Earnings call transcript: Torm PLC Q4 2024 beats EPS estimates, stock surges

Torm PLC reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.77 compared to a forecast of $0.61. The company also reported higher-than-expected revenue of $214.7 million against a forecast of $211.57 million. Following these results, Torm’s stock surged by 10.84% in pre-market trading, reflecting strong investor sentiment. According to InvestingPro data, the company maintains excellent financial health with an overall score of 3.4 out of 5, supported by strong profitability metrics and robust cash flow generation.

Key Takeaways

• Torm PLC’s Q4 EPS of $0.77 exceeded the forecast of $0.61.
• Revenue for Q4 was $214.7 million, above the expected $211.57 million.
• The stock price increased by 10.84% in pre-market trading.
• Torm declared a dividend of $0.60 per share.
• The company forecasts a significant decrease in 2025 TCE earnings.

Company Performance

Torm PLC demonstrated robust performance in the fourth quarter of 2024, with a net profit of $77 million. This reflects a strong finish to a year where the company achieved total TCE earnings of $1.135 billion and a net profit of $612 million. The company’s return on invested capital was an impressive 24.3%, underscoring its efficient capital utilization. InvestingPro analysis reveals the company trades at an attractive P/E ratio of 2.43 and maintains a healthy current ratio of 2.47, indicating strong liquidity. Despite a challenging market environment, Torm maintained its competitive edge with strategic fleet management and operational agility. InvestingPro subscribers have access to 12 additional key insights about Torm’s financial position and market performance.

Financial Highlights

• Revenue: $214.7 million (Q4 2024), exceeding the forecast of $211.57 million.
• Earnings per share: $0.77 (Q4 2024), up from $0.0218 in the same period last year.
• Dividend: $0.60 per share declared for the quarter.
• Q4 EBITDA: $142 million.

Earnings vs. Forecast

Torm PLC’s actual EPS of $0.77 significantly outperformed the forecast of $0.61, resulting in a positive surprise of approximately 26.2%. The revenue also surpassed expectations, contributing to the stock’s positive movement. This performance marks a notable improvement from previous quarters, highlighting the company’s resilience and effective strategy execution.

Market Reaction

Following the earnings announcement, Torm’s stock price rose by 10.84%, reflecting strong investor confidence. The stock, which closed at $17.35 previously, is now trading significantly higher, nearing its 52-week high of $40.47. This bullish sentiment is driven by the company’s earnings beat and optimistic forward guidance. InvestingPro’s Fair Value analysis suggests the stock remains undervalued despite recent gains. The company also offers an impressive dividend yield of 27.67%, making it particularly attractive for income-focused investors. For detailed valuation metrics and comprehensive analysis, investors can access Torm’s Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.

Outlook & Guidance

Looking ahead, Torm forecasts TCE earnings for 2025 to be between $650 million and $950 million, a decrease from 2024’s $1.135 billion. The company also projects EBITDA for 2025 to range from $350 million to $650 million, down from $850 million in 2024. Torm remains focused on sustainability and is closely monitoring geopolitical developments that may impact its operations.

Executive Commentary

CEO Jacob Melgaard emphasized the influence of geopolitical factors on the product tanker market, stating, "Geopolitics are expected to drive the product tanker market also this year." CFO Kim reiterated the company’s commitment to sustainability, noting, "Sustainability remains a core part of our long-term strategy."

Risks and Challenges

• Geopolitical tensions could impact market dynamics and trade routes.
• Fluctuations in global oil demand may affect tanker rates.
• Potential regulatory changes, particularly regarding Chinese-built tonnage, could pose operational challenges.
• Economic uncertainty and inflationary pressures may impact profitability.
• Supply chain disruptions could affect fleet operations and maintenance.

Q&A

During the earnings call, analysts inquired about the company’s fleet management strategy and its response to geopolitical uncertainties. Executives confirmed a consistent approach to fleet operations and emphasized vigilance regarding OPEC+ developments. Additionally, potential regulatory impacts on Chinese-built vessels were discussed, with management indicating ongoing evaluations.

Full transcript - Torm PLC Class A (TRMD) Q4 2024:

Pam, Conference Operator: Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM twenty twenty four Annual Report Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the conference over to CEO, Jacob Melgaard. You may begin.

Jacob Melgaard, CEO, TORM: Thank you. And a warm welcome to everyone joining us on the call here today. So, as you all know, this morning, we released our annual report for the full year of 2024. And I dare say that all in all, it was a very satisfactory year for TORM, but also a year that has demonstrated that we operate in a volatile industry influenced by a wide range of external factors that we need to take into consideration. As usual, I’ll start with a few comments on our business and how we’re doing, and then I will provide you with our take on the current market and how we see the development in the quarters to come.

Looking back at the past year, we are pleased to report a very satisfactory performance with TCE earnings climbing to a new all time high of US1.135 billion dollars supported by the additions made to our fleet during the year. Freight rates remained at high levels throughout most of the first three quarters, enabling us to achieve fleet wide rates of US3960026 dollars per day. However, in the fourth quarter, freight rates decreased and the normal seasonal strengthening of the market did not materialize. Despite continuous vessel rerouting, volumes on long haul voyages from east to west were lower and our feed wide rates decreased to US25 dollars $7.75 per day, thus adding to the downward trajectory seen from Q2 to Q3. While the rate levels in the last quarter were lower compared to the strong performance in the first three quarters of the year, we still delivered solid earnings.

For the full year, we achieved a net profit of US612 million dollars and a return on invested capital of 24.3%, demonstrating resilience despite a challenging market environment. Now, looking into 2025, the ever changing nature of shipping presents both challenges and opportunities. Geopolitical developments, trade flow shifts, and oil demand fluctuations require that we continuously adapt our business. We remain confident in the factors that are within our own control. These include fleet efficiency, disciplined cost management, prudent capital management, and a well executed commercial strategy.

However, we acknowledge that geopolitical risk introduced a wide range of potential earnings outcome for the year ahead. Beyond geopolitics, market condition will be shaped by trade disruptions, regulatory changes, and broader macroeconomic factors, such as the global oil demand and economic growth trajectories. These variables would dictate both freight rates and feed utilization. So, to say ahead, we continuously monitor and analyze geopolitical trends, ensuring we remain well positioned to navigate uncertainties effectively. So, here, kindly turn to slide five.

For the past three years, geopolitical tensions had driven product tanker rates to a new higher average level. However, in recent months, as already noted, we have seen a decline in rates as short term factors, such as intensified crude tanker cannibalization, have softened the positive impact from geopolitical factors, and the general market uncertainty has increased. The rates have nevertheless remained at levels which are still strong in historical terms. Please turn to Slide six. To conclude on the year 2024, we saw a very strong positive impact on ton miles from the Red Sea disruption, which led to longer trading distances at the same time as growing oil demand and changes in the refinery landscape increased volume of products being transported.

This positive ton mile effect was, however, front loaded for product tankers, as after the first half of the year, crude tankers cleaning up in order to benefit from lucrative rates from transporting clean products from the East to the West via Cape Of Good Hope took up most of the incremental ton miles. For full year 2024, clean product tanker ton miles increased by 9% in 2024. But due to this crude cleanups, product tankers benefited from only two thirds of that. While crude cannibalization declined towards the end of the year, trade volumes on the roofs mostly affected by the Red Sea disruption fell to levels that offset the longer trading distances. So, with this, the ton mile impact of the Red Sea disruption, in fact, became non existent by the start of this year.

Please turn to the next slide, to slide seven, and I’ll elaborate a bit more on that. So, as the main trade route affected by the Red Sea disruption is from The Middle East to Europe, the outcome of the potential future Red Sea normalization really depends on this route. Currently, Europe’s diesel imports are down by 30%, with especially flows from The Middle East affected. This has effectively pushed ton miles on this trade route down to pre disruption levels, although distances have increased. At the same time, we believe that such low imports levels are not sustainable, especially taking into account that European diesel demand is expected to increase slightly this year, supported by increased demand for diesel from the Mediterranean emission control area, ICA, from May of this year.

At the same time, three refineries will close down in Northern Europe this year, while diesel stocks are at below average levels. We expect that a potential reopening of the Red Sea passage will encourage intra basin trade and return the volumes lost since the end of twenty twenty four. At the same time, incentives for crude cleanups would decline. Even with shorter sailing distances, ton miles would stay at around the current levels with any upside to imports would add to product tanker ton miles. We deem it unlikely that the volumes would not increase as the current levels are unsustainable and any increase in imports needs to be met by The Middle East given refinery capacity closures in The US.

Now, please turn to the next slide to slide eight. This brings me to the conclusion that the impact of any potential reversal of the latest scale produced drivers will likely be less pronounced as much as the impact is currently non existing. As I just explained, the potential Red Sea normalization could in fact be neutral for product tanker ton miles, with an upside to this from potential increases in European diesel imports. Shorter trade distances may be offset by a potential return of currently lost trade volumes and lower incentives for crude tanker cleanups. Similarly, any potential easing of sanctions against Russia would not hit the product tanker market by a full effect, as some of the gains ton mile have receded by now.

Due to the uncertainty with regard to the prospects for ceasefire, we do not foresee a quick abolishment of EU sanctions against Russia. And finally, we also have some new potential geopolitical drivers, which could have a positive ton mile impact, such as a potential tariff war between The US and its closest neighbors, Canada and Mexico, leading to potentially new trade redirection towards longer distances. Now, please turn to slide nine. So, let me now also take a look at the ton supply side. As we pointed out earlier, relatively high product tanker order book should be seen in combination with the fact that the average age of the fleet is the highest in two decades.

With 50% of the fleet being more than 20 years old, this will potentially offset a large part of the vehicle in the coming years. Furthermore, we see that as vessels turn towards 20 years of age, their average utilization drops significantly compared to longer vessels. That would lead to a growth share of the fleet operating at lower utilization. And in addition, a large share of especially the older fleet is sanctioned, which is expected to support exits from the market. This is especially the case for the combined Ella2 Aframax fleet, where almost three quarters of the older fleet are today under U.

S. Sanctions. We’ll now turn to Slide 10. To sum up on the market, geopolitics are expected to drive the product tanker market also this year, on top of the demand and supply fundamentals. Yet, the level of uncertainty is even higher and the speed of change has increased significantly, with the new US administration’s more aggressive approach to geopolitics and trade policy.

I already touched upon potential normalization of the Red Sea situation, potential easing of sanctions against Russia, and the proposed tariffs on oil from Canada and Mexico. Another element of uncertainty on the market stems from the US administration’s proposal to implement a port fee to operators with vessels built or on order in China. On the other hand, the new US administration’s more tough approach towards Iran and Venezuela is expected to benefit the product tanker market via the reduced risk of crude cannibalization. I’m certain that TORM is well positioned to navigate in this environment of increased uncertainty through our strong capital structure, operational leverage, and integrated platform. And now here with these comments, I conclude my part of the presentation.

I hand it over to my colleague, Kim, who will walk us through the financials.

Kim, CFO, TORM: Thank you, Jacob. Now, please turn to slide 12 for an overview of the financials. In the fourth quarter, TCE amounted to US215

Jacob Melgaard, CEO, TORM: million

Kim, CFO, TORM: dollars and based on this, we achieved US142 million dollars in EBITDA and US77 million dollars in net profit. Feed wise, we averaged TCE rates of close to US26000 dollars per day, with LR2 slightly above US34000 dollars and LR1s at over $22,000 AMRs at more than US23000 dollars These numbers are in line with the coverage that we published in connection with our Q3 results, coupled with the lower spot rates in the last November and the month of December, thus in line with our overall guidance communicated back in November. For the full year 2024, we generated TCE of US1.135 billion dollars EBITDA of US851 million dollars and net profit of US612 million dollars As you can see on the right side of the table, full year 2024 rates were close to the elevated levels we saw in 2023. However, the composition of these rates tells a more nuanced story. The high annual rates were largely driven by exceptionally strong market conditions in the first half of the year, tight supplydemand fundamentals and favorable trade patterns supported elevated spot rates during this period.

In contrast, Q3 saw some softening, reflecting capitalization by coupe carriers that captured a significant part of the additional tonne mine demand. While rates remained healthy, they trended lower compared to the earlier part of the year. The fourth quarter brought an additional setback with no seasonal upswing and rates declined further. Due to the industry’s natural spot exposure, our earnings per share are closely tied to movements in freight rates, and this dynamic becomes especially evident in a very volatile market environment. In Q4, we experienced a sharp decline in freight rates, which had a direct and material impact on our earnings per share.

Thus, basic earnings per share for Q4 decreased to USD 0.77 per share compared to USD 0.0218 per share in the same period last year. This time, our board of directors have declared a dividend of US0.60 dollars per share. We believe that our approach ensures that distributions align with actual financial performance, maintaining a disciplined, transparent and sustainable capital allocation strategy. Slide 13, please. This slide provides a clear overview of our top line performance for the full year 2024 compared to 2023, as well as the quarter by quarter development throughout the year.

The numbers illustrate how the strong markets in the first half of the year gave way to softer conditions in the last half of the year impacting overall performance. Feed wide rates remained elevated in the first half of the year, hovering above US40 dollars a day. However, as we moved into Q3, rates started to decline and this trend accelerated further in Q4. This reflects broader market softening due to the positive tonne mile impact from the Red Sea disruption diminishing as crude tankers shifted back to dirty trades and the trade volumes on affected routes declined, effectively neutralizing the earlier gains. While fleet wide rates declined by about 40% from Q1 to Q4, UST our TCE saw a small decline of 35%.

This demonstrated positive impact of our fleet expansion and operational efficiency. EBITDA amounted to US142 million dollars in Q4. And as a reminder, everything else being equal, a change in daily freight rates of US10000 dollars translate into an EBITDA impact of approximately plusminus US80 million dollars for a quarter based on approximately 8,000 earning days in a quarter. This illustrates a significant earnings sensitivity to market movements, which is a key consideration for our financial outlook. Please turn to slide 14.

Likewise, on this slide, we provide a breakdown of the quarterly development in net profit and key share related ratios. A key factor to note is that the total number of shares increased by around 10,000,000 over the year. The decline in freight rates has translated into a corresponding downward trend in net profit, earnings per share and dividend per share. This is a direct consequence of the softer market conditions seen in the latter half of the year. As in previous quarters, our dividend policy remains unchanged.

We continue to distribute excess liquidity on a quarterly basis by maintaining a prudent financial buffer. Our threshold liquidity level is determined by two key factors. First, a fixed liquidity requirement of US1.8 million dollars per vessel and second, a discretionary element set by the board. This discretionary component considers our capital structure, future obligations and broader market trends to ensure a balanced approach to capital allocation. Consequently, the payout ratio for Q4 is 75%.

Jacob Melgaard, CEO, TORM: Slide 15, please.

Kim, CFO, TORM: As shown on this slide, vessel values have been on a steady upward trajectory over recent quarters, but saw a decline in the fourth quarter to US3.6 billion dollars with an average broker valuation down 4.6% relative to the end of twenty twenty three. In the chart in the middle, we highlight the development of our net interest bearing debt, which now stands at US948 million dollars against US773 million dollars a year ago. This increase reflects our fee expansion over the past year. Despite this, our net loan to value remains stable at 26.8%, in line with the same quarter last year, ensuring a conservative financial foundation as we move forward. Additionally, in the chart to the right side, we provide an overview of the debt maturity profile.

This year, we have only borrowings of US168 million dollars maturing, and committed scrubber installations of US12 million Beyond 2026, our obligations remain relatively modest until Adata loan matures in mid-twenty twenty nine. Overall, our financial position remains strong, allowing us to manage our commitments while maintaining flexibility for future risks and opportunities. And now please turn to Slide 16. As already shown on Slide 12, based on the quarterly results, the Board of Directors has declared a Q4 twenty twenty four dividend of USD 0.6 per share, which corresponds to a payout ratio of 75%. Also on this slide, we provide a full overview of the key dates.

The ex dividend date for shares on NASDAQ Copenhagen is set for March, while on NASDAQ New York, it will be on March 20, and record date will be on March 20, and payment date will be on April 2. And now, turn to Slide 17. In the annual report that we have published this morning, we are taking a significant step forward in our sustainability reporting, placing transparency as the core to provide stakeholders with a clearer view of our priorities. With the implementation of the Coble’s sustainability reporting directive, we are refining how we communicate our Coble responsibilities. This framework strengthens our ability to report on material impacts, risks and opportunities across environmental, social and governance factors, and I encourage you all to have a look at this.

Our approach to sustainability includes clear, measurable targets across safety, diversity and carbon intensity reduction. Starting with safety, our key performance indicator is long term accident frequency, which tracks accidents per 1,000,000 exposure hours. In 2024, we achieved an LTAF of 0.42. And although this number is very sensitive to single accidents, we will continue working towards further improvements. On gender diversity and leadership, we are committed to increase women in leadership positions to 35% by 02/1930.

Lastly, on carbon intensity reduction, we are well on track. By the end of twenty twenty four, we reached our 40% reduction target, thus already now meeting the IMO two thousand and thirty target. Looking ahead, we remain committed to our next ambitious 02/1930 goal of a 45% reduction and ultimately to achieve net zero CO2 emissions from our fleet by 02/1950. Sustainability remains a core part of our long term strategy, and we will continue taking decisive actions in these areas. We have set new ESD targets for 2024, reinforcing our commitment to reducing CO2 emissions, enhancing staff safety, and improving gender diversity and leadership.

These actions demonstrate our dedication to making a tangible impact while creating long term value for stakeholders. And now, please turn to Slide 18 for the outlook. We forecast TCE earnings of US650 million dollars to US950 million dollars against the twenty twenty four actuals of US1.135 million dollars and EBITDA of US350 dollars to US650 million dollars against the twenty twenty four actuals of US850 million dollars This reflects expectations of lower freight rates year on year based on current spot and forward market trends. Based on our rates and coverage as of 03/03/2025, we had fixed a total of 84% of our earning days at USD 26,612 per day in the first quarter across the fleet. Likewise, for the full 2025, we have fixed a total of 27% of our winning days at US2816 dollars per day for the full year across the fleet.

And with this, I conclude my remarks and hand back to

: the operator.

Pam, Conference Operator: Thank you. We will now begin the question and answer session. Your first question comes from Jon Chappell with Evercore. Please go ahead.

Jon Chappell, Analyst, Evercore: Thank you. Good afternoon. Jacob, we’ve seen your strategy over the last three years with the elevated market, with the fleet replenishment, selling of the older vessels, even the dividend policy. As we enter this year, I guess we’re well into this year at this point, with a lot more uncertainty, a lower starting point, how does that strategy change, if at all, as it relates to both operations and fleet evolution as well as capital structure and capital return?

Jacob Melgaard, CEO, TORM: Yeah. Thanks for that question, John. So, I will answer in a little more detail, but I think the short end of it is that there’s no change. So, if I just take it one by one on operation. As I alluded to also in my prepared remarks, then we do see that geo politics and the associated change is obviously still front and center as it has been over the last three years.

I think the difference is really the speed with which we at least perceive that we can potentially have these changes coming to us. And what you need on an operational platform in that scenario of, I would say, from the outside that the playbook is changed and redefined is to have agility, and it is to be prepared for all scenarios. And there, I actually, I really think that the value of an integrated company is in that scenario, as we deem it, the very best you can have, because we will be able to redefine, I can say, our operational optimal way of setting it up with a very short notice. So, that’s number one. I don’t expect us to change anything there.

Then on feet, it’s not been part of the presentation, but you should see that it’s more of the same. And I think the proof or the testament to that is that we did after the end of the year and we have announced as a subsequent event, we have sold, again, three older vessels, three MRs built in 02/2005, in a marketplace where the dynamic clearly has been that the liquidity in the market has been relatively lower because of the uncertainties. But we have been able to stick to our strategy around maintaining a fleet where the average age is in line at that part with the global product tanker fleet, but where we can utilize them all the way up to you can say, of course, it depends a little on the specific of the vessel, but in this case, up until the year of ’twenty. And again, that fleet strategy will not change. We are going to look at that.

We have not experienced that we cannot execute on that particular strategy. And you can say, of course, if it is the other way, if it would be inbound, that we should have methods coming to a fee, we are also ready for that when and if the right circumstances are there. And then on our strategy on our financials, There’s, again, really no change. I think we’ve demonstrated also here with the way that we pay out for this quarter, 60¢. I think Kim and I and the rest of management all feel very comfortable with our capital structure, with the leverage, and with still maintaining, strategically the same intent around the use of excess capital to be paid out.

Obviously, there may be circumstances where you would argue that it gets so compelling to buyback shares, but it’s not really been the fact, and I think it would have to be a real special circumstance if we were to look at that as a tool in the toolbox. So, for now, I would argue you should expect more of the same.

Jon Chappell, Analyst, Evercore: Great. I appreciate that answer. My second one relates a little bit more to the market. You mentioned the crude cannibalization, so to speak, and that kind of reversing entering this year. Kind of a two parter, where do we sit today on kind of crude encroaching on traditional product trades maybe relative to the peak of the second half of last year?

And then I guess bigger picture, is it just becoming more easier? I guess we were kind of always under the impression that it was difficult for a crude ship to get into the product trade, several voyages, process of kind of slowly cleaning up via the cargo. Has it just become easier that you can go kind of back and forth between crude and product and we should look for that impact and volatility going forward?

Jacob Melgaard, CEO, TORM: Yes. Maybe I’ll do it in reverse order, if it’s okay, Jan. So,

: I

Jacob Melgaard, CEO, TORM: think the so you’ve been around, maybe I’ve not been around maybe as long as you. I’ve only been in the product tanker business fifteen years. But I think what we are raised with in shipping is that crude tankers, they carry crude. And as you point to, it is possible to carry clean, but you’re kind of, it’s not really what you want to do, not as a ship owner with the risk associated and also not as the customer because you sort of have the risk of contamination of your cargo and it will be devalued on arrival. And all these are kind of operational hindrances leading to that we have actually not, over the last thirty years, been able to observe that you had existing vessels in crude that cleaned up.

You will see first voyage after you come out of the yard as a new build, yes, and maybe even more than one voyage. But it’s really been a change of tact to see that this is going in and out of the trade as you point to. And now I’ll come to our reflection is that it is actually the circumstances around the Red Sea and the impact of that you, in a way, have a new trade between Middle East and Europe with diesel that only came about in 2022 in bigger volumes, because until then, most of the needs of Europe was served by Russian diesel. So, that’s the first component. Well, then you look further away and then you take diesel, as we all know, you take it then from nearby with The US into Europe.

And then your sort of second option would be to then replenish the balance from the Middle East. So, that was the first thing that happened in 2022 and continued into 2024. But then of course at the beginning of 2024, ’70 percent of product centers decided that it was not a safe option to transit through Van Der El Barre Strait and to go to that route. That meant that certainly the LR2 market that was servicing this deal in ’twenty two, ’twenty three and ’twenty four for the first time, they became, you can say, at par with a Suezmax or a VLCC on the particular routing that you did, because before a VLCC would have to go paper good hope and up, but the LR2 would do the, you can say, the Suez Canal and save twelve days. So, it was on a per ton basis, It was significantly cheaper to do the transportation on an LR2 than a V.

But what happened is obviously that the freight rate in the first half of 24 per ton for an LR2 to carry diesel became so high that it was relevant for the traders to think, well, this product, diesel, in itself is less risky around contamination than, for instance, gasoline or jet fuel. So, it was product specific and it was the trade lane specific TUV, that the small vessels and the big vessels would travel the same distance, and you would therefore call for, you can say, that size matters and that scale of the business was there. So, this is, I don’t think any of us could have played out, let’s say ten years ago that we had the discussion, will crude tankers cannibalize? Well, you would need to see something akin to this before you could imagine it, I. E, a product that is less risky in high volumes going between, how can I say, ports that are well developed?

And that’s exactly what you have. Middle East refiners come on stream being relatively modern. You have the receiving infrastructure in Europe being some of the largest ports, etcetera. So, you could substitute, and then what you had left is actually only the operational thing about the cleanup. So, to my point here, or your question, is that it is something that can occur when you have But I don’t think it’s something that I would put into my sort of forward thinking.

Of course, in the circumstance I just described and something like that, yes. But in general, this is not gonna be it. Right now, we see that 3% of CPP on water is on Versus and SUEZ maxes. At the peak in September, it was 8%. And we think that this, let’s say, three percent is more what we would calculate as being a normalized level.

Jon Chappell, Analyst, Evercore: Great. That was all very helpful. I appreciate it, Jacob. Thank you.

Jacob Melgaard, CEO, TORM: Thank you. Thanks for the questions.

Pam, Conference Operator: The next question comes from Omar Nochtar with Jefferies. Please go ahead.

Omar Nochtar, Analyst, Jefferies: Thank you. Hey, guys. Good afternoon. Yes, just a couple from me. Obviously, you’ve given a wide guidance range for the year, makes sense, beginning early in the year and the spot market is the spot market.

And you outlined all the geopolitics and a bit of the uncertainty, but just maybe in terms of say seasonality, I wanted to get your sense of how you’re thinking about that now. Any kind of ideas or how you think seasonality is going to play out here, not perhaps about all of ’25, but maybe the first half. Is there anything that you could see at the moment that suggests there’s a shift in how seasonality is going to be, given obviously there’s a lot of uncertainty and geopolitics is probably factoring into the seasonality also, but just any sense of how you think the market is going to be shifting here in the coming months?

Jacob Melgaard, CEO, TORM: Yes. I think we will have to I think that currently, we are more observant about the items that I described around geopolitics. I mean, another key that I think will impact our marketing directly is, of course, the OPEC plus We’ve not mentioned this. Some of these things will be a higher prioritization for us to try and understand what takes place rather than the seasonality, because over the long term, there is seasonality, but in the last years, it’s actually different. And I don’t have a particular view on how it will play out for this year, to be honest, Omar.

Omar Nochtar, Analyst, Jefferies: No, that’s fair. No, I appreciate you at least giving some of that context. And I guess maybe, I know this is still fresh and it’s early days, but The U. S. Proposal of taxing Chinese tonnage, just want to get a sense from you or say for TORM, has that affected anything in how you’re doing business, whether how you think about allocating vessels into The U.

S. Market or holding on to ships that are Chinese built or contemplating new buildings? Has there been any shift or thought of changes as a result of that?

Jacob Melgaard, CEO, TORM: Yeah. Well, that’s a good question. I mean, if we looked at a little above, Tom, then, in the product tanker market, our account is that about 26% of the total product segment fleet is Chinese built and around 70%, maybe even a little higher, of the new builds. And if you read the material, the proposals that have come out and which we’ll be hearing here end of the month, it is both you can actually, I would say, get a fee based on both your percentage on the 16 feet and on your order book. And if we take it sort of then at a ton level, we are at 41% after the latest sale of vessels.

We are Chinese ratio is 41 and we have zero newbuilds. We have zero newbuilds overall, but we also, of course, identified the Indonesian have zero China build. So, you can say, if we take it for us, it would really be that currently, The US trade is approximately 20% of our overall trade. And it would really be a question of whether the cost associated with a potential fee on our vessels, given our ratio, would make sense for us or whether we would redirect our vessels. Currently, we don’t have any plans, but I think coming back to my point a little more, or a little before, that I think an integrated platform like ourselves, where actually we have, I would say, the highest degree of flexibility about where we maneuver our feet.

I’m comfortable in saying that I think that this will be something that I would rather be without. I think it’s gonna be costly for the refiners and for that industry. But how it’ll all play out, whether you will have lower US volumes because it will simply not make sense for The US refiners to, I would say, crack their oil and have refined products which is not competitive in the global market because the all landed costs for the product plus insurance plus plate will be non competitive compared to others and that others will then raise. I think that dynamic is yet to be seen. And we will basically just again be a receiver of that and maneuver in it.

Yeah. Great. Thank you, Jacob. Appreciate the comments. I’ll pass it back.

Thanks.

Pam, Conference Operator: Your next question comes from Vedic Nithinness with Clarksons Securities. Please go ahead.

: Thank you. I have a quick one on growth or fleet renewal going forward. Since I’ve been quite a slip in activity in the fourth quarter compared to the last two years for you guys and for the market in general when it comes to P deals. But how do you view this going forward? Should we expect sort of peer trades to be the main theme for the next few months?

Or do you expect any sort of larger type of transactions? Yes.

Jacob Melgaard, CEO, TORM: I think thank you, Benoit. Jacob here. So looking forward, I think it’s going to be depending on the segment. But I think looking a little back and thinking through your good point around that the liquidity in the market in the secondary market on sale and purchase in the fourth quarter was significantly lower than what we had then experienced for, let’s say, a number of years. And I think the fact is that when prices recalibrates to now, as they’ve changed down to healthy rates in a historical sense and good rates for a company like ourselves, but lower than what they were, I think the market and potential buyers and sellers simply need to be comfortable with that you have found a new level, and then transactions, in my opinion, will start to pre evolve.

I think a testament to that is that we have sold here very recently three vessels of vintage 2,005. So, I think that liquidity comes back when both the earning potential and sort of prices, they recalibrate from where they were. Are we then at that point now? Let’s just argue that that is the case. Then I think we will see that there will be more meeting of mind between buyers and sellers and that you will have an uptick in volume on transactions.

But time will tell. But I think it’s quite explained, and I think it behaves, our markets on S and P behaves pretty much like we all understand real estate markets, that when there’s a shock to, let’s say, the price of houses or apartments, I mean, those markets tend to also come to a grind, because people need to evaluate, okay, what is then the next clearance price? And I think it’s very much the same here.

: Yes. Thank you, Jacob. That makes total sense. I’ll return to you, Keith.

Jacob Melgaard, CEO, TORM: Thanks, Andy.

Pam, Conference Operator: There are no more questions. I will now turn the conference back over to CEO, Jacob Melgaard, for closing remarks.

Jacob Melgaard, CEO, TORM: Yes. Thanks to all of you for listening in to the presentation of the annual report 2024 platform. Thank you.

Pam, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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