TRMD

Thank you for standing by. My name is Angela and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM First Quarter 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Mr. Jacob Meldgaard, CEO. You may begin.

Thank you and welcome to everyone joining us today. We started 2026 with a very strong first quarter, delivering results that demonstrate both the earnings power of our platform and the strength of our execution in a supportive freight market. This morning, we released our Q1 2026 results and we are pleased with the performance. However, before I go into the details of the quarter, I would like to take a step back and briefly talk about TORM and the foundation that underpins these results and continues to differentiate us in the market. Again, our performance was driven by a combination of strong freight rates, disciplined execution and the One TORM platform. While we remain attentive to global developments, we continue to align ourselves with market changes and believe we have a unique ability to react quickly to movements in spot prices.

This is something we are often asked about. The answer is that it represents a quantifiable advantage over our peers. What we refer to as the One TORM advantage. It is now embedded in the way we operate and is a capability our competitors would undoubtedly like to replicate. Importantly, this advantage is the result of a journey over many years, a journey that continues to evolve. We are able to track this across a range of performance indicators. For example, over a three-year period, our MR fleet generated TCE revenue that exceeded the peer average by approximately $200 million, reflecting the strength and efficiency of our operating model through higher utilization, disciplined cost control and strong commercial execution. This culture of operational excellence is supported by our centralized management platform that coordinates and accelerates our decision-making.

This is good news for our investors because it means we are now extremely well-placed for the complex landscape ahead, and we remain confident that the shifting sands of geopolitical uncertainty continue to present opportunities for us. Thus, it's no surprise to us that TORM share are currently in focus among the investment community as a route to unlock value from this uncertainty. Now, please to slide number four. As always, I'll start with the key financial outcomes for the quarter to give you a clear picture of how the business is developing. During the first quarter, we delivered TCE of $286 million, representing a clear continuation of the positive earnings trajectory seen over recent quarters. This was significantly higher than the same quarter last year, driven by consistently firm freight rates throughout the period, which strengthened further towards quarter end.

These conditions reflect a value chain currently characterized by abnormal trade flows and structural inefficiencies, resulting in elevated margins, not only for tanker companies like us, but also for our customers who are capturing strong profitability across the trading and refining segments. That top line performance translated into an EBITDA of $201 million and a net profit of $122 million, reflecting both the strength of the market environment and our ability to convert rates into earnings through disciplined commercial execution and operational leverage. Supported by the continued strength we see across our markets and the solid momentum entering the remainder of the year, we are therefore increasing our full year guidance to $1.15 billion-$1.45 billion, underscoring our confidence in sustaining profitable growth.

We continued active fleet renewal, adding younger secondhand vessels and committing further acquisitions while divesting older tonnage. After quarter end, we also agreed to acquire six MR resales with expected delivery of four in 2027 and two in 2028. These acquisitions further enhance fleet flexibility and earnings capacity while preserving a prudent age profile. As of quarter end, our fleet consisted of 95 vessels. Once all the beforementioned transactions are completed, the fleet will increase to 103 vessels on a fully delivered basis. Please turn to slide five. Before moving to the broader market, let me briefly address our current operating status. Safety remains our highest priority.

We currently have one vessel inside the Persian Gulf, and I'm pleased to say that the crew are doing well, morale is high, and provisions are not an issue. As we will describe on this call, the market impact has been significant, tightening effective supply and contributing to the sharp increase in freight rates. Bunker prices have also moved higher, although availability remains secure. Throughout this period, our approach has been clear and unchanged. We take a safety-first approach in all operating decisions. Please turn to slide seven. Following a strong close to 2025, product tanker markets entered the first quarter of 2026 with rates stabilizing at levels well above historical averages.

This strength was supported by broader momentum in the crude tanker market, which benefited from record volumes of cargo on the water, as well as the return of Venezuelan exports to the compliant fleet, and generally, more cautious use of sanctioned vessels globally. On top of this, the development was further supported by the consolidation of the ownership in the VLCC segment. The outbreak of the U.S.-Israel-Iran war in late February and the subsequent closure of the Strait of Hormuz marked a further and unprecedented escalation in tanker rates. This is clearly reflected in our commercial performance with Q2 average bookings to date above $70,000 per day across vessel sizes. Taken together, these dynamics have created one of the strongest cross-segment market environments we've seen in several years, underpinned by both structural and event-driven factors. Kindly turn to the next slide.

Turn to slide eight, please. The closure of the Strait of Hormuz had an immediate and profound impact on global energy flows. Approximately 14% of global clean petroleum product volumes and around 30% of crude oil movements that would normally transit the strait were suddenly constrained. Combined, this corresponds to approximately 20% of global daily oil production, consumption. In scale and immediacy, this represents the largest oil supply disruption the market has ever experienced. On the clean product side, the impact was uneven. Naphtha and jet fuel were disproportionately affected, reflecting the Persian Gulf's central role in global exports, accounting for 37% of global naphtha exports and 21% of jet fuel under normal conditions. Diesel and gasoline were relatively less exposed.

As the next slide will show, only a fraction of these lost volumes have been replaced so far, underscoring how structural this shock has been. Please turn to slide nine. In crude markets, part of the lost Persian Gulf supply has been mitigated through pipeline redirection from Saudi Arabia and the U.A.E., alongside increased flows from the Atlantic Basin. Reduced crude availability at Asian refineries has forced meaningful run cuts, which in turn has sharply reduced clean petroleum product exports from the region. By the end of April, global clean petroleum product trade was down by roughly 16% as incremental supply from Western markets proved insufficient to offset the loss of Middle Eastern and Asian exports. Crude oil trades saw a decline of similar magnitude. Despite this contraction in traded volumes, product tanker rates remained elevated. Some of this reflects longer replacement voyages and urgency premiums.

The more important explanation lies on the ton supply side, which I'll address on the next slide. Here, please turn to the next slide, to slide 10. The closure of the Strait of Hormuz caused significant vessel dislocation, with more than 200 crude and product tankers stranded inside the Persian Gulf. This equates to roughly 3% of the global product tanker fleet and 6% of the crude fleet. As vessels were rerouted toward regions with replacement volumes, we saw higher ballast ratios and materially increased inefficiencies. In simple terms, ships spending more time sailing empty to reach their next cargo. In the MR segment, increased east to west ballasting was partially offset by stronger west to east cargo flows as Asian product supply tightened. At the same time, we saw an unprecedented shift of LR2 vessels into crude trading, the so-called dirty ops.

By the end of April, the number of LR2s trading clean products had fallen by more than 50 vessels compared with the start of the year, despite the delivery of 27 newbuildings. As a result, effective CPP trading fleet capacity declined by around 4%, even before accounting for the vessels stranded in the Gulf. Please turn to slide 11. It is, however, important to recognize that this migration of LR2s into crude trading began well before the Strait of Hormuz closure. Since 2025, the Aframax and LR2 segments have faced extensive vessel sanctioning, largely linked to Russian crude trades. In 2025 alone, more than 200 Aframax and LR2 vessels were sanctioned. This has created a growing disconnect between newbuilding deliveries and effective fleet growth. Since the start of 2025, nominal product tanker capacity is up 8%.

Yet the capacity actually trading clean today is around 4% lower. The scale of sanctions is noticeable. One in four vessels in the combined Aframax LR2 segment is currently under U.S., EU or U.K. sanctions. This comes on top of an already balanced order book due to the high share of older vessels. With 60% of the sanction fleet older than 20 years, the prospect of these ships returning to the mainstream clean market, even if sanctions were lifted, appears increasingly limited. Now turn to slide 12. Let me frame this slide with one central point. What we are facing is not a return to normal, but a structural market reset. First, on timing. The duration and persistence of the closure of the Strait of Hormuz remain uncertain, despite recent diplomatic attempts to end the conflict.

Currently, tanker transit through the Strait of Hormuz remain more than 95% below the pre-conflict levels. We don't know when transit will resume. We're not speculating on the timing. That uncertainty is real, and we are managing the business responsibly with that reality in mind. What is equally important, however, is what happens after reopening. When transits resume, the market does not simply switch back to where it was. There'll be tonnage dislocation and significant vessel repositioning as assets reenter trade lanes that have been disrupted for an extended period. That creates friction, inefficiency and volatility, conditions where agile operators outperform. At the same time, depleted strategic and commercial inventories will need to be rebuilt, a multi-year process that supports sustained activity rather than a temporary outlet. The UAE's recent exit from OPEC enables higher production, which is likely to accelerate the replenishment of global oil stocks.

It's also important to remember that tanker market strength was already evident before the Strait of Hormuz closure. Those fundamentals were paused, not erased. From our perspective, the key is readiness. We have deliberately built an agile business platform that allows us to react immediately. When the strait opens, we are well-positioned to benefit from the market reset. Please turn to slide 13. To conclude on the market, the tanker industry today is operating in an environment shaped by an unusually large and growing number of geopolitical factors. Trade routes, cargo flows, sanctions regimes and security considerations are all contributing to greater market inefficiency. Importantly, this is not new, but it has intensified. Since 2022, the number of geopolitical variables we are navigating has increased significantly, adding friction and complexity to global energy transportation. For the industry, inefficiency translates into longer voyages, dislocated tonnage and volatility.

For well-positioned operators like us, it also creates opportunity, provided you have the scale, agility and discipline to navigate it effectively. With that, I'll now hand it over to Kim, who will walk us through the numbers.

Thank you, Jacob. Now please turn to slide 15 and let me walk you through some of the drivers behind our performance. The product tanker market entered 2026 on a strong footing, and this momentum was sustained throughout the first quarter, supporting another solid set of results for TORM. For the first quarter, we delivered TCE of $286 million, translating into EBITDA of $201 million, and a net profit of $122 million. These results reflect firm freight markets across the quarter and our continued ability to consistently capture this across the fleet. On a fleet-wide basis, average TCE was $34,937 per day. By segment, LR2 earnings exceeded $41,000 per day.

MRs earned just under 33,000 per day, while LR1s came in around $35,000 per day, i.e., up significantly compared to the freight rates we had a year ago. Our TCE earnings were affected by timing issues relating to IFRS 15. Under IFRS 15, we recognize freight revenue from when cargo is loaded until it is discharged, not from when the voyage is agreed and hence influenced by changes in balance patterns. It does not impact our underlying cash earnings or the economic performance of the vessels. Again, the realized earnings level highlights the continued strength of the underlying market, supported in part by very firm crude tanker rates, which again influenced product tanker dynamics positively. With that overview in place, let me turn to slide 16, where we break down earnings in more detail and walk through the underlying drivers.

This slide illustrates our quarterly earnings development since the first quarter of 2025. What stands out very clearly is the step-up we see in the most recent quarter. The Q1 results we delivered a meaning uplift in earnings, continuing and accelerating the positive trajectory we've seen over recent quarters. This reflects the strength of the freight market and confirms that the supportive market conditions are translating directly into financial performance. For the quarter, we generated TCE of $286 million and EBITDA of $201 million, making this our strongest quarterly result since the second quarter of 2024. It is a clear validation of both the market environment and our ability to capitalize on it.

The primary driver was firm freight rates, supported by strong spillover from the crude tanker sector and continued geopolitical disruptions in the Middle East, which have introduced additional inefficiencies into the market. Importantly, given the inherent operational leverage in our business model, incremental rate improvements translate efficiently into higher earnings. This sets out a solid foundation as we move through the remainder of the year. Please turn to slide 17. On this slide, we show the quarterly development net profit alongside earnings and dividends per share. Starting with earnings, net profit increased to $122 million, corresponding to earnings per share of $1.21.

Turning to free cash flow generation and capital returns, it is important to note that a combination of high freight rates and elevated bunker prices resulted in a net working capital increase of around $30 million during the quarter. Against this backdrop, the board has declared a dividend of $0.7 per share, equivalent to a payout ratio of 58%. This reflects the free cash flow generated after accounting for the working capital build. Absent to this effect, the implied payout ratio would have been in the range of 80%-85%. We believe this once again demonstrates that our capital return framework strikes the right balance, remaining clear and disciplined while being firmly anchored in strong and sustainable underlying cash earnings generation. Now please turn to slide 18.

As shown on this slide, broker valuations for our fleet stood at $3.6 billion at the end of the quarter. This reflects a continued positive sentiment across the tanker asset market and results in an increase in our net asset value to $3.1 billion. Importantly, average broker valuations for the fleet increased by 9.7% during the first quarter, with particularly strong appreciation seen in the LR2 and LR1 segments. This development is an acceleration of what we observed the previous quarter and further underlies both the improving market backdrop and the quality of our asset base.

Turning to the center chart, you can see our net interest-bearing debt, which now stands at $894 million, and this corresponds to a net loan to value ratio of 25.1%, keeping us comfortably within the range we have maintained for many quarters. This highlights the strength of our conservative capital structure. Maintaining stable leverage at these levels provide us with significant financial flexibility, allowing us to pursue value accretive opportunities as we have demonstrated this quarter, while at the same time preserving balance sheet resilience through microcycles. Finally, on the right side, you see our debt maturity profile. We have $287 million in borrowings maturing over the next 12 months, and beyond that, maturities are modest and well-distributed across the subsequent years.

Overall, our solid balance sheet positions us well to navigate current market conditions with confidence while preserving the ability to act decisively on attractive opportunities as they emerge. Now please turn to slide 19, where I will walk you through our outlook for 2026. Based on the strong start to the year and the earnings visibility we now have in the near term, we are upgrading our full year 2026 guidance. For the full year, we now expect TCE of $1.15 billion-$1.45 billion, up from our previous guidance range from $850 million-$1,150 million. At the same time, we upgrade our EBITDA guidance to $800 million-$1.1 billion, compared with the previous $500 million-$900 million.

Booking conditions have reached exceptionally strong levels in the second quarter, supported by tight tonnage balance and continued trade dislocations. As a result, we have already secured 57% of our earning days in Q2 at a fleet-wide average of TCE $71,494 per day. A significant share of this quarter is therefore fixed at very attractive rate levels, providing a high degree of near-term earnings visibility. This strong coverage gives us a very solid foundation for the year and reflects the positive traction we have seen across all vessel segments. Thus, this upgrade reflects two main factors. First, the strong earnings performance delivered in the first quarter. Second, the very strong coverage we have secured for the second quarter at rate levels that are unprecedented for the product tanker market.

For the uncovered days, we have, as usual, used the forward derivatives market as a reference. As always, the updated guidance remains subject to market volatility, geopolitical developments, and potential changes in trade patterns, particularly as we move into the second half of the year. That said, we believe our upgraded guidance properly reflects both the strengths of the current market backdrop and the visibility we have today. With this, I will hand it back to the operator.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Jon Chappell with Evercore ISI. Your line is now open.

Thank you. Good afternoon. Kim, I wanna go back to the dividend slide. You mentioned it briefly, the 58% payout ratio, but would have been 83.5%. Can you remind us what that difference was? If it's associated with the new builds, how do we think about the payout ratio going forward? Is it closer to this 58, which was the lowest payout ratio since 3Q 2022, or does it return something to that 80% range that it's been for much of the last three years?

Yeah. Hi, Jon. Thank you very much for that question. What I tried to communicate was that when we saw the market rate increase during March, we will have DSOs, freight days outstanding of around, let's say, 45 to 50 days. Meaning we book the cargo, the fixing, but we will get the liquidity those days later. I.e., it means that we will not get the liquidity in the same month of March. We will get that booking in April as an example. In that sense, we build up a net working capital.

If you add the increase in bunker prices, i.e., the effect on our bunker inventory, that in itself, those two in itself, equate to around $30 million, and that was why I added it to the earning, or sorry, to the dividend we paid out. If you add that, you will get to the 80%-85%. It has nothing to do per se, with the resales that we bought. It is just a reflection of the net working capital build-up when markets react as it did over one month and then over a quarter end when we report.

Does it

Does that mean that there's a catch-up, so to speak, in the second quarter, assuming rates stabilize or maybe even pull back a little bit from the highs? Does that net working capital then work in your favor? Whereas the second quarter or maybe some quarter in the second half, the ratio is well over the 80% to kind of make that timing even out.

Exactly. I think you should think about it. Say that things were steady now throughout the next quarter, you would get it back. Would rates increase further? You would probably tie up a bit more on net working capital. Would it decrease? You would get it even more released.

Okay.

That's all it is.

Yeah.

How to think about it.

That's super important. Thank you for the clarification. Then Jacob, kind of strategic outlook. You talked about the opportunities that you have, you know, if there is a normalization. Also just thinking about the strategy. You obviously bought the resales. There's been a lot of time charter activity, especially in the bigger ships, LR2s. Are you still kind of fully exposed to the spot market, or do you think there's some opportunity that some of these elevated levels and maybe some charters and traders reaching out for some term to, you know, get some fixed cash flows for one to five years?

Yeah. We had done a few charter outs, one year, three year. We've done some forward cover for next year on derivatives when markets were a little hot. Yeah, that's an efficient way of us to sort of capture value, protect the level, but still have, let's say, the operational flexibility on our assets. We've been doing that the way you describe it. Of course, it's a trade-off between, as you can see, the elevated rate environment that we have currently, and then and then the forward protection. But we like to do a little of all in this environment.

Some a little shorter, one year, some a little longer, three years, and some somewhat forward, you know covering 2027, already now on some derivatives trades.

Mm. Okay. One last one for me. Sorry if this is too many. Obviously the resales make sense in the framework of modernizing the fleet. You've been pretty active in some older vessel sales, and given the fact that older asset prices, at least on paper, seem to be even higher, it was maybe a little surprising that some of those resales weren't offset with older vessel disposition. Is that just a function of trying to maintain as much leverage to the market as possible, or is the liquidity in the secondhand market for older vessels maybe not as robust as it's been recently?

I think definitely it's robust. We've simply just done, yeah, done simple math. We feel that our balance sheet is in pristine shape as Kim alluded to. I think we have the opinion that the asset base we have longevity and optionality, and also the way the market behaves with quite high volatility, it means that that can be attractive earnings in, yeah, in many scenarios that we look at going forward. I think it's gonna be volatile and choppy, you know, in many ways. We've seen that here over the first and second quarter. I think that will continue. Fundamentally, we believe that this is offering a lot of opportunity for our platform. We do evaluate exactly as you described, Jon.

You know, what is the better sort of net present value that we will get selling an asset or keeping it with the rate environment that we predict.

Understood. Thanks, Jacob. Thanks, Kim.

Busy. Thank you. Yeah.

Your next question comes from the line of Frode Mørkedal with Clarksons Securities. Your line is now open.

Thank you. Hey, guys. I wanted to follow up on the acquisition of the six MRs. I'm not sure if you talked about the price. You know, maybe you could talk about the price level versus, let's say, older ships, right? That's probably how you thought about it. Resale value in 2027 versus somewhat older. Yeah, that's it.

Say that we have come to the decision of the purchase of the six resale MRs is exactly as you point to, that we evaluate what is the earning that we will be having on various assets, you know, on various age profiles in the coming years. We also compare it. Basically, you could say there's three buckets that you could invest in. If you are looking to make an investment, it would be existing ships on the water with, you know, whatever age profile that you could dream up. It would be resales with relatively early delivery, or it would be that you go to a shipyard and do complete new contracts, so new building contracts.

Right now, what we found was that we did find kind of a gap where we saw the market being attractive from the pricing and timing of the delivery of these resales being better than paying, let's say, the same price for a deferred delivery out three years out, compared to having a resale three quarters out, was just simply a better, more attractive solution for us. Also better than identifying vessels on the water where prices, as also Jonathan pointed to, have been creeping up as of late. It's simple math that has driven us to that this price point and delivery point is, in our opinion, the better of the three choices if you are looking at it.

We found that this one also meet our return criteria for making the risk-adjusted return that we are looking for in any of our investments.

Yeah, interesting.

What kind of risk or just returns are you talking about? I mean, I understand it on your comments here. You basically are acquiring these ships at, say, probably less than $50 million, right, per ship, and then a five-year-old ship today is probably a similar level, right? You're arguing that you get more modern, better ships at the same price, something like that, right? Yeah.

Yeah.

Maybe you could tie it into the required MR rates to get like a decent return on it.

Sure, yeah. I mean, we don't disclose our forward thinking. The way we model is exactly the way you more or less describe it. We would, of course, put in, let's say financing, our operating cost, et cetera. At the end of the day, we would then compare with our earning potential. I think to say that in our modeling, we probably look about five years out, and then we'll look at sort of a residual risk basis, exactly what you also describe, what would be a five-year-old residual sort of market value at that point in time. What I then describe is that in the hurdle on that return on that invested capital is of course internal for us.

This way of making the investment exceeds our sort of hurdle for believing that that's a good investment. We think it's a good investment for our shareholders, and that is an asset that would be appreciated obviously by our customers at the time.

Yeah. Understood.

Yeah, you probably have like a $50 million investment. You probably only need like 23,000 per day over time to get like a 10%-12% return or something like that, right? Anyway, shifting gears on the market, I wanted to hear your thoughts on the drivers here. Clearly has been very, very strong start to Q2, right? Maybe you could Talk a little bit about the trade flow adjustments, right? We've seen refineries closing down obviously in the Middle East, but also in Asia. Now U.S. Gulf has come up and ramped up exports and clearly adding to ton-miles. Then again, at the same time, you're seeing freight rates come off the boil, so to speak, recently.

Maybe you could talk a bit, a little bit about how you think rates will develop now in the short term? Do you think, like, there's more normalization to rates?

Or could, let's say, start to find a bottom now?

Yeah. Okay. As you point to, this sort of dislocation of the sourcing for many buyers had led to longer ton-mile. We've already discussed that. That also translated into higher margins for our customers. It translated into higher freight rates for ourselves and the ecosystem of transportation. Just recently, we've seen that the I think our freight rate is driven by our customers and basically by how the arbitrages work. You had a period where the arbitrage west to east was wide open, obviously leading to that when the arb is open, that customers in, let's say, in Asia or Australia, East Africa, you know, these areas that would normally be looking towards the Middle East for their supply, they were beating up cargoes that were available in the Western Hemisphere.

This has come off a little. Right now there's been a period where our understanding is that the end users have been a little more reluctant. I think they've been looking at the situation in the Strait of Hormuz and sort of valuing, "Hey, you know, if we get cargo out there, it's gonna come faster and it's gonna come cheaper. Maybe, you know, let's just cool the jets a little." Margins have come in, less attractive, and of course, then volumes come down because the sellers of the product will then have also competing areas, more local areas that will also call, make a call on exactly the same tons of products. I think one of two would happen in the near term.

Either the Strait of Hormuz actually opens and cargo volumes will increase and flow through the strait due to that. If it doesn't, I think the call on products from the Western Hemisphere to the Eastern Hemisphere will yet again increase. Margins will widen again, and you'll see that strait. That is how, I think, that's the most likely that one of these two scenarios play out. The current, where there's no, let's say, call on products from either Strait of Hormuz because it's impossible or from the west because the margins are not, how do I say, sufficiently high, I don't think that is a long-term trend.

Okay. Interesting. Thanks for the good color. That's it for me.

Thank you very much. Good to speak to you.

Your next question comes from the line of Bendik Folden from Danske Bank. Your line is now open.

Yes. Thank you. I'll just turn to your guidance for the second quarter. Obviously, extremely strong. I wanna know if there's any effects we should be aware of here, sort of, unpaid balance dates, anything like that might sort of, mess up our modeling on the quarter.

Yeah. On foster strength, we use the methodology here. We take Q1, and we take the coverage that we have for Q2, and then we have the as I said, to the forward market to take that as the benchmark. You should not sort of see it necessarily as this is how we foresee the markets month by month. We very much seized on the forward freight markets. See that we observe the market. Of course, we have the Q2, the offset on three stages based on it. I hope that clarifies it. It's a guidance that we are obliged to present an update, and we have defined this methodology.

Perhaps I should add that we do that, and then we stress it with a ± TCE around that. For this quarter, it's ± $7,500. It's very methodology or sort of mathematically easy to both explain and understand, but that's how we do it. Please use similar model for that. Hope it makes sense.

For the second quarter specifically, utilization-wise, has it been like, some unpaid balancing or something like that?

Yeah. There's nothing that distracts the numbers that as you point to, Bendik. The numbers for Q2 includes ballast when and if a vessel has had to have a longer ballast prior to the employment. All of our numbers includes the previous just like included in the daily.

Yeah. Thank you.

You're welcome.

There are no further questions. I will now turn the call back over to Jacob for closing remarks.

Well, thank you very much. There has been very good questions. Thanks for listening in. This ends the Q1 2026 report for TORM. Thank you.

That concludes today's call. Thank you all for joining. You may now disconnect.

Hello, and welcome to the TORM Full Year 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Jacob Meldgaard, CEO. You may begin.

Thank you, and welcome to everyone joining us here today. This morning, we released our annual report for 2025, and we are satisfied with the results, which, once again, reflect our strong execution across the business. However, before I now turn to the results, I want to spend a little time talking about TORM and the foundation that enables these results and consistently differentiates TORM in the market. I want to talk about the key pillars of our business that have placed us in a strong position to date and that we believe will continue to do so in the future. We are immensely proud of what we have achieved here at TORM. Our ownership model and culture provides us with a clarity of purpose that streamlines our actions across the business. We are focused each and every day on staying one step ahead of other fleets to make the most of every opportunity. We believe our ability to deliver on this ambition for our shareholders is a distinct competitive advantage. Underpinning our strategic focus is the platform you will know as One TORM. We believe this is a point of difference that sets us apart. The model was originally built around a spot-oriented strategy to unite the business and accelerate decision-making and response time. It enables us to use real-time data and insights to share our deep expertise at the core of the business at a moment's notice. We are not complacent. Since its inception, we have continuously refined this model using the latest technology, advanced analytics and proprietary data at our disposal to ensure we remain as alert and responsive as we possibly can be. In short, we can identify and capture attractive trading opportunities even in the most challenging markets, and perhaps I should say, especially in challenging markets, exactly the type of markets which now characterize the shipping industry even as we see comparatively fewer headwinds here into 2026. For our shareholders, this approach offers a very clear advantage. We believe an industry benchmark for unrivaled consistency, strategic optionality and financial discipline that you can see once again in our numbers. And here, please turn to Slide #4. In here and on the next 2 slides, we show the key figures for the quarter and the full year. As always, I'll start with the quarterly numbers to give you a clear picture of how the business is developing. In Q4, TCE came in at USD 251 million, slightly above Q3, supported by firm freight rates throughout the quarter. This strong performance resulted in a net profit of USD 87 million, which enables us to declare a dividend of $0.70 per share, once again demonstrating our higher earnings translate directly into higher shareholder returns. During the quarter, we were active in the S&P market. We added 2 2016-built LR2s and 6 MR vessels built between 2014 and '18, while divesting 1 older 2008-built LR2. Several of the vessels were delivered before year-end, bringing our fleet to 93 vessels. And after completing the remaining deliveries at the start of 2026, our fleet comprises 95 vessels. Importantly, our investments were exceptionally well timed. Based on current broker valuations, the vessels we acquired have already been appreciated by a double-digit U.S. dollar amount. This reflects not only the quality of the assets and our disciplined approach to capital allocation, but also a market that continuously turned more positive, supporting higher asset values across the product tanker space. Now turning to Slide 5, we show the full year numbers. These are strong results. A year ago, our TCE guidance was USD 650 million to USD 950 million, and we closed the year towards the high end with USD 910 million. While not matching the all-time high in 2024, it remains a very satisfactory outcome. Freight rates strengthened from the first to the second half of the year and ended at attractive levels. In this environment, TORM achieved fleet-wide rates of USD 28,703 per day, which we are very pleased with and which again demonstrates our ability to outperform the broader market. Net profit for the year totaled USD 286 million, of which USD 212 million is being returned to shareholders. With that overview in place, let us take a step back and look at the broader market dynamics that shape the environment we operate in. And here, please turn to the next slide to Slide 7. And after a softer, but still historically strong 2025, product tanker freight rates have now returned to the average levels that were seen in the 2022 to 2024 market. Underlying demand for product tankers has remained steady, and the recent uplift in rates has been driven primarily by developments elsewhere in the tanker complex. The crude market has moved into territory that, while not unprecedented, is extremely rare. VLCC spot rates have surged to the USD 200,000 per day range, a unique and record-breaking level, and with charterers reportedly fixing 1-year deals above USD 110,000 per day. This strength is spilling over into the rest of the market, first into Suezmax and Aframax and then further into clean product tankers. If this momentum continues, we are potentially looking at a very interesting rate environment. At the same time, sanctions in the dirty Aframax segment have tightened vessel availability, triggering a large shift of LR2s from clean to dirty trade. This reduction in clean LR2 supply has further supported product tanker earnings. After several years of partial decoupling between segments, the product tanker market is once again being carried by the broader strength in crude. VLCCs, as mentioned in particular, continue to benefit from increased OPEC production, renewed stock building demand from China, heightened geopolitical tensions involving Venezuela and Iran and further consolidation in the segment. All these factors together have created one of the strongest cross-segment market backdrops we have seen in years. Please turn to Slide 8. And here, let's have a look at the product tanker demand side. Seaborne volumes of clean petroleum products have been trending upwards in recent months. However, the overall impact of the Red Sea rerouting has been largely neutral due to lower trade volumes and a partial return to Red Sea transits. Trade volumes from the Middle East and Asia to Europe have started the year at 30% below pre-disruption levels, which is largely a result of lower flows from India amid introduction of an EU ban on imports of oil products derived from Russian crude. At the same time, an increasing number of vessels have resumed transiting the Red Sea with an, on average, 40% of the clean petroleum product volumes on the Middle East, Asia to Europe route traveling via the Red Sea in 2025. This is up from under 10% in 2024. As a result, we see limited downside risk from a potential full normalization of the Red Sea transit as much of this effect has already been unwound and instead, a likely rebound in clean petroleum trade volumes after the normalization of the transit would increase ton-miles. This is reinforced by the closure of 5% of the refining capacity in Northwest Europe last year, which is driving higher import needs for middle distillates. Additional support comes from sustained strength in crude tanker rates, which limits the crude tanker cannibalization and also from rising clean product ton-miles driven by refinery closures on the U.S. West Coast. Kindly turn to Slide 9. Let's turn to now the supply dynamics. Newbuilding deliveries have increased here in 2025, but this has not translated into effective growth in the fleet trading clean products. In fact, since the start of 2024, nominal product tanker fleet capacity is up by 8%, yet the capacity actually trading clean today is 1% lower than it was at the beginning of 2024. This disconnect is primarily due to sanctions in the Aframax segment, which had incentivized a significant shift of LR2 vessels into duty trades. To illustrate this point, compared to the start of 2025, currently, there are 20 fewer LR2 vessels transporting clean petroleum products and, at the same time, 65 newbuildings have been delivered to the LR2 fleet during the same period. The scale of the sanctions is notable. 1 in 4 vessels in the combined Aframax LR2 segment is currently under U.S., EU or U.K. sanctions. This comes on top of the fact that the order book is already balanced by the high share of overage vessels in this segment. Next slide, please, Slide 10. And here, let me just elaborate a little on vessel sanctions. So most sanctioned vessels were added to the list last year. So in 2025 alone, more than 200 Aframax and LR2 vessels were sanctioned. This is 3.5x the number of newbuilding deliveries in the segment in 2025, and it is equivalent to almost the entire combined newbuilding program for a 3-year period from 2025 to 2027. With 60% of these now sanctioned vessels being older than 20 years, their likelihood of returning to the mainstream market even if sanctions were lifted appears to be limited. And now turn to Slide 11, please. Geopolitical developments continue to be a major driver of market dynamics. And in fact, the list of different geopolitical drivers has only gotten longer in the past 4 years. The growing number of policy interventions and geopolitical flash points increases uncertainty and associated inefficiencies. Beyond the policies directly affecting product tankers, developments in the crude tanker market such as a potential tightening of sanctions against Iran, rising OPEC production are also indirectly supportive for product tanker demand. We sincerely hope for a ceasefire between Ukraine and Russia. However, we see the likelihood of trade returning to pre-war levels as very low or nonexistent in the foreseeable future given the EU's clear determination to tighten sanctions. The EU ban on Russian crude oil and oil products has been by far the most significant sanction against Russia in terms of ton-miles. And the new 20th sanction package the EU is working on is potentially adding a full maritime services ban to it, pausing an even larger share of Russian oil flows into the shadow fleet. This would likely further increase the inefficiencies of the fleet trading Russian oil. Please turn to the next slide, Slide 12. And in summary, the key geopolitical forces continue to shape this year's market. While a potential normalization of Red Sea transit is unlikely to weigh on the market, the EU's ban on Russian oil will continue to underpin longer trading distances. On the demand side, ongoing shifts in global refining capacity continue to support ton-mile expansion. On the tonnage supply side, the increase in newbuilding deliveries will be balanced by a growing pool of scrapping candidates and reduced participation from sanctioned vessels, factors that will influence overall tonnage availability and market equilibrium. Against this backdrop, I'm confident that TORM is well positioned to navigate an environment marked by uncertainty and supported by our solid capital structure, strong operational leverage and our fully integrated platform. So with that, I'll now hand it over to you, Kim, who will take us through the numbers.

Thank you, Jacob. Now please turn to Slide 14, and let me walk you through some of the drivers behind our performance this quarter and for the full year. Starting with the market backdrop. The product tanker market stayed strong throughout the fourth quarter, and that supported another solid result for us. For Q4, we delivered TCE of USD 251 million, which translated into EBITDA of USD 156 million and net profit of USD 87 million. Across the fleet, our average TCE came in at USD 30,658 per day. Breaking that down, our LR2 earned above USD 35,000, LR1s were above $31,000 and MRs were just under USD 29,000 per day. For the long-range vessels, these numbers were actually a bit better than we indicated in our Q3 coverage, reflecting continued strong markets, helped in part by very firm crude tanker rates. For the full year, we delivered TCE of USD 910 million, EBITDA of USD 571 million and net profit of USD 286 million. These are solid numbers. As expected, earnings moderated from the exceptional levels of last year, but they remain robust and importantly, very much in line with the guidance we shared in November. And turning to shareholder returns. With a strong Q4, earnings per share reached $0.88, and the Board has declared a dividend of $0.70 per share, bringing total dividends for the year to USD 2.12 per share. We continue to believe that our capital return framework strikes the right balance, clear, disciplined and supported by robust cash earnings generation. And with that overview in place, let us move to Slide 15, where we break down the earnings in more details and talk through the underlying drivers. Slide 15 shows our quarterly revenue progression since Q4 2024. With this quarter's results, we see a meaningful uptick building on the positive trajectory in freight rates and earnings we delivered over recent quarters. It's a clear indication of the favorable market environment we are operating in. For the quarter, we delivered TCE of USD 251 million and EBITDA of USD 156 million, making our strongest quarterly performance this year. The underlying uplift is driven by firm freight rates supported by solid fundamentals and a positive spillover from the crude tanker segment, as mentioned. Given our operational leverage, we were well positioned to benefit from what we already see as very attractive freight rates. Please turn to Slide 16. Here, we show the quarterly development in net profit and the key share-related metrics. For the fourth quarter, earnings per share came in at $0.88. Our approach to shareholder returns remain clear, disciplined and consistent. We continue to distribute excess liquidity on a quarterly basis while maintaining a prudent financial buffer to safeguard the balance sheet. For Q4, this has resulted in a declared dividend of $0.70 per share, corresponding to a payout ratio of 82%. This is fully aligned with our free cash flow and debt -- after debt repayments and reflects both the strength of our earnings and our ongoing commitment to responsible capital allocation. And now please turn to Slide 17. As shown on this slide, broker valuations for our fleet stood at USD 3.2 billion at year-end. This reflects a continued positive sentiment in the market and results in an NAV increase to USD 2.6 billion. Importantly to note, average broker valuations for the fleet increased by 4.2% during the quarter, driven primarily by higher valuations for our LR2 vessels, which saw the strongest appreciation. This uplift further underscores the improving market backdrop and the quality of our asset base. In the recent quarter -- or sorry, in the central chart, you can see our net interest-bearing debt, which now stands at USD 848 million, corresponding to 29.4% in net LTV. The increase reflects the vessels acquired during the quarter, which naturally required incremental funding. Importantly, even with this investment-driven uptick, our leverage ratio remains within the range that we have maintained over recent quarters, typically between 25% to 30%, underscoring the strength of our conservative capital structure. This stable leverage -- sorry, this stable level continues to provide us with ample financial flexibility to pursue value-accretive opportunities while safeguarding balance sheet resilience across market cycles. On the right, you can see our debt maturity profile. We have USD 135 million in borrowings maturing over the next 12 months, excluding lease terminations that have already been refinanced. Beyond that, only modest amounts fall due in the following years. Overall, our solid balance sheet gives us sustainable financial flexibility to navigate current market conditions with confidence and to pursue value-creating opportunities as they emerge. Now please turn to Slide 18. This time, we have added a new slide to show what is actually -- what it actually means for the value creation when we consistently achieve rates above the market average. The MR segment is our largest exposure and a segment where competitors also have meaningful scale, making it the most representative benchmark for the product tanker market. We could, of course, perform a similar comparison for LR2 vessels. However, the benchmarking becomes less robust as many of our peers operate only a relative small LR2 fleet, limiting the comparability and statistical relevance for such an analysis. That said, based on the data available, a comparable calculation for the LR2 segment would probably show the same picture. As shown on Slide 24 in the appendix, we compare the rates we achieved with those of our peer group. Quarter after quarter and year after year, we have consistently delivered rates well above the peer average and in most quarters, even market-leading. This performance is a direct outcome of the One TORM that Jacob discussed and which continues to differentiate us in the market. But on this slide, when we take the analysis a step further by quantifying what that actually means, then, holding everything else equal, we calculate the premium TCE by taking our spot TCE relative to the peer average, multiplying it by our operating base and comparing that figure directly with our dividend in each quarter from 2022 to 2025. This provides a clear transparent view of the tangible financial value created by outperforming the market. Two examples illustrate the impact. In 2022, we returned USD 381 million in dividends. Our premium TCE was USD 38 million, around 10% of the total dividends paid. And in 2025, based on the first 3 quarters, the premium reached USD 49 million compared to our full year dividend of $212 million, that represents 23% of the total. So the message is clear. Our strong rates have a material and measurable impact on our dividends returned to our shareholders. Across that period, which includes different market conditions, we have returned USD 1.6 billion in cash dividends. And our analysis show that premium earnings from the MR fleet accounted for roughly 15% of the total dividends paid over the past 4 years. And now please turn to Slide 20 for the outlook. We're stepping into 2026 from a clear position of strength and solid momentum across our business. In Q1, we have already secured 70% of our earnings days at an attractive average TCE of USD 34,926 per day. This strong coverage provides a robust foundation for the year and reflects the positive traction we are seeing across all vessel segments. With the coverage already locked in and the encouraging market outlook ahead, we expect TCE earnings of USD 850 million to USD 1.25 billion and EBITDA of USD 500 million to USD 900 million. Both ranges are based on our midpoint internal forecast, after which we apply a defined range to reflect the uncertainty associated with the full year outlook and the potential volatility in the market conditions as the year progresses. And we are entering the year with confidence and real momentum behind us. And with this, I will conclude my remarks and hand it back to the operator.

[Operator Instructions] Your first question comes from Frode Morkedal with Clarksons Securities.

First question I have is on the EBITDA guidance or the revenue guidance. If you could, I'm curious about what type of spot rate assumption you made there? Of course, I understand there's a lot of moving parts in this type of guidance, but let's say, LR2, MR rates in the high end, what are -- what's the implied rate, if you can share that?

Frode, I can tell you about our methodology that we use when calculating our guidance for the year. So we take the coverage, the fixed days we have already made for Q1, and then we apply the unfixed days for the rest of the year with the forward curve that we see in the market for the remainder of that period. And then you get to a midpoint. And from that midpoint of TCE, you then deduct our normal cost and get to an EBITDA. And depending on where the freight rates are, we stress that with an interval. And as they are higher right now, you will see, compared to last year, that the interval is slightly higher than we had a year ago. That is due to both what I just said, the higher rates, freight rates, but also more earning days, of course. So that's the methodology behind. So we are basically building it on what we have achieved already and then the markets.

Right. So is it just FFA market or time charter rates that you're looking at or...

It's forward freight rates.

And can you just say like the midpoint, is that -- roughly is that curve today when you made the guidance?

It's around $30,400 across the fleet.

Right. Okay. That's a good reference point. So yes, but just I wanted to discuss how you see the strength in the crude market impacting the products? Clearly, you talked about the switching. I'm curious to know if you think there's more to go there? I have noticed that crude Aframaxes are still trading with quite a significant differential to LR2 spot rates. So yes, curious to hear your views.

Yes. Obviously, time will tell. But I think clearly, the strength that we are seeing across the crude segments is first and foremost, having a direct one-to-one impact on the behavior of the LR2 fleet and LR2 owners. So the incentive currently to switch from being participating as an LR2 in the CPP market and potentially moving into the crude market is a little depend on whether you are in the Western hemisphere or the Eastern hemisphere. But just as an example, as you point to in the Western hemisphere, there's a clear financial incentive to switch over. I think we will see more of that as we showed in the graph. There is basically fewer vessels that are available due to the sanctions regime imposed, especially by the U.K. and EU, but also by OFAC. So that means that the compliant requirements for our customers, whether it's in CPP or in dirty trade, is serviced by fewer vessels, fewer assets. And that is pushing rates higher as we speak. We see term rates rising, and they are not to the extreme volatility that we see in the VLCC segment, but still significantly higher for a 1-year charter today than what it was at the beginning of the year. And I think this trend, let's see how it plays out, but I think it is here to stay. So we're quite optimistic in the earning power in the segments, to be honest.

I agree. I guess the acquisition you made, I think it was 8 ships, right, in Q4. That was a pretty good timing. I think we discussed it last time, but maybe you could just discuss how you thought about the investment case at the time. Clearly, it's been a -- was a good idea to buy these ships. And secondly, what's your view now at this point in time of further opportunities to acquire ships?

Yes. So I think it's like this, that we did -- when we had the conversation, I think also on this call in Q4, I think we illustrated that we are looking at it quite methodically and just saying what is the sweet spot in terms of our expectation of the free cash flow that we can generate from an asset and where is the asset [indiscernible]. And what we identified was these pockets of that we could buy some LR2s and we did some here actually towards sort of mid-December bought a couple of ships. And clearly, today, the price of these assets and one of them is actually only delivering tomorrow is already up by 20%. So if you isolate it out and just say, yes, that's good timing. But the backdrop of that is, of course, also that now when we had to sort of do our own thinking around potential other acquisitions, clearly, with assets rising like this, it gets harder to make the next acquisition. So I think we were fortunate about the timing on these 8 ships. We actually had hoped, to be very honest, to have upped the end a little on that in terms of number of assets, but they were simply not available at that point in time at attractive prices. So I think we just had to regroup a little. Asset prices are moving quite fast, and we just have to regroup and make sure we still follow our methodology and not get carried away. But I'm optimistic that we can maybe identify a few, let's say, some other deals that sort of fits the bill on our return requirements.

Frode, may I just -- I need to answer your question. You started a bit more precise than what we did, just so it's clear how we do it on the guidance. I just didn't have them in my head, but I have the numbers here. So if you take Q1, we had covered 8,177 days with $34,208. Then we take the uncovered days, that's 25,691 at $30,371. And then you do the math from there. Then you come to a total number of days, operating days and average TCE. And then you get to a TCE and you stress that.

Right. That's good. So on the stress test, do you have like a percentage plus/minus or...

That's -- we derived it a few years ago, but the way we use it is plus/minus TCE, and it depends on how much the stress depends on what the actual TCE level is. The lower it is, the lower the stress is, the higher it is, the higher the stress is. So it depends on where you are on the actual TCE levels.

Your next question comes from [ Clement Mullins ] with Value Investors Edge.

I wanted to start by following up on Frode's question on Afras and LR2s. Could you talk a bit about the portion of your LR2 fleet that traded dirty throughout the quarter? And secondly, on the LR1 side, have you seen an increase in the proportion of vessels trading dirty over the past few months?

Yes. Thanks for those very precise ones. So I'll start from the back end of this. So we have not really seen that the dirty market has affected the LR1s in our fleet and in our case. And when we look at our vessels and on the spot, we basically have 10% to 20% of our LR2s trading spot dirty. And then we've got another 10% that is on term charter dirty.

That's helpful. And you continue to outperform peers on the MR side with your chartering team doing an excellent job. Could you talk a bit about what portion of your administrative expenses is attributable to the chartering team versus kind of the corporate side? Any color you could provide would be really helpful.

Yes. So we actually don't account like that. We -- as I tried to illustrate also in the beginning, on the One TORM platform, we believe that it's not actually the chartering team that is the secret sauce. It is actually the power of -- that you have in an organization ranging from the employees who bought a ship to the people doing the accounting and operations, technical. And of course, also, as you point to, the chartering team, but their success is not an isolated thing that has to do with their ability, it's the whole structure. So we don't -- I don't have an answer. I don't know the number. It's not the way we think about...

There are no further questions at this time. I'll turn the call to Jacob Meldgaard for closing remarks.

Yes. Thank you very much, everyone, for listening in on the annual report 2021 for -- 2025, obviously, for TORM. Thank you very much for listening in, and have a great day.

This concludes today's conference call. Thank you for joining. You may now disconnect.