TORM Losses Up on Impairment Charges, Falling Spot Rates

by Ship & Bunker News Team
Thursday May 15, 2014

Troubled Danish tanker company TORM A/S [NASDAQ:TRMD]  (TORM) reports it lost $222 million before taxes in the first quarter of 2014, due largely to an impairment charge of $195 million related to updated freight forecast rates and an agreement to sell 13 vessels.

"The first quarter is usually a strong period for product tankers, but this year freight rate improvements were partly offset by limited arbitrage trades and continued low European demand," said CEO Jacob Meldgaard.

"TORM incurred a non-cash impairment charge of USD 195m and now has negative equity.

"I am pleased that TORM's operational platform continues to deliver competitive results, which is the foundation for a recapitalization of the Company."

TORM's revenues dropped 34 percent to $182.9 million year-over year as spot rates for the company's largest segment, MR tankers, fell 14 percent to $15,207 per day.

During the quarter, TORM delivered two MR tankers sold in 2013 to companies controlled by private equity firm Oaktree Management (Oaktree) and agreed to sell three LR2 and 10 MR product tankers to Oaktree with delivery in the second quarter of 2014.

Speaking with industry news site ShippingWatch, Meldgaard said the company is continuing to work with the banks that took it over two years ago, seeking a final, long-term agreement that would allow the company to come under new ownership, probably within the private equity segment.

"We're getting closer and closer, and I'm confident that we'll reach an agreement," he said.

Ship & Bunker News Team
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