Presentation of Q2 2011 results 1 Safe Harbour Statement Matters - PowerPoint PPT Presentation

Presentation of Q2 2011 results 1

Safe Harbour Statement Matters discussed in this presentation may constitute forward-looking statements. Such statements reflect TORM's current expectations and are subject to certain risks and uncertainties that could negatively impact TORM's business. To understand these risks and uncertainties, please read TORM's announcements and filings with The US Securities and Exchange Commission. The presentation may include statements and illustrations concerning risks, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, TORM's examination of historical operating trends, data contained in our records and other data available from third parties. As many of these factors are subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, TORM makes no warranties or representations about accuracy, sequence, timeliness or completeness of the content of this presentation. 2

Highlights Highlights for Q2 2011 Tanker market Dry bulk market Finance • H1 loss before tax of USD 69m Results • Q2 loss before tax of USD 24m • In line with expectations • Temporary rate spikes in Q2 2011 in the Western hemisphere from arbitrage Tanker • Market recovery postponed by oversupply of tonnage, and adverse effects from Japan, Libya, and the release of strategic petroleum reserves • Q2 2011 was influenced negatively by the Japanese earthquake • Q2 2011 was influenced negatively by the Japanese earthquake Bulk • Continued high inflow of new tonnage in all segments • USD 630m medium term bank financing announced in Q2 2011 Financing • 2 vessels sold during Q2 2011 in sale-and-leaseback agreements with and purchase options liquidity • 1 older product tanker vessel sold to maintain modern fleet • Great uncertainty due to the global economy, the volatility in the freight rates and TORM’s open earning days Forecast • Forecast for 2011 result before tax revised to a loss of USD 100-175m due to 3 revised freight rate expectations for second half of 2011 3

Highlights Financial highlights H1 2011 Tanker market Dry bulk market Finance Financials USD million H1 2011 H1 2010 2010 2009 P&L Gross profit 67 97 180 243 • H1 2011 loss before tax of USD Sale of vessels 1 18 2 33 69m as expected EBITDA 34 79 97 203 • H1 2011 EBITDA of USD 34m compared to H1 2010 EBITDA of Profit before tax -69 -22 -136 -19 USD 79m – difference primarily Balance Balance explained by lower coverage in a explained by lower coverage in a Equity 1,037 1,220 1,115 1,247 low freight rate environment • Positive investment cash flow of NIBD 1,824 1,691 1,875 1,683 USD 195m from sale of vessels in Cash and cash equivalents 147 121 120 122 H1 2011 • USD 102m in instalments on Cash flow statement newbuildings in H1 2011 Operating cash flow -41 21 -1 116 Investment cash flow 93 -27 -187 -199 4

Highlights The product tankers freight rates Tanker market Dry bulk market Finance Freight rates (MR, LR1 and LR2) in USDt/day 90 80 LR2 (TC1) 70 60 • TORM outperform the benchmarks 50 – Q2: LR2 -18%, LR1 +63% and MR +44% 40 – 12 months: LR2 +14%, LR1 +40% and MR +22% 30 20 •Q2 2011 positive impacts: 10 – Oil demand up 0 – Non-fundamental demand due to oil price Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec volatility 70 MAX LR1 (TC5) MIN 2011 – Transatlantic MR strength from arbitrage 60 opportunities and US export to South America 50 40 • Q2 2011 negative impacts: 30 – Ample tonnage, notably in the East market – Low demand in the East market 20 – Low US gasoline import 10 – Continued low level of floating storage 0 – Weak dirty market Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec – Release of Strategic Petroleum Reserves 50 MAX MIN 2011 MR (TC2) 40 •Into Q3 2011 – negative sentiment 30 – General uncertainty inmacro outlook – Ample tonnage situation 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5 2005 - 2009 range 2009 2010 2011 Source: Clarksons, until 5 August 2011 LR2 : Aframax tanker 80-120,000 dwt , LR1: Panamax tanker 60-80,000 dwt, MR/Handymax tanker 30-60,000 dwt

Highlights The Tanker market impacted by Tanker market Dry bulk market Finance Increased oil demand Million barrels pr.day • Continued increase in world oil demand – Q2 2011 +0.9% (0.7m barrels/day) vs Q2 2010 – Q1 2011 +2.5% vs Q1 2010 Continued WTI Brent spread and volatility Continued WTI Brent spread and volatility USD/bbl • Continued oil price volatility N e v o l u m e s * o a o f v e s e l s g r i F 0 1 0 2 0 3 0 4 o 0 l o a t n g s t – Arbitrage movements “helped” by volatility • Continued Brent/WTI spread – Improved US refinery margins – Higher US export 6 Source: IEA and Factset

Highlights Supply continues to be affected by slippage Tanker market Dry bulk market Finance Slippage is continuing… No. of vessels • Significant slippage continues – H1 2011, slippage of 60% – Delivery of 30 vessels in Q2 2011 – H1 2011 net fleet growth of 3% …and net fleet growth is declining No % yoy 300 12% 250 10% 10% 200 8% 8% • Order book stands at 14% of the fleet on water 150 6% • Slippage expected to continue 100 5% – 30% in 2011 and 2012 4% 4% 4% 50 – No slippage from 2013 as there is free yard capacity 2% 0 compared to orders this year • TORM estimates 10% cancellations 2009 2010 2011 2012 2013 -50 0% • Assumed new ordering of 40 MR (2013 delivery) LR2 LR1 • Total net growth in the fleet declines from 5% in 2011 to MR SR approx. 4% in 2013 New ordering est. Total by MR equivalent 7 Note: Net fleet growth: Gross order book adjusted for scrapping, slippage, phase out of single hulls and new ordering Source: Inge Steensland and TORM

Highlights Product Tanker market - Tanker market Dry bulk market Finance demand will outgrow supply from 2011 to 2013 Demand and supply development (2011 - 2013) Demand Supply Swing factors: 750 Number of vessels* • Order book delays • Delays in refineries 500 404 40 40 • Floating storage 75 74 75 delivered in H1 2011 403 • Slow steaming 68 72 250 54 • Changes in transport 329 to be delivered 206 258 patterns 0 • Embargoes & strikes Growth in oil Increasing port Total demand Total supply Phase out & LR into dirty dditional 2013 Refinery and transportation e/triangulation Swing factors Cancellations der book gross bitrage/cross scrapping • Blockage of water ways increase demand increase market deliveries and ports days • Disruptions to refinery production production R Inc C S tr trade/ T Orde Arbi Ad • Hurricanes Source: TORM research *All effects are recalculated into MR equivalents – to enable comparision based on their volume relative to MR Demand primarily affected by Supply primarily affected by • LR into dirty • Refinery expansions in the Middle East and – Some LR1 vessels are replacing Panamax India & changes in transport patterns phase outs in crude • Increased oil demand – 30% of LR2 vessels are trading in the • Increasing port days due to increased crude activity/bottlenecks • Phase-out of single hulls and scrapping of old • Arbitrage tonnage • Improving US exports • Additional new ordering of 2013 deliveries 8

Highlights Product tanker vessel prices stable – but limited S&P activity Tanker market Dry bulk market Finance Vessel price development • Stable new building prices from established MR newbuilding and second-hand prices yards USDm 60 • New building slots covered until Q4 2012 50 • Good demand for modern second-hand units at unchanged prices 40 • Prices for older pre 2000 built vessels under 30 pressure • Potential distressed assets sales may impact 20 the general price level negatively 10 0 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 Jul/11 MR DWT Products Tanker New building Prices MR 5 year old second-hand prices USDm USDt/day MR - 1 year T/C and second-hand prices 30 60 25 50 20 40 15 30 • T/C rates and second-hand prices are still 10 20 relatively well correlated 5 10 0 0 Jul/11 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 1 Year Time charter R ate 47-48,000 Modern Products Tanker 9 MR 5 year old second-hand prices (right axis) Source: Clarksons, until 5 August 2011