Torm sees early recovery for product tankers
One of the leading players for product tankers, TORM, sees an early recovery on the sector, on the back of lower orderbook. The company’s Chief Executive Officer, Mr. Jacob Meldgaard” also said, in an exclusive interview with Hellenic Shipping News Worldwide, that the outlook for 2011
suggests a loss before tax of between $100-125 million, as a result of lower rates. TORM has been actively taking defensive measures to counter this expected loss, securing liquidity through various deals and deleveraging its balance sheet, until the market picks up pace.
TORM is one of the active players in both the dry bulk and the product tankers’ segment, which have exhibited mixed results in the past couple of years. Which are your estimates in terms of future demand in both of these sectors?
We believe in an increasing volume in both segments, however since the orderbook is much larger in dry bulk than in product tankers, we expect an earlier recovery in the product-tanker segment, which comprises the majority of our business, than in dry bulk.
The company has been in a financial turmoil, as a result of the crisis of the previous years. How would you evaluate the results of the first quarter?
The result was in line with expectations but obviously unsatisfactory. The pretax loss was USD 45 million due to the weak rates, during that quarter.
Which are your estimates regarding the company’s performance during the following quarters of the year?
We have given an outlook for 2011 of a loss before tax between USD 100-125 million and we maintain this outlook.
Lately, the company signed a series of deals to improve its fortunes. Could you give us some details about these moves?
We have sold two older product tankers, Faja De Oro, and Potrero, which is in line with our strategy of maintaining a modern fleet.
We have also done two sale-and-lease back transactions of TORM Marie and TORM Margrethe, both sold for USD 46 million and taken back on seven-year-bareboat charters.
Do you think that after these deals, TORM is better positioned in the market?
We maintain our commercial exposure through these deals, whilst securing liquidity and deleveraging the balance sheet.
We are experiencing that size matters and it matters to be closer to the customers. So apart from the financial deals we are doing we are also expanding our organization in growth regions such as Brazil, where we will open an office in Rio later this year, and in Singapore, where we have recently hired a new head of dry bulk.
The product tanker markets have been on a rollercoaster ride in these past few months. How do you think the market will behave in the rest of the year, in terms of freight rates?
We are maintaining our outlook for 2011 whilst we believe that freight rates will gradually improve from the current low levels.
We still believe that there is more upside potential than downside risk concerning rates going forward.
Which routes would you say provide the best returns at the moment?
The market is generally weak and volatile but pockets with solid demand continue to exist, where we are able to fix at more satisfactory levels.
Will we see the company returning back to newbuildings or purchasing more second hand vessels any time soon?
We are comfortable with the level of owned tonnage and the existing orderbook we hold, why we currently do not wish to increase this.
Nikos Roussanoglou, Hellenic Shipping News Worldwide