“The result for the first half of 2009 reflects that freight rates were at a historic low due to lower than expected global oil consumption. Our strategic view of the product tanker market is unchanged, and although the number of newbuildings is a challenge short-term, we are positive on the future prospects of the segment,” says CEO Mikael Skov.
The second quarter of 2009 showed a gross profit of USD 39 million, against USD 146 million for the corresponding quarter of 2008. Profit before depreciation (EBITDA) for the period was USD 31 million, against USD 189 million for the second quarter of 2008. The decline in gross profit and EBITDA was primarily due to substantially lower freight rates in both the Tanker Division and the Bulk Division. In the second quarter of 2009, depreciation amounted to USD 34 million.
An operating loss of USD 3 million was posted in the second quarter of 2009, against an operating profit of USD 158 million in the same quarter of 2008. The Tanker and Bulk Divisions contributed a loss of USD 12 million and a profit of USD 10 million respectively, whereas a loss of USD 1 million is unallocated. There was a total negative effect from mark-to-market non-cash adjustments of USD 25 million in the second quarter with USD 20 million on financial instruments and USD 5 million on FFA/bunker derivatives.
The mark-to-market adjustments on financial instruments were primarily due to a writedown of USD 23 million on options related to vessel values taken over in connection with the acquisition of OMI. In the second quarter of 2009, financials amounted to an expense of USD 30 million, against an expense of USD 12 million in the same quarter of 2008. The difference was primarily due to the above-mentioned mark-to-market non-cash adjustments.
A loss after tax of USD 34 million was posted in the second quarter of 2009, including a profit of USD 13 million on the sale of vessels, against a profit of USD 145 million in the second quarter of 2008, where a profit of USD 52 million was recognised on the sale of vessels. Assets Total assets fell from USD 3,287 million to USD 3,256 million in the second quarter of 2009. TORM receives quarterly valuations on its fleet value from three internationally acknowledged shipbrokers and calculates a value in use derived from discounted cash flow valuations.
Based on the broker valuations, the market value of TORM’s fleet was below book value at 30 June 2009. However, as the market for product tanker vessels is currently illiquid, broker valuations are uncertain. Liabilities During the second quarter of 2009, the Company’s net interest bearing debt rose from USD 1,615 million to USD 1,670 million. The item mainly comprises net borrowing in connection with the delivery of vessels, the cash effect of the distribution of dividend and positive cash.
Source: TORM
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