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COPENHAGEN, Denmark, Aug. 18, 2011 (GLOBE NEWSWIRE) –

• EBITDA for the second quarter of 2011 was USD 30 million, compared to USD 24 million in the second quarter of 2010. Gains from vessel sales in the second quarter of 2011 were USD 7 million compared to no gains for the same period in 2010. The result before tax was a loss of USD 24 million, which is in line with the second quarter of 2010. For the first half of 2011, a loss before tax of USD 69 million was recognised, compared to a loss of USD 22 million in the first half of 2010.

• The product tanker market experienced a temporary surge in demand in the western hemisphere in the second quarter of 2011 as most western arbitrage opportunities were open in April and May. However, the continued oversupply of tonnage and the adverse effects from Japan and Libya as well as the release of strategic petroleum reserves have postponed the market recovery.
• The bulk market was in the second quarter of 2011 influenced by the Japanese earthquake as the Japanese industry remained in distress and caused disruption to the global production. Continued tonnage inflow and dedicated Japanese vessels entering the market put the bulk freight market under pressure.
• As announced on 28 June 2011, TORM has agreed to an amendment of a revolving credit facility agreement of USD 900 million that matures in 2013 with a bullet payment of USD 630 million. The agreement extends the facility to 2015 where it matures with a bullet payment of USD 480 million. TORM will, as a part of the agreement, secure that the cash equity injection of USD 100 million, as announced on 14 April 2011, will be completed by mid-December 2011 at the latest. The exact timing of the equity issue will depend on the current unrest on the global capital markets.
• Two MR newbuildings with delivery in 2012 have been deferred until the second quarter of 2013 and the second quarter of 2014. In the second quarter of 2011, TORM sold an older product tanker, Potrero, while the product tankers TORM Marie and TORM Margrethe were sold in sale and leaseback agreements with purchase options.
• Net interest-bearing debt was down in the second quarter of 2011 to USD 1,824 million from USD 1,853 million as at 31 March 2011.
• Undrawn credit facilities and cash constituted USD 288 million at the end of the second quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 167 million.
  
   
• Equity amounted to USD 1,037 million as at 30 June 2011, equivalent to USD 14.9 per share, excluding treasury shares, giving TORM an equity ratio of 32%.
• By 30 June 2011, TORM had covered 18% of the remaining tanker earning days in 2011 at USD/day 14,659 and 75% of the remaining bulk earning days at USD/day 15,742.
• TORM previously announced a forecasted loss before tax for 2011 of USD 100-125 million. The expectations for the full year of 2011 are characterised by great uncertainty due to the global economy, the volatility in the freight rates and TORM’s open earning days in the product tanker segment. A change of USD/day of 1,000 in freight rates will currently impact the profit before tax by app. USD 15 million. TORM continues to expect improving medium and long-term supply and demand fundamentals for the product tanker market. If, though, the market conditions and freight rates remain unchanged for the rest of the year compared to now, this will impact the forecast negatively by app. USD 50 million. Therefore, the forecast for the full year of 2011 is now a loss before tax of USD 100-175 million.

Tanker Division

The months of April and May 2011 experienced a firmer product tanker market, as most western arbitrage opportunities were open. The demand for tonnage west of Suez increased with the halt of Japanese exports to the West Coast of South America while the increased spread for US diesel due to the difference between Brent and WTI crude prices resulted in increased diesel exports from the USA. In addition to this, increased gasoline movements into both the USA and South America added to the tonnage demand. The Eastern market remained weak. Transport volumes of naphtha were lower as eastern domestic consumption was lower than expected and oversupply of tonnage remained an issue. In the second half of May and June, most of the arbitrage opportunities in the western hemisphere ceased. This made the two-tier Western and Eastern markets converge into one product tanker market that was affected by the continued oversupply of tonnage. In addition, the release of strategic petroleum reserves in the USA and Europe has constrained the demand for transportation of dirty and clean products. The global fleet grew by ~3% in the first half of 2011. The slippage in newbuilding deliveries continued in the second quarter of 2011 and was around 60% compared to the order book ultimo 2010.  TORM achieved LR2 spot rates of USD/day 10,612 in the second quarter of 2011, which was rather atypical and below the spot rates for other segments. The main reasons were overcapacity, reduced naphtha demand and a weak Aframax market. LR1 spot rates were at USD/day 15,174, as TORM benefitted from being positioned in the stronger Western market. MR spot rates obtained in the second quarter of 2011 were USD/day 15,315 driven by the surge in demand for transportation in the western markets where TORM was well positioned. This is the highest spot rates obtained by TORM since the first quarter of 2009. SR spot rates were USD/day 13,403.

Notes on the financial reporting
Accounting policies
	The interim report for the first half of 2011 is presented in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies. Except for the instances mentioned below, the interim report has been prepared using the accounting policies as for the Annual Report for 2010. The accounting policies are described in more detail in the Annual Report for 2010. As from 1 January 2011, TORM has implemented the following new or amended standards and interpretations: Amendment to IAS 24 “Related Party Disclosures”, amendment to IAS 32 “Financial Instruments: Presentation: Classification of Rights Issues”, smaller changes from Improvements to IFRS May 2010, amendment to IFRIC 14 “Prepayments of a Minimum Funding Requirement” and IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”. The new or amended standards and interpretations have not affected recognition and measurement in TORM’s interim report for the first half of 2011. The interim report for the first half of 2011 is unaudited, in line with the normal practice.
Income statement
	The gross profit for the second quarter of 2011 was USD 39 million, compared to USD 41 million for the corresponding period in 2010. The second quarter of 2011 was impacted by gains of USD 7 million from sale of vessels, whilst the second quarter of 2010 had no effects from vessel sales. Administrative costs in the second quarter of 2011 were USD 18 million, i.e. in line with the second quarter of 2010. The result before depreciation (EBITDA) for the period was USD 30 million, compared to USD 24 million for the second quarter of 2010. Depreciation in the second quarter of 2011 was USD 37 million, up USD 2 million on the second quarter of 2010. This increase was due to addition of tonnage. The primary operating result for the second quarter of 2011 was a loss of USD 7 million, compared to a loss of USD 11 million in the same quarter of 2010. The second quarter of 2011 was positively impacted by mark-to-market non-cash adjustments of USD 2 million in total: USD 2 million in connection with FFA/bunker derivatives and the net effect from other financial derivatives amounting to USD 0 million. The result after tax was a loss of USD 24 million in the second quarter of 2011, as against a loss of USD 24 million in the second quarter of 2010.
Assets
	Total assets were down from USD 3,286 million as at 31 December 2010 to USD 3,202 million as at 30 June 2011. TORM estimates the fleet’s total long-term earning potential each quarter based on future discounted cash flows. The estimated value for the fleet as at 30 June 2011 supports the book value.
Debt
	Net interest-bearing debt was down in the second quarter of 2011 to USD 1,824 million from USD 1,853 million as at 31 March 2011. As announced on 28 June 2011, TORM has agreed an amendment of a revolving credit facility agreement of USD 900 million that matures in 2013 with a bullet payment of USD 630 million. The agreement extends the facility to 2015 where it matures with a bullet payment of USD 480 million. The Company will, as a part of the agreement, secure that the cash equity injection of USD 100 million will be completed by mid-December 2011 at the latest. The facility will continue with TORM’s existing covenant package. In addition, a market value test will be applicable from 2013 and certain ordinary dividend restrictions will apply.
Equity
	Equity declined in the second quarter of 2011 from USD 1,075 million as at 31 March 2011 to USD 1,037 million due to the loss during the period. Equity as a percentage of total assets was 32% as at 30 June 2011, compared to 34% as at 31 December 2010. TORM held 3,230,432 treasury shares as at 30 June 2011, equivalent to 4.4% of the Company’s share capital. This is the same level as of 31 March 2011.
Liquidity
	TORM had undrawn credit facilities and cash of USD 288 million at the end of the second quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 167 million.
Post balance sheet events
None.
Financial calendar
TORM’s third quarter report for 2011 will be published on 17 November 2011. TORM’s complete financial calendar can be found at www.torm.com/IR.
About TORM
TORM is one of the world’s leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 140 modern vessels in cooperation with other respected shipping companies sharing TORM’s commitment to safety, environmental responsibility and customer service. TORM was founded in 1889. The Company conducts business worldwide and is headquartered in Copenhagen, Denmark. TORM’s shares are listed on NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit www.torm.com.
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.
Statement by the Board of Directors and Executive Management
The Board and Management have today discussed and adopted this interim report for the period 1 January – 30 June 2011. This interim report is unaudited and was produced in accordance with current accounting requirements for listed Danish companies, including IFRS rules on quantifying and reporting which are assumed to apply to the annual report for 2011. We believe the accounting practices used are reasonable, and that this interim report gives a true and accurate picture of the Group’s assets, debt, financial position, results and cash flows.   Copenhagen, 18 August 2011
Executive Management			Board of Directors
Jacob Meldgaard, CEO   Roland M. Andersen, CFO			Niels Erik Nielsen, Chairman   Christian Frigast, Deputy Chairman   Peter Abildgaard   Kari Millum Gardarnar   Rasmus Johannes Hoffmann   Jesper Jarlbæk   Gabriel Panayotides   Angelos Papoulias   Nicos Zouvelos

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