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Torm sees lower loss this year
Debt-laden Danish shipping company Torm A/S said an improvement in freight rates, together with lower restructuring costs and writedowns, would help it cut losses this year.Torm, whose banks threw it a lifeline and took control last year as the sector fights a slump now in its fifth year, forecast a pretax loss of between $100 million and $150 million this year before potential vessel sales and impairment charges.
That would compare with a 2012 pretax loss of $579 million reported on Wednesday, in line with a warning issued last month.
The tanker and dry-bulk group has been fighting for survival due to the weak global economy, oversupply of vessels and low freight rates.
The latest loss was due in part to one-off items amounting to $326 million, including restructuring costs of $210 million and a $74 million writedown following the sale of five vessels.
The result was also hurt by a slowdown in global oil consumption and overcapacity of tonnage in the market, resulting in falling freight rates.
The company said in a statement it expected to comply with its lending agreements this year and to be operational cash flow positive after interest payments.
“The product tanker market is expected to gradually improve during 2013,” Torm said, adding it expected increasing oil consumption, which could lend support to freight rate levels.
While oversupply was still a problem in the product tanker sector, the scrapping of existing tonnage and possible postponement of new buildings could reduce supply growth and impact rates positively this year, the company said. (Reuters)
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