TORM PLC (TRMD)

[dealorfx]

Torm sees tough product tanker mkt in short term

Friday March 12, 2010 02:23:11 AM GMT

TORM/
COPENHAGEN, March 11 (Reuters) - Danish shipper Torm said it expected the product tanker market to remain tough in the near future, and predicted a possibly deepening group loss this year compared with 2009.

The global shipping industry has suffered from a worldwide slump in freight rates and volumes, due to slow trade in the downturn.

"Despite the fact that the short-term outlook for the product tanker market remains difficult, Torm maintains its long-term strategic focus on and belief in this segment," it said on Thursday in its full-year 2009 report.

"In the second half of the year, the bulk market showed signs of recovery," Torm said.

For Torm, the bulk, or dry cargo, market has however become less important over the past year after the firm sold four of its six bulk carriers.

Torm Chairman Nils Erik Nielsen said in the report that markets remained tough. "The economic crisis is not yet over, and it is difficult to predict when market trends will turn around conclusively."

Torm predicted a 2010 group pretax loss of $15 million-$60 million, adding that the outlook was subject to considerable uncertainty.

In 2009 it swung to a $19 million pretax loss from a year-earlier $360 million profit, with a $20 million impairment writedown related to a stake in peer FR8 weighing on the result.

The mean forecast in a Reuters poll of analysts had been for a $3 million pretax profit.

Jyske Bank said in a note to clients the results roughly matched expectations apart from the writedown, but the 2010 outlook disappointed.

Shares in Torm were flat at 57.50 crowns by 1043 GMT while the wider market in Copenhagen was roughly unchanged.

Domestic rival Norden said this week that both dry cargo and tankers were subject to greater uncertainty than normal, forecasting rising core earnings in 2010, driven mainly by economic growth in China.

The world's biggest container shipper, Denmark's A.P. Moller-Maersk, said this month that its shipping business would remain in the red this year as freight rates had improved but were still not at a level where they could give acceptable profitability.

Torm said vessel values in the product tanker market had continued to be under pressure in the beginning of 2010. (Reporting by Anna Ringstrom; Editing by Rupert Winchester)