FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August 2006
A/S STEAMSHIP COMPANY TORM
(Translation of registrant's name into English)
Tuborg Havnevej 18
DK-2900 Hellerup
Denmark
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein as Exhibit 1 is a copy of Announcement No. 9 - issued by
A/S STEAMSHIP COMPANY TORM (the "Company") to the Copenhagen Stock Exchange on
August 9, 2006.
In anticipation of continuing firm freight rates for the remainder of the year,
the profit forecast for 2006 is upgraded to USD 230-250 million before tax.
Profit before tax for the first half-year of 2006 was USD 140 million (DKK 852
million). The result was better than expected and highly satisfactory.
Highlights o Profit after tax for the second quarter of 2006 was USD 81
million (DKK 480 million). Profit after tax for the first
half of 2006 was USD 139 million (DKK 842 million).
o Earnings per share (EPS) were USD 4.0 (DKK 24.2) for the
first half of 2006 against USD 4.6 (DKK 26.7) for the same
period last year. EPS for the second quarter were USD 2.3
(DKK 13.8) in 2006 and USD 2.4 (DKK 14.2) in 2005,
respectively.
o Return on Invested Capital (RoIC) was 18.1% p.a., and Return
on Equity (RoE) was 35.6% p.a. for the quarter and 20.4%
(RoIC) and 31.2% (RoE) for the first half of 2006. At
30 June 2006, equity amounted to USD 870 million (DKK 5,109
million), corresponding to USD 25.1 per share (DKK 147.6 per
share) excluding treasury shares.
o The market value of the Company's vessels, including the
order book, exceeded book value by USD 861.3 million at 30
June 2006, equalling USD 24.9 per share (DKK 146.0 per
share), excluding treasury shares.
o The product tanker market was highly volatile in the first
half. The increasing transport demand in the USA and Asia
ensured a solid demand for product tankers at favourable
rates during the first half. The period time charter market
remained strong, reflecting the persistently strong customer
demand and optimistic outlook. At 30 June, the Company had
covered 35% of the remaining earning days in 2006 at an
average rate of USD/day 25,375.
o The upward trend in the bulk market of the second quarter
continued into the third quarter due to an increasing demand
for transport of primarily iron ore and coal. At 30 June,
the Company had covered 77% of the remaining earning days in
2006 at an average of USD/day 17,557.
o Pursuant to the strategy "Greater Earning Power", TORM has
in 2006 contracted four MR product tankers with 1A Super Ice
Class designation, sold five older dry bulk vessels and one
product tanker.
o As a consequence of continuing firm freight freight rates
for product tankers and the unhedged part of dry bulk the
expectations for 2006 are upgraded by USD 40 million to USD
230-250 million before tax. Profit from the sale of vessels
amounts to USD 54 million.
Teleconference TORM's management will review the report for the first
half-year of 2006 in a telecom-ference and webcast
(www.torm.com) to be held today, 9 August 2006, at 17:00
Copenhagen time (CET). To participate, please call 10
minutes before the call on tel.: +45 3271 4607 (from Europe)
or +1 334 323 6201 (from the USA). A replay of the
conference will be available from TORM's website.
Contact A/S Dampskibsselskabet TORM Telephone +45 39 17 92 00
Tuborg Havnevej 18 Klaus Kjaerulff, CEO
DK-2900 Hellerup - Denmark
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Q2 2006 Q2 2005 Q1-Q2 Q1-Q2
Million USD 2006 2005 2005
--------------------------------------------------------------------------------------------------------------------------
Income statement
Net revenue 140.1 132.1 301.9 264.4 587.0
Time charter equivalent earnings (TCE) 102.9 103.7 232.4 209.3 463.8
Gross profit 59.8 70.0 145.8 145.6 314.9
EBITDA 72.4 87.1 154.4 179.0 351.0
Operating profit 57.6 75.9 124.5 157.5 303.2
Financial items 23.2 10.0 15.6 6.3 (3.8)
Profit before tax 80.8 85.9 140.1 163.8 299.4
Net profit 80.8 84.2 138.5 161.1 299.4
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Balance sheet
Total assets 1,753.1 1,580.6 1,753.1 1,580.6 1,810.1
Equity 870.3 790.2 870.3 790.2 904.7
Total liabilities 882.8 790.4 882.8 790.4 905.4
Invested capital 1,265.4 1,023.2 1,265.4 1,023.2 1,175.8
Net interest bearing debt 723.1 617.4 723.1 617.4 632.1
--------------------------------------------------------------------------------------------------------------------------
Cash flow
From operating activities 64.6 76.5 140.3 140.5 261.1
From investing activities 33.0 (174.2) (86.5) (348.4) (473.1)
Thereof investment in tangible fixed
assets (56.8) (249.9) (176.5) (471.5) (635.9)
From financing activities (168.1) 44.4 (160.7) 181.8 303.2
Net cash flow (70.5) (53.3) (106.9) (26.1) 91.2
--------------------------------------------------------------------------------------------------------------------------
Key financial figures
Margins:
TCE 73.4% 78.5% 77.0% 79.2% 79.0%
Gross profit 42.7% 53.0% 48.3% 55.1% 53.7%
EBITDA 51.7% 65.9% 51.1% 67.7% 59.8%
Operating profit 41.1% 57.5% 41.2% 59.6% 51.6%
Return on Equity (RoE) (p.a.) 35.6% 41.3% 31.2% 42.8% 36.9%
Return on Invested Capital (RoIC) (p.a.) 18.1% 33.2% 20.4% 38.4% 33.8%
Equity ratio 49.6% 50.0% 49.6% 50.0% 50.0%
Exchange rate USD/DKK, end of period 5.87 6.16 5.87 6.16 6.32
Exchange rate USD/DKK, average 5.94 5.91 6.08 5.80 6.00
--------------------------------------------------------------------------------------------------------------------------
Share related key figures
Earnings per share, EPS USD 2.3 2.4 4.0 4.6 8.6
Cash flow per share, CFPS USD 1.9 2.2 4.0 4.0 7.5
Share price, end of period
(per share of DKK 10 each) DKK 271.7 331.5 271.7 331.5 305.1
Number of shares, end of period Mill. 36.4 36.4 36.4 36.4 36.4
Number of shares (excl. treasury shares),
average. Mill. 34.8 34.8 34.8 34.8 34.8
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Profit by division
--------------------------------------------------------------------------------------------------------------------------
Million USD Q2 2006 Q1-Q2 2006
-------------------------------------------------------------------------------
Tanker Bulk Not Tanker Bulk Not
division division allocated Total division division allocated Total
--------------------------------------------------------------------------------------------------------------------------
Net revenue 111.6 28.5 0.0 140.1 242.3 59.6 0.0 301.9
Port expenses, bunkers and commissions (35.9) (1.3) 0.0 (37.2) (66.6) (2.9) 0.0 (69.5)
--------------------------------------------------------------------------------------------------------------------------
Time charter equivalent earnings (TCE)*) 75.7 27.2 0.0 102.9 175.7 56.7 0.0 232.4
Charter hire (11.4) (11.2) 0.0 (22.6) (23.4) (22.6) 0.0 (46.0)
Operating expenses (16.6) (3.9) 0.0 (20.5) (32.6) (8.0) 0.0 (40.6)
--------------------------------------------------------------------------------------------------------------------------
Gross Profit 47.7 12.1 0.0 59.8 119.7 26.1 0.0 145.8
Profit from sale of vessels 2.9 16.5 0.0 19.4 2.9 16.5 0.0 19.4
Administrative expenses (7.3) (1.5) 0.0 (8.8) (13.2) (2.7) 0.0 (15.9)
Other operating income 2.2 (0.2) 0.0 2.0 5.1 0.0 0.0 5.1
Depreciation and impairment losses (12.3) (2.5) 0.0 (14.8) (24.7) (5.2) 0.0 (29.9)
--------------------------------------------------------------------------------------------------------------------------
Operating profit 33.2 24.4 0.0 57.6 89.8 34.7 0.0 124.5
Financial items - - 23.2 23.2 - - 15.6 15.6
--------------------------------------------------------------------------------------------------------------------------
Profit/(Loss) before tax - - 23.2 80.8 - - 15.6 140.1
Tax - - 0.0 0.0 - - (1.6) (1.6)
--------------------------------------------------------------------------------------------------------------------------
Net profit - - 23.2 80.8 - - 14.0 138.5
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*) TCE is gross freight income less bunker, commissions and port expenses (TCE
= Time Charter Equivalent).
Tanker and Bulk
Tanker Division The Tanker Division achieved a profit before financial items
of USD 33.2 million in the second quarter of 2006 against
USD 56.6 million in the first quarter. Profit from the sale
of vessels amounted to USD 2.9 million in the second
quarter.
In line with normal seasonal patterns, freight rates were
strong at the beginning of the year, dropping towards the
end of the first and into the second quarter as the winter
season came to an end, resulting in a tailing off in the
transportation of heating oil. The decrease in freight rates
at the beginning of the second quarter was more pronounced
than normal, although rates recovered from the middle of the
quarter. Especially the MR segment has been very positive in
the second quarter and this development has continued into
Financial items
Bunker expenses have risen steadily during 2006, negatively
affecting the earnings of vessels operating in the spot
market. At 30 June, TORM had covered 51.5% of the remaining
bunker requirement for 2006.
In the first half of 2006, the tanker market was affected by
the following factors:
Positive impact:
o Economic growth in the USA and China which, together
with the OECD's increased stockpiling of oil products,
ensured strong demand for product tankers.
o Failing oil supplies from Nigeria and lower Russian oil
exports, which were replaced by oil from Saudi Arabia,
increasing transport distances.
o Coverage of freight rates which to some extent
countered the effect of the low freight rates at the
end of the first and the beginning of the second
quarter.
Negative impact:
o Reduced naphtha exports to the Far East and the Middle
East as a result of the extraordinarily large number of
inspections of refineries and petrochemical plants,
particularly affecting the LR2 market.
o Reduced exports of jet fuel to Europe.
o Continued strong growth in the global product tanker
fleet.
In the second quarter of 2006, TORM's Tanker Division
obtained freight rates that were 25% lower for the LR2
segment, 21% lower for the LR1 segment and unchanged in the
MR segment compared with those of the second quarter of
2005. The MR segment was by far the strongest segment in the
second quarter.
The number of earning days in the LR2 segment was up by 19%
compared with the second quarter of 2005. The number of
earning days in the LR1 and MR segments increased by 63% and
28%, respectively. Compared with the first quarter of 2006,
the number of earning days was up by 6% for the tanker fleet
as a whole.
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Tanker Division Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Change
Q2 05
-Q2 06
------------------------------------------------------------------------------------------
LR2 (Aframax, 90-110,000 DWT)
Available earning days 442 548 550 529 527 19%
Per earning day (USD):
Earnings (TCE)*) 30,281 28,185 45,917 43,553 22,707 (25%)
Operating expenses (4,849) (5,899) (6,157) (5,464) (6,695) 38%
Operating cash flow**) 18,726 14,172 30,316 33,526 13,258 (29%)
------------------------------------------------------------------------------------------
LR1 (Panamax, 75-85,000 DWT)
Available earning days 652 774 827 912 1,060 63%
Per earning day (USD):
Earnings (TCE)*) 26,906 26,509 41,726 35,356 21,275 (21%)
Operating expenses (6,836) (6,074) (5,680) (5,730) (5,254) (23%)
Operating cash flow**) 11,769 15,090 27,964 22,113 9,718 (17%)
------------------------------------------------------------------------------------------
MR (45,000 DWT)
Available earning days 1,270 1,547 1,638 1,599 1,632 29%
Per earning day (USD):
Earnings (TCE)*) 26,079 23,499 29,373 28,118 26,009 0%
Operating expenses (6,594) (6,274) (6,505) (7,199) (7,320) 11%
Operating cash flow**) 18,788 17,738 23,598 21,730 19,506 4%
------------------------------------------------------------------------------------------
*) TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
**) Operating cash flow = TCE less operating expenses and charter hire.
Bulk Division The Bulk Division achieved a profit before financial items
of USD 24.4 million in the second quarter of 2006 against
USD 10.3 million in the first quarter. The profit from the
sale of TORM's two Handysize vessels, TORM Arawa and TORM
Pacific, amounted to USD 16.5 million in the second quarter.
Rates increased in the bulk market during the second quarter
of 2006 to a historic seasonal high. Rates have continued to
increase into the third quarter.
Bulk rates were primarily positively affected by stronger
demand for iron ore during the second quarter. The growth in
Chinese steel production also increased the demand for coal,
which supported bulk rates in the second quarter. The
increased cement exports from China to the USA further
boosted the bulk market.
Despite the relatively large addition of newbuildings to the
bulk market in 2006, the market was able to absorb the new
tonnage in the second quarter.
The number of available earning days in the Panamax segment
was 15% higher in the second quarter of 2006 compared with
the second quarter of 2005.
The number of available earning days in the Handysize
segment dropped by 40% in the second quarter of 2006
compared with the second quarter of 2005. The decrease was
due to TORM's sale and delivery of its two Handysize vessels
during the second quarter of 2006. Pursuant to the strategy,
TORM no longer operates in this segment and the Bulk
Division focuses only on the Panamax segment.
------------------------------------------------------------------------------------------
Bulk Division Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Change
Q2 05
-Q2 06
------------------------------------------------------------------------------------------
Panamax (60-80,000 DWT)
Available earning days 1,203 1,240 1,356 1,346 1,382 15%
Per earning day (USD):
Earnings (TCE)*) 30,962 27,523 22,585 20,324 18,343 (41%)
Operating expenses (4,607) (4,294) (5,017) (4,572) (4,576) (1%)
Operating cash flow**) 21,792 12,241 12,136 9,430 7,681 (65%)
------------------------------------------------------------------------------------------
Handysize (20-35,000 DWT)
Available earning days 206 215 197 179 124 (40%)
Per earning day (USD):
Earnings (TCE)*) 17,645 14,514 13,067 12,479 11,899 (33%)
Operating expenses (3,908) (3,690) (5,049) (4,583) (4,583) 17%
Operating cash flow**) 13,172 9,150 7,745 7,987 9,700 (26%)
------------------------------------------------------------------------------------------
*) TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
**) Operating cash flow = TCE less operating expenses and charter hire.
Other activities Other (non allocated) activities for the first half-year
consisted of financial items of USD 15.6 million, of which
USD 25.5 million was dividend from the shareholding in
Dampskibsselskabet "NORDEN" A/S ("Norden"), while tax
accounted for USD (1.6) million.
Fleet development In the second quarter, TORM sold and delivered DIFKO
Lisbeth, TORM Pacific and TORM Arawa. TORM furthermore took
delivery of the LR2 product tanker TORM Margrethe.
At the end of the second quarter of 2006, TORM's fleet
consisted of 38 vessels: 30 product tankers and eight bulk
carriers. In July, TORM sold three Panamax bulk carriers,
cf. the announcement of 28 July.
-----------------------------------------------------------
31 Dec 30 June
2005 Addition Disposal 2006
-----------------------------------------------------------
LR2/Aframax 3.0 TORM Gudrun - 6.0
TORM Kristina
TORM Margrethe
LR1/Panamax 6.0 DIFKO Lisbeth DIFKO Lisbeth 6.0
MR 18.0 - - 18.0
-----------------------------------------------------------
Tank 27.0 4.0 1.0 30.0
-----------------------------------------------------------
Panamax 8.0 - - 8.0
Handysize 2.0 - TORM Pacific -
TORM Arawa
-----------------------------------------------------------
Bulk 10.0 - 2.0 8.0
-----------------------------------------------------------
Total 37.0 4.0 3.0 38.0
-----------------------------------------------------------
Planned
fleet changes PHIC The order book of a total of 14 vessels represents an
investment of USD 634 million, of which the remaining
investments amount to USD 500 million.
----------------------------------------------------------------------------------------------
30 June 2006 2007 2008 2009 Total
2006 ------- ----------------- ----------------- ----------------- Order
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Book
----------------------------------------------------------------------------------------------
LR2 6 1 - 1 1 - 0.5 - 1 - 1 1 - - - 6.5
LR1 6 - 0.5 1 - - - - - - - - - - - 1.5
MR 18 - 0 0 - - - - - 1 - 1 1 2 1 6
----------------------------------------------------------------------------------------------
Panamax 8 (3) - - - - - - - - - - - - - (3)
Handysize - - - - - - - - - - - - - - - -
----------------------------------------------------------------------------------------------
Total 38 (2) 0.5 2 1 0 0.5 0 1 1 1 2 1 2 1 11
----------------------------------------------------------------------------------------------
TORM has chartered in 17.5 product tankers on long-term
charters, of which 8.5 already form part of the fleet. TORM
holds purchase options on four of the charters. The options
can be exercised in 2009 and beyond.
TORM has chartered in 11 Panamax bulkers on long-term
charters with purchase options, of which seven already form
part of the fleet. The options can be exercised in 2007 and
beyond.
As a result, the Company's fleet of owned and chartered
vessels will increase gradually to a total of 74 vessels by
2009, unless any vessels are bought or sold in the meantime.
Pools At 30 June 2006, the three product tanker pools consisted of
78 vessels. By the end of 2006, the three pools are expected
to comprise a total of 85 vessels.
Results
Second quarter 2006 The second quarter of 2006 showed a gross profit of USD 60
million, against USD 70 million for the corresponding
quarter of 2005.
Depreciation was USD 15 million during the second quarter of
2006, against USD 11 million in the second quarter of 2005.
The higher depreciation amount was due to the Company's
larger fleet.
Profit before financial items for the second quarter of 2006
was USD 58 million, against USD 76 million in the same
quarter of 2005. Of this amount, the Tanker and Bulk
Divisions contributed USD 33 million and USD 24 million,
respectively.
Financial items were positive by USD 23 million against USD
10 million in the same quarter of 2005. Financial items were
positively affected by a dividend payment of USD 25.5
million from Norden in 2006 (2005: USD 12.6 million).
Profit after tax was USD 81 million, against USD 84 million
in the same quarter of 2005.
Six months 2006 Profit after tax for the first six months of 2006 was USD
139 million, while profit before tax for the first half-year
amounted to USD 140 million. This is considered very
satisfactory.
Gross profit for the first six months of 2006 was USD 146
million, unchanged from the first six months of 2005. The
number of earning days for both the Tanker and the Bulk
Divisions was 26% higher in the first half-year of 2006 than
in the first half of 2005. This was countered by lower rates
during the period.
EBITDA was USD 154 million for the first six months of 2006,
against USD 179 million in the corresponding period of 2005.
Assets Total assets decreased from USD 1,860 million to USD 1,753
million in the second quarter, primarily as a result of the
distribution of dividend of USD 140 million in April.
The value adjustment of the Norden shares is a consequence
of a drop in the share price from DKK 2,709 as of 31 March
2006 to DKK 2,483 as of 30 June 2006, offset by the effects
of a drop in the USD/DKK rate from 6.17 to 5.87 during the
same period. The value adjustment of the Norden shares for
the second quarter of 2006 was USD (12) million.
Liabilities During the second quarter of 2006, the Company's net
interest bearing debt increased from USD 676 million to USD
723 million. The increase was mainly due to higher net
borrowing in connection with the delivery of vessels and
distribution of dividend, countered by positive cash
earnings during the period. The Company has considerable
undrawn loan facilities at its disposal.
Equity During the second quarter of 2006, equity declined from USD
946 million to USD 870 million, mainly as a result of the
distribution of dividend, offset by earnings during the
period and value adjustments of the Norden shareholding in
particular. The equity ratio was 49.6% at 30 June 2006.
At 30 June 2006, TORM held 1,778,182 treasury shares,
corresponding to 4.9% of the Company's share capital. This
is an increase of 219,710 shares, corresponding to 0.6% of
the Company's share capital, over the first quarter of 2006.
Subsequent events Since the end of the second quarter of 2006, TORM has sold
TORM Herdis, TORM Marina and TORM Tekla for USD 63 million
pursuant to announcement no. 8 dated 28 July 2006.
TORM has signed a contract in July 2006 for two more MR
product tankers with 1A Super Ice Class designation for
delivery in 2009. Consequently, TORM will take delivery of
six MR product tankers with 1A Super Ice Class designation
in 2008-2009.
Norden On 4 April 2006, TORM announced that the Company would
actively reconsider its shareholding in Norden during the
coming period. TORM's Board of Directors has actively
reconsidered the shareholding in Norden, and this has not
resulted in a re-evaluation of the value and the strategic
potential of the stake.
Management In connection with the resignation of the former CFO, TORM
has hired Egon Zehnder International S.A. to assist in
finding a successor.
Expectations Rates in the tanker market were very volatile in the first
half-year. In the LR2 and LR1 segments, rates were lower
than expected, while the rates of the MR segment have been
better than expected. The MR segment is important to TORM,
as 49% of earning days in the Tanker Division are in MR
tankers. Rates in the spot-, paper-, and the period market
have continued to increase into the third quarter, which
gives rise to optimism with regard to rates.
Rates in the dry bulk market were slightly better than
expected in the first six months of 2006. Rates in the spot
market have continued to rise into the third quarter, which
gives rise to some optimism with regard to rates. TORM
expects the spot market to remain relatively strong
throughout the year, although it is not expected to reach
the all-time high recorded in the fourth quarter of 2004.
As a result of the expected higher earnings for the rest of
the year, TORM upgrades the forecast for 2006 by USD 40
million to USD 230-250 million before tax.
The key assumptions behind the forecast are as follows:
------------------------------------------------------------------
Assumptions Q1 06(A) Q2 06(A) Q3 06 Q4 06
------------------------------------------------------------------
LR2 Earning days 529 527 654 728
TCE rate (USD/day) 43,553 22,707 - -
LR1 Earning days 912 1,060 1,211 1,281
TCE rate (USD/day) 35,356 21,275 - -
MR Earning days 1,599 1,632 1,647 1,626
TCE rate (USD/day) 28,118 26,009 - -
------------------------------------------------------------------
Panamax Earning days 1,346 1,382 1,192 916
TCE rate (USD/day) 20,324 18,343 18,000 18,000
Handysize Earning days 179 124 - -
TCE rate (USD/day) 12,479 11,899 - -
------------------------------------------------------------------
(A) Realized figures.
For competitive reasons, TORM does not provide the Company's
own expectations for product tanker rates. The table below
sets out the rates as quoted on the IMAREX forward market at
30 June.
------------------------------------------------------------
TCE rate (USD/day) Q3 06 Q4 06
------------------------------------------------------------
27,000 46,000
LR2
LR1 25,000 37,000
MR 20,000 26,000
Sensitivity At the beginning of the third quarter of 2006, 77% of the
earning days remaining in the year for the Panamax bulk
carriers was covered at an average of USD/day 17,557. In the
Tanker Division, 35% of the earning days were covered at an
average of USD/day 25,375.
A change compared to the above of USD 1,000 per day of the
rates not yet covered in the remaining two quarters of the
year will, all other things being equal, lead to a change in
net profit of USD 5.1 million.
At 30 June, TORM had covered 51.5% of the remaining bunker
requirement for 2006. A hypothetical 1 percentage point
price change would lead to a change in bunker expenditure in
2006 of USD 0.3 million.
Safe Harbor Matters discussed in this release may constitute
Forward looking forward-looking statements. Forward-looking statements
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 other
statements, which are 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 assure you 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 world
economies 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
governmental rules and regulations 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 obligation to update and
change the listed expectations to the extent required by
law.
The TORM share
The price of a TORM share was DKK 271.7 as of 30 June 2006,
against DKK 282.6 at the beginning of the second quarter - a
reduction of DKK 10.9.
During the second quarter, the Company distributed a
dividend of DKK 23 per share, equalling DKK 837 million.
The total return to shareholders for the second quarter of
2006 was thus DKK 12.1 per share (calculated excluding
reinvestment), corresponding to a total return of 4.3%.
Accounting policies
The accounts for the first half of 2006 have been prepared
using the same accounting policies as for the Annual Report
2005.
The report for the first-half year of 2006 is unaudited, in
line with the normal practice.
Information
Teleconference TORM will review the report for the first half-year of 2006
in a teleconference for financial analysts and investors to
be held on 9 August 2006 at 17:00 Copenhagen time (CET). The
conference call will be hosted by Klaus Kjaerulff, CEO, and
will be conducted in English.
Please call 10 minutes before the conference call starts on
tel. +45 3271 4607 (from Europe) or +1 334 323 6201 (from
the USA). The teleconference will also be webcast via TORM's
website, www.torm.com. The presentation material can be
downloaded from the website.
Next reporting TORM's financial report for the third quarter of 2006 will
be released on 8 November 2006.
Statement by the Board of Directors and Management on the
Interim Report
The Board of Directors and Management have considered and
approved the interim report for the period 1 January - 30
June 2006.
The interim report, which is unaudited, has been prepared in
accordance with the general Danish financial reporting
requirements governing listed companies, including the
measurement and recognition provisions in IFRS.
We consider the accounting policies applied to be
appropriate, and in our opinion the interim report gives a
true and fair view of the Group's assets, liabilities,
financial position and of the results of operations and
consolidated cash flows.
Copenhagen, 9 August 2006
Management Board of Directors
Klaus Kjaerulff, CEO Niels Erik Nielsen, Chairman
Christian Frigast, Deputy Chairman
Lennart Arrias
Ditlev Engel
Peder Mouridsen
Gabriel Panayotides
Nicos Zouvelos
About TORM TORM is one of the world's leading carriers of refined oil
products as well as being a significant participant in the
dry bulk market. The Company operates a combined fleet of
close to 100 modern vessels, principally through a pooling
cooperation with other respected shipping companies who
share TORM's commitment to safety, environmental
responsibility and customer service.
TORM was founded in 1889 and has consistently adapted itself
to, and benefited from, the enormous changes which
characterise the shipping industry in general. The Company
conducts business worldwide and is headquartered in
Copenhagen, Denmark. TORM's shares are listed on the
Copenhagen Stock Exchange (ticker TORM) as well as on the
NASDAQ (ticker TRMD). For further information, please visit
www.torm.com.
Income Statement
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Million USD Q2 2006 Q2 2005 Q1-Q2 2006 Q1-Q2 2005 2005
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Net revenue 140.1 132.1 301.9 264.4 586.9
Port expenses, bunkers and commissions (37.2) (28.4) (69.5) (55.1) (123.1)
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Time Charter Equivalent Earnings (TCE) 102.9 103.7 232.4 209.3 463.8
Charter hire (22.6) (17.4) (46.0) (33.9) (82.2)
Operating expenses (20.5) (16.3) (40.6) (29.8) (66.7)
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Gross profit 59.8 70.0 145.8 145.6 314.9
Profit from sale of vessels 19.4 21.0 19.4 40.4 54.7
Administrative expenses (8.8) (6.7) (15.9) (13.3) (31.2)
Other operating income 2.0 2.8 5.1 6.3 12.6
Depreciation and impairment losses (14.8) (11.2) (29.9) (21.5) (47.8)
-----------------------------------------------------------------------------------------------------------
Operating profit 57.6 75.9 124.5 157.5 303.2
Financial items 23.2 10.0 15.6 6.3 (3.8)
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Profit before tax 80.8 85.9 140.1 163.8 299.4
Tax 0.0 (1.7) (1.6) (2.7) 0.0
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Net profit 80.8 84.2 138.5 161.1 299.4
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Earnings per share, EPS (USD) 2.3 2.4 4.0 4.6 8.6
Earnings per share, EPS (DKK)*) 13.8 14.2 24.2 26.7 51.5
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*) Calculated from USD to DKK at the average USD/DKK exchange rate for the
relevant period.
Income statement by quarter
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Million USD Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
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Net revenue 132.1 142.2 180.3 161.8 140.1
Port expenses, bunkers and commissions (28.4) (32.8) (35.2) (32.3) (37.2)
--------------------------------------------------------------------------------------------------------
Time Charter Equivalent Earnings (TCE) 103.7 109.4 145.1 129.5 102.9
Charter hire (17.4) (19.1) (29.2) (23.4) (22.6)
Operating expenses (16.3) (18.2) (18.7) (20.1) (20.5)
--------------------------------------------------------------------------------------------------------
Gross profit 70.0 72.1 97.2 86.0 59.8
Profit from sale of vessels 21.0 14.4 (0.1) 0.0 19.4
Administrative expenses (6.7) (7.8) (10.1) (7.1) (8.8)
Other operating income 2.8 2.6 3.7 3.1 2.0
Depreciation and impairment losses (11.2) (12.5) (13.8) (15.1) (14.8)
--------------------------------------------------------------------------------------------------------
Operating profit 75.9 68.8 76.9 66.9 57.6
Financial items 10.0 (2.3) (7.8) (7.6) 23.2
--------------------------------------------------------------------------------------------------------
Profit before tax 85.9 66.5 69.1 59.3 80.8
Tax (1.7) 0.2 2.5 (1.6) 0.0
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Net profit 84.2 66.7 71.6 57.7 80.8
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Assets
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Million USD 30 June 30 June 31 December
2006 2005 2005
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NON-CURRENT ASSETS
Tangible fixed assets
Land and buildings 0.4 0.4 0.9
Vessels and capitalized dry-docking 1,139.6 917.6 1,066.5
Vessels under construction and prepayments
for vessels 134.4 116.1 97.4
Other plant and operating equipment 2.8 2.8 2.3
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Total tangible fixed assets 1,277.2 1,036.9 1,167.1
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Financial fixed assets
-------------------------------------------------------------------------------
Other investments 328.0 384.4 361.0
TOTAL NON-CURRENT ASSETS 1,605.2 1,421.3 1,528.1
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CURRENT ASSETS
Inventories of bunkers 12.0 9.2 10.9
Freight receivables, etc. 45.8 34.7 53.9
Other receivables 25.2 7.2 14.1
Prepayments 5.6 5.2 2.9
Marketable securities 0.0 10.8 0.2
Cash and cash equivalents 49.8 39.4 156.7
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138.4 106.5 238.7
Non-current assets held for sale 9.5 52.8 43.3
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TOTAL CURRENT ASSETS 147.9 159.3 282.0
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TOTAL ASSETS 1,753.1 1,580.6 1,810.1
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Liabilities and Equity
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Million USD 30 June 30 June 31 December
2006 2005 2005
-------------------------------------------------------------------------------
EQUITY
Common shares 61.1 61.1 61.1
Treasury shares (18.1) (7.7) (7.7)
Revaluation reserves 263.4 322,4 296.4
Retained profit 552.5 409.4 415.3
Proposed dividend 0.0 0.0 132.4
Hedging reserves 7.5 1.1 3.3
Translation reserves 3.9 3.9 3.9
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TOTAL EQUITY 870.3 790.2 904.7
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LIABILITIES
Non-current liabilities
Deferred tax 55.8 61.8 54.5
Mortgage debt and bank loans 716.3 507.8 729.1
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TOTAL NON-CURRENT LIABILITIES 772.1 569.6 783.6
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Current liabilities
Mortgage debt and bank loans 56.6 54.5 59.9
Other financial liabilities 0.0 105.3 0.0
Trade payables 15.6 18.3 22.9
Current tax liability 10.0 14.2 9.4
Other liabilities 27.1 22.2 23.6
Deferred income 1.4 6.3 6.0
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TOTAL CURRENT LIABILITIES 110.7 220.8 121.8
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TOTAL LIABILITIES 882.8 790.4 905.4
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TOTAL EQUITY AND LIABILITIES 1,753.1 1,580.6 1,810.1
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Equity at 1 January - 30 June 2006
--------------------------------------------------------------------------------------------------------------------------------
Million USD Com- Treas- Revalua- Re- Pro- Hedging Transla- Total
mon ury tion tained posed reserves tion
shares shares reserves profit divi- reserves
dend
--------------------------------------------------------------------------------------------------------------------------------
Equity at 1 January 2006 61.1 (7.7) 296.4 415.3 132.4 3.3 3.9 904.7
--------------------------------------------------------------------------------------------------------------------------------
Changes in equity Q1-Q2 2006:
Exchange rate adjustment arising on translation
of entities using a measurement currency diff. from USD - - - - - - 0.0 0.0
Reversal of deferred gain/loss on cash flow hedges at the
beginning of the year - - - - - (3.3) - (3.3)
Deferred gain/loss on cash flow hedges at the end of the
Period - - - - - 7.5 - 7.5
Reversal of fair value adjustment on available for sale
investments at the beginning of the year - - (296.4) - - - - (296.4)
Fair value adjustment on available for sale investments at
the end of the period - - 263.4 - - - - 263.4
--------------------------------------------------------------------------------------------------------------------------------
Net income recognised directly in equity - - (33.0) - - 4.2 0.0 (28.8)
Net profit for the period 138.5 138.5
--------------------------------------------------------------------------------------------------------------------------------
Total income for the period - - (33.0) 138.5 0.0 4.2 0.0 109.7
Purchase of treasury shares, cost - (10.4) - - - - - (10.4)
Disposal of treasury shares, cost - 0.0 - - - - - 0.0
Dividends paid - - - - (140.1) - - (140.1)
Dividends paid on treasury shares - - - 6.0 - - - 6.0
Exchange rate adjustment on dividends paid - - - (7.7) 7.7 - - 0.0
Exercise of share options - - - 0.4 - - - 0.4
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Total changes in equity Q1-Q2 2006: - (10.4) (33.0) 137.2 (132.4) 4.2 0.0 (34.4)
--------------------------------------------------------------------------------------------------------------------------------
Equity at 30 June 2006 61.1 (18.1) 263.4 552.5 0.0 7.5 3.9 870.3
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Equity at 1 January - 30 June 2005
--------------------------------------------------------------------------------------------------------------------------------
Million USD Com- Treas- Revalua- Re- Pro- Hedging Transla- Total
mon ury tion tained posed reserves tion
shares shares reserves profit divi- reserves
dend
--------------------------------------------------------------------------------------------------------------------------------
Equity at 1 January 2005 61,1 (7,7) 319,3 238,4 99,9 0,4 4,0 715,4
--------------------------------------------------------------------------------------------------------------------------------
Changes in equity Q1-Q2 2005:
Exchange rate adjustment arising on translation
of entities using a measurement currency diff. from USD - - - - - - (0,1) (0,1)
Reversal of deferred gain/loss on cash flow hedges at the
beginning of the year - - - - - (0,4) - (0,4)
Deferred gain/loss on cash flow hedges at the end of the
period - - - - - 1,1 - 1,1
Reversal of fair value adjustment on available for sale
investments at the beginning of the year - - (319,3) - - - - (319,3)
Fair value adjustment on available for sale investments at
the end
of the period - - 322,4 - - - - 322,4
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Net income recognised directly in equity 0,0 0,0 3,1 0,0 0,0 0,7 (0,1) 3,7
Net profit for the period 161,1 161,1
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Total income for the period 0,0 0,0 3,1 161,1 0,0 0,7 (0,1) 164,8
Purchase of treasury shares, cost - - - - - - - 0,0
Disposal of treasury shares, cost - 0,0 - - - - - 0,0
Dividends paid - - - - (94,5) - - (94,5)
Dividends paid on treasury shares - - - 4,1 - - - 4,1
Exchange rate adjustment on dividends paid - - - 5,4 (5,4) - - 0,0
Exercise of share options - - - 0,4 - - - 0,4
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Total changes in equity Q1-Q2 2005: 0,0 0,0 3,1 171,0 (99,9) 0,7 (0,1) 74,8
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Equity at 30 June 2005 61,1 (7,7) 322,4 409,4 0,0 1,1 3,9 790,2
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Cash flow statement
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Million USD Q2 2006 Q2 2005 Q1-Q2 Q1-Q2 2005
2006 2005
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Cash flow from operating activities
Operating profit 57.6 75.9 124.5 157.5 303.2
Adjustments:
Reversal of profit from sale of vessels (19.4) (21.0) (19.4) (40.4) (54.7)
Reversal of depreciation and impairment loss 14.8 11.2 29.9 21.5 47.9
Reversal of other non-cash movements 2.2 (0.1) 7.7 (9.5) (6.5)
Dividends received 26.2 12.6 26.4 12.8 12.8
Interest income and exchange rate gains 6.3 1.0 7.4 2.1 7.8
Interest expenses (10.7) (5.9) (21.0) (10.7) (26.1)
Income taxes paid 0.0 0.0 0.0 0.0 (7.5)
Change in inventories, accounts receivables and payables (12.4) 2.8 (15.2) 7.2 (15.8)
---------------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from operating activities 64.6 76.5 140.3 140.5 261.1
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Cash flow from investing activities
Investment in tangible fixed assets (56.8) (249.9) (176.5) (471.5) (635.9)
Investment in equity interests and securities 0.0 34.3 0.2 34.3 (15.4)
Sale of non-current assets 89.8 41.4 89.8 88.8 178.2
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Net cash inflow/(outflow) from investing activities 33.0 (174.2) (86.5) (348.4) (473.1)
---------------------------------------------------------------------------------------------------------
Cash flow from financing activities
Borrowing, mortgage debt and other financial liabilities 87.7 208.8 98.9 367.9 645.5
Repayment/redemption, mortgage debt (111.3) (74.0) (115.1) (95.7) (251.9)
Dividends paid (134.1) (90.4) (134.1) (90.4) (90.4)
Purchase/disposal of treasury shares (10.4) 0.0 (10.4) 0.0 0.0
---------------------------------------------------------------------------------------------------------
Cash inflow/(outflow) from financing activities (168.1) 44.4 (160.7) 181.8 303.2
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Increase/(decrease) in cash and cash equivalents (70.5) (53.3) (106.9) (26.1) 91.2
Cash and cash equivalents, beginning balance 120.3 92.7 156.7 65.5 65.5
---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, ending balance 49.8 39.4 49.8 39.4 156.7
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Quarterly cash flow statement
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Million USD Q2 05 Q3 05 Q4 05 Q1 06 Q2 06
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Cash flow from operating activities
Operating profit 75.9 68.8 76.9 66.9 57.6
Adjustments:
Reversal of profit from sale of vessels (21.0) (14.4) 0.1 0.0 (19.4)
Reversal of depreciation and impairment loss 11.2 12.5 13.9 15.1 14.8
Reversal of other non-cash movements (0.1) 3.0 0.0 5.5 2.2
Dividends received 12.6 0.0 0.0 0.2 26.2
Interest income and exchange rate gains 1.0 0.6 5.1 1.1 6.3
Interest expenses (5.9) (6.7) (8.7) (10.3) (10.7)
Income taxes paid 0.0 0.0 (7.5) 0.0 0.0
Change in inventories, accounts receivables and payables 2.8 (7.0) (16.0) (2.8) (12.4)
--------------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from operating activities 76.5 56.8 63.8 75.7 64.6
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Cash flow from investing activities
Investment in tangible fixed assets (249.9) (145.8) (18.6) (119.7) (56.8)
Investment in equity interests and securities 34.3 3.2 (52.9) 0.2 0.0
Sale of non-current assets 41.4 36.4 53.0 0.0 89.8
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Net cash inflow/(outflow) from investing activities (174.2) (106.2) (18.5) (119.5) 33.0
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Cash flow from financing activities
Borrowing, mortgage debt and other financial liabilities 208.8 158.6 119.0 11.2 87.7
Repayment/redemption, mortgage debt (74.0) (122.7) (33.5) (3.8) (111.3)
Dividends paid (90.4) 0.0 0.0 0.0 (134.1)
Purchase/disposal of treasury shares 0.0 0.0 0.0 0.0 (10.4)
--------------------------------------------------------------------------------------------------------
Cash inflow/(outflow) from financing activities 44.4 35.9 85.5 7.4 (168.1)
--------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents (53.3) (13.5) 130.8 (36.4) (70.5)
Cash and cash equivalents, beginning balance 92.7 39.4 25.9 156.7 120.3
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Cash and cash equivalents, ending balance 39.4 25.9 156.7 120.3 49.8
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Reconciliation to United States Generally Accepted Accounting Principles (US
GAAP)
---------------------------------------------------------------------------
Million USD Net income Equity
Q1-Q2 2006 30 June 2006
---------------------------------------------------------------------------
As reported under IFRS
138.5 870.3
---------------------------------------------------------------------------
Adjustments:
Reversal of write-down of assets 0.5 0.0
Deferred gain on a sale/lease back 2.1 (15.2)
Deferred tax (0.6) 4.3
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Total adjustments 2.0 (10.9)
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According to US GAAP 140.5 859.4
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For a review of principles and methods used in the reconciliation, please refer
to the TORM Annual Report for 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
A/S STEAMSHIP COMPANY TORM
(registrant)
Dated August 9, 2006
By: /s/ Klaus Kjaerulff
--------------------------
Klaus Kjaerulff
CEO
SK 03810 0001 693565