised, with the remaining six consisting of three newbuilding deliveries and three retrofit installations.
As of 30th June, 2019, TORM’s available liquidity was $366.9 mill consisting of $106.4 mill in cash, $214.6 mill in undrawn credit facilities and $45.9 mill in undrawn credit facilities, subject to documentation.
This excluded the estimated impact of $99 mill from the six sale and leaseback transactions to be concluded in 3Q19.
”TORM’s results in the first half of 2019 reflect the company’s strong operating performance relative to its peers and our focus on maintaining efficient operations and a low cost base. Our profit before tax of $28.7 mill in the first half of 2019 represented the strongest half-year result in three years, and we are pleased to be able to generate a profit also in the second quarter of year that has been negatively impacted by an unusually high and prolonged refinery maintenance period,“ explained Executive Director, Jacob Meldgaard: “We believe the IMO 2020 regulation will drive increased demand for product tankers and that TORM is well positioned to take advantage of these new market dynamics.”