“In the second quarter of 2021, TORM achieved an EBITDA of USD 45m and a profit before tax of USD 2.4m, despite a market which is still impacted by the pandemic. In Q2 2021, we have seen an increase of USD 81m in vessel market values, corresponding to approximately 5%, supporting the expectation of a recovering product tanker market” says Executive Director Jacob Meldgaard.
In the second quarter of 2021, TORM achieved TCE rates of USD/day 14,591 (2020, same period: USD/day 25,274) and an EBITDA of USD 44.7m (2020, same period: USD 119.0m). The profit before tax amounted to USD 2.4m (2020, same period a profit of USD 71.4m), and earnings per share (EPS) were USD 0.03 or DKK 0.19 (2020, same period: USD 0.96 or DKK 6.5). The result includes an unrealized gain from freight derivatives of USD 8.2m in the second quarter. Cash flow from operating activities was positive at USD 13.4m in the second quarter of 2021 (2020, same period: USD 113.3m), and Return on Invested Capital (RoIC) was 2.6% (2020, same period: 18.5%).
In the first six months of 2021, TORM achieved TCE rates of USD/day 14,056 (2020, same period: USD/day 24,465) and an EBITDA of USD 63.6m (2020, same period: USD 220.5m). The loss before tax for the first six months of 2021 amounted to USD -18.7m (2020, same period a profit: USD 128.2m), and loss per share (EPS) was negative USD -0.25 or DKK -1.54 (2020, same period positive: USD 1.71 or DKK 11.6). The result includes an unrealized gain from freight derivatives of USD 1.1m in the first half of 2021. Cash flow from operating activities was positive at USD 23.2m in the first six months of 2021 (2020, same period: USD 163.1m). Return on Invested Capital (RoIC) for the first six months of 2021 was 0.0% (2020, same period: 17.1%).
The product tanker market remained weak in the second quarter of 2021, affected by new lockdowns in Asia and a continuously weak crude tanker market. The US and Europe continued to see significant improvements in vaccine rollouts which have led to improvements in mobility and demand for transportation fuels. At the same time, India and several countries in Southeast Asia were impacted by the Delta variant of COVID-19 with many new cases and consequently renewed lockdowns.
During the second quarter of 2021, TORM took delivery of six of the eight 2007-2012 built MR product tanker vessels from Team Tankers Deep Sea Ltd. and the remaining two vessels were delivered during July 2021. A total of 5.97m shares was issued as part of the payment for the vessels. In the first quarter of 2021, TORM purchased the three 2015-built scrubber-fitted and fuel-efficient LR2 vessels Nissos Schinoussa, Nissos Heraclea and Nissos Therassia from Okeanis Eco Tankers Corp. for a total consideration of USD 120.8m. Nissos Schinoussa and Nissos Therassia were delivered in the second quarter of 2021 and Nissos Heraclea is expected to be delivered in August 2021.
In the first quarter of 2021, TORM obtained commitment for the financing of two of the vessels from Danish Ship Finance for USD 60.0m. The third vessel will be financed through a sale and leaseback agreement with a Chinese financial institution for proceeds of USD 31.8m. Commitment for this and for the sale and leaseback of two LR2 vessels were obtained from a Chinese financial institution on attractive terms. The sale and leaseback transactions were completed early in the third quarter of 2021 and generated net liquidity of USD 24.1m.
As of 30 June 2021, TORM’s available liquidity was USD 267.4m consisting of USD 111.3m in cash and cash equivalents, USD 24.6m in undrawn credit facilities and USD 131.5m (net of USD 46.2m existing TORM debt to be repaid) sale and leaseback financing related to the financing of two newbuildings and one second-hand and the refinancing of two LR2 vessels. Cash and cash equivalents include USD 7.1m in restricted cash, primarily related to collateral for financial instruments. As of 30 June 2021, net interest-bearing debt amounted to USD 889.5m, and TORM's net loan-to-value (LTV) ratio was 53.9%.
Based on broker valuations, TORM’s fleet including newbuildings had a market value of USD 1,904.4m as of end June 2021. Compared to broker valuations as of 31 March 2021, the market value of the fleet increased by USD 81.1m when adjusted for acquired and sold vessels. The book value of TORM’s fleet was USD 1,911.6m as of 30 June 2021 excluding outstanding payments on the newbuildings and second-hand vessels. The outstanding installments include payment for scrubbers related to the two LR2 newbuildings.
As of 30 June 2021, TORM had installed 49 scrubbers out of 53 planned and the remaining four are expected to be installed during the remainder of 2021 and the first quarter of 2022, including two on the LR2 newbuildings and one on an acquired vessel.
As of 30 June 2021, 23% of the remaining total earning days in 2021 were covered at an average rate of USD/day 14,612. As of 05 August 2021, the coverage for the third quarter of 2021 was 65% at USD/day 13,387. For the individual segments, the coverage was 76% at USD/day 15,700 for LR2, 62% at USD/day 10,062 for LR1, 64% at USD/day 13,391 for MR and 45% at USD/day 8,313 for Handysize.