Annual Report 2012
COPENHAGEN, Denmark, March 13, 2013 (GLOBE NEWSWIRE) --
"2012 proved challenging for shipping in general and in particular TORM faced
uncertainty for a prolonged period. On a positive note, TORM succeeded in
achieving a financial restructuring, which brings stability to the Company for
the coming period. The Board of Directors is con-fident that TORM together
with its most important stakeholders will re-establish the foundation for a
stronger company going forward," says Chairman of the Board Flemming Ipsen.
*In 2012, the Company incurred a loss before tax of USD 579 million. This
is clearly unsatisfactory and impacted by special items of USD -326
million including restructuring costs of USD 210 million, impairment loss
from assets held for sale of USD 74 million, an impairment loss of USD 42
million related to FR8. The performance is in line with the revised
forecast of 27 February 2013.
*Throughout 2012, the Tanker Division's earnings were negatively impacted
by low freight rates and continued tonnage oversupply in the global
product tanker market. The continued European financial crisis and a
slowdown in GDP growth in China and the USA negatively affected global
indicators. Combined, these factors led to a slowdown in global oil
consumption, consequently adversely impacting oil product transportation.
The Tanker Division's result was to a significant degree adversely
affected by TORM's financial situation in 2012.
*During 2012, dry bulk freight rates continued to be volatile and under
pressure. The dry bulk spot market stayed volatile due to seasonality and
events such as the drought during the US grain season, the Indonesian raw
material export ban and the tropical storms Isaac and Sandy. In 2012, the
bulk market saw the highest level of newbuilding deliveries ever recorded.
However, demand from China continued to be strong. The Bulk Division
experienced a high number of waiting days in 2012 due to the Company's
challenging financial situation.
*The Company's 2012 performance was negatively impacted by a USD 16 million
net loss from the sale of TORM Lana and the cancellation of one product
tanker newbuilding contract. In addition, there was a loss of USD 10
million from the termination of finance lease vessels in connection with
the restructuring. Five MR vessels are accounted for as assets held for
sale with an impairment charge of USD 74 million.
*As stated in company announcements no. 31 dated 2 October 2012 and no. 32
and no. 33 dated 5 November 2012, TORM entered into a Restructuring
Agreement with its banks and time charter partners that secured the
Company deferral of bank debt, new liquidity and substantial savings from
the restructured time charter book. The receivable that the time charter
partners were given for the amended contractual conditions as well as a
fee to the banks, estimated at a total net present value of USD 200
million, has been converted into shares in TORM, corresponding to 90% of
the shares in the Company. Consequently, the existing shareholders
retained an ownership interest of 10%.
*As of 31 December 2012, cash totaled USD 28 million and undrawn credit
facilities amounted to USD 42 million. TORM has no newbuilding order book
and therefore no CAPEX commitments related hereto.
*The book value of the fleet excluding finance lease vessels as of 31
December 2012 was USD 1,934 million. Based on broker valuations, TORM's
fleet excluding finance lease vessels had a market value of USD 1,145
million as of 31 December 2012. In accordance with IFRS, TORM estimates
the fleet's total long-term earning potential each quarter based on
discounted future cash flows. The estimated value of the fleet as of 31
December 2012 supports the carrying amount.
*As of 31 December 2012, net interest-bearing debt amounted to USD 1,868
*As of 31 December 2012, equity amounted to USD 267 million (DKK 1,513
million), corresponding to USD 0.4 per share (DKK 2.1) excluding treasury
shares, resulting in an equity ratio of 11%.
*As of 31 December 2012, 8% of the total earning days in the Tanker
Division for 2013 were covered at a rate of USD/day 15,126 and 66% of the
total earning days in the Bulk Division at USD/day 13,155.
*For the full year 2013, TORM forecasts a loss before tax of USD 100-150
million before potential vessel sales and impairment charges. TORM expects
to remain in compliance with the financial covenants for 2013. In
addition, TORM expects to be operational cash flow positive after interest
payment. The uncertainties and sensitivities about freight rates and asset
prices may have an effect on the Company's compliance with the financial
covenants. As 24,676 earning days are uncovered at year-end 2012, a change
in freight rates of USD/day 1,000 would impact profit before tax by USD 25
*The Board of Directors proposes that no dividend be distributed for 2012.
Safe Harbor statements as to the future
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and statements other than statements of historical facts. The
forward-looking statements in this release are based upon various assumptions,
many of which are based, in turn, upon further assumptions, including without
limitation, management's examination of historical operating trends, data
contained in our records and other data available from third parties. Although
TORM believes that these assumptions were reasonable when made, because these
assumptions are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are beyond our
control, TORM cannot guarantee that it will achieve or accomplish these
expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward- looking statements include the
strength of the world economy and currencies, changes in charter hire rates
and vessel values, changes in demand for "tonne miles" of oil carried by oil
tankers, the effect of changes in OPEC's petroleum production levels and
worldwide oil consumption and storage, changes in demand that may affect
attitudes of time charterers to scheduled and unscheduled dry-docking, changes
in TORM's operating expenses, including bunker prices, dry-docking and
insurance costs, changes in the regulation of shipping operations, including
requirements for double hull tankers or actions taken by regulatory
authorities, potential liability from pending or future litigation, domestic
and international political conditions, potential disruption of shipping
routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by TORM with
the US Securities and Exchange Commission, including the TORM Annual Report on
Form 20-F and its reports on Form 6-K. Forward-looking statements are based on
management's current evaluation, and TORM is only under an obligation to
update and change the listed expectations to the extent required by law.
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