Danish shipping group Torm believes the shipping market had reached the bottom of a cycle as it reported deepening losses for 2010 and predicted a similar loss for this year.

Torm shares slid to stand 12.7 percent lower at 33.16 crowns at 1110 GMT, reaching their lowest level since late 2003 after reporting the deeper-than-forecast loss which was hit by weak tanker rates, overcapacity and one-off charges.

The company's pretax loss widened to $136 million from $19 million in 2009, said Torm which runs a fleet of about 140 tankers and dry-bulk vessels. That compared with a forecast for a loss of $84 million.

The result was burdened by an impairment charge of $35 million related to an investment and a loss of $16 million on the sale of the two new dry-bulk ships, Torm said.

Without those one-offs, the pretax loss was $85 million, which is at the weak end of Torm's guidance in its third-quarter report for a loss of $75 million to $85 million.

"The most important factor of the loss is the poor market conditions in the product tanker market," Chief Executive Jacob Meldgaard told Reuters, adding that Torm would be well placed to take advantage of increasing rates once the rebound comes.

"We think that we are now at the bottom of the shipping cycle," Meldgaard said, adding that it was strategically important not to fix vessels on contracts at the current historically low levels.

Tanker shipping had a dismal year due to overcapacity in the market.

"In 2010, the tanker division's earnings were negatively impacted by continued low freight rates," Torm said in the statement.

Bulk freight rates were volatile in 2010, but the volatility did not hurt earnings due to the company's high contract coverage of its dry-bulk fleet, it said.

Analysts were downbeat on the statement.

"It is a disappointing result...even if it is adjusted for one-offs which pulled it down," said ABG Sundal Collier analyst Lars Heindorff.

Handelsbanken analyst Dan Togo Jensen said: "The negative reaction in the share is justified as the result was weaker than expected." (Reuters)