Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome and thank you for joining TORM plc Fourth Quarter and Full Year 2022 Results Call. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions] It's my pleasure and I would now like to turn the conference over to Mr. Andreas Abildgaard-Hein, Head of IR. Please go ahead, sir.

Thank you. Welcome to TORM's conference call. We have been looking forward to presenting to you the results for the fourth quarter and full year 2022. We'll refer to the slides that we present during our presentation. And at the end of the presentation, you will get the possibility to ask questions. After this conference call, you will be able to listen to a recording of the call. And as usual, you can find our presentation and other relevant data on our website. Please turn to Slide 2. Before we start presenting the results, I would like to draw your attention to the Safe Harbor statement. Please turn to Slide 3. The results will, as usual, be presented by Executive Director and CEO, Jacob Meldgaard, and CFO, Kim Balle. Please turn to Slide 4. I will now hand over to Jacob.

Thank you, Address, and good afternoon, good morning to all. Thank you for connecting with us today for our Q4 and full year 2022 presentation. The headline of today's call is that, the very strong product tanker markets have continued here into the fourth quarter of 2022 and that the underlying factors have also continued into 2023, no visible signs as of now as to when the market return. We have today presented the strongest results for the second quarter in a row. This means that we for the fourth quarter of 2022 achieved an EBITDA of $267 million and a profit before tax of $222 million. Our fourth quarter average TCE ended at $47,520 per day across the fleet and above $45,000 per day across our MR business. For the full year 2022 with our average TCE rate of $34,154 per day, we reached a total EBITDA of $743 million and a profit before tax of $557 million. With this, we ended with a return on invested capital of 29.2% for the year. TORM's Board of Directors has approved a dividend of $2.59 per share based on the fourth quarter and we expect to distribute around $212 million in early April. This means that our total distributions for 2022 will end up at around $378 million. The distributions are in line with the distribution policy announced last year. After the end of the fourth quarter of 2022, we acquired seven LR1 tankers built between 2011 and 2013. As of today, two of the vessels have been delivered and the remaining vessels will be delivered before the end of April of this year. However, we today entered into an agreement to purchase three 2013 built MR tankers for total cash consideration of $48.5 million. In combination with the issuance of…

Thank you, Jacob. Please turn to Slide 11. We reported record high TCE rates in the third quarter of 2022, but we managed to obtain even higher rates. Average rates in the fourth quarter of 2022 increased our rates from $44,376 per day in Q3 to above $47,500 per day in the fourth quarter across the fleet. By the beginning of the year, rates have increased from an average of $16,743 per day, equaling an increase of 184% from the first to the fourth quarter. For MRs, the average rates for the fourth quarter ended at $45,029 per day for LR1s at $48,076 per day and for LR2 the average rates were $58,889. I'm very happy with the performance of the one TORM platform that once again demonstrated outperformance. Please turn to Slide 12. Looking into the TCE rates we have obtained during the beginning of this year, we have seen that the strong markets are continuing. Tom has covered 90% of our first quarter 2023 tanker days at an average rate of $43,002 per day. And for the MRs in the first quarter, we as of the 30th of March fixed 89% at $37,730 per day and so far 86 of the LR1 tanker days were fixed at $44,135 per day and 90% of the LR2 days are fixed at $65,950. Also in the remaining quarters, we managed to fix rates at strong levels. As of 12th March, 80% of our days are fixed at $42,237 per day in the second quarter, 13% are fixed at $42,228 per day in the third quarter and 13% are fixed at $42,527 per day in the fourth quarter of this year. The main part of our coverage beyond the first quarter was made in the yellow ones and MR vessel classes remaining…

Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] We have the first question from Jon Chappell from Evercore. Please go ahead, sir.

Thank you. Good afternoon. Jacob, two somewhat obvious strategic questions for you this afternoon. I like the Slide 12 that you put in on the 2023 coverage and it feels like it's pretty balanced on the LR1, but clearly with your optimism on the market, keeping a lot of spot exposure on the core LR2 and MR, which make sense. At a certain point, do you expect to lock in some of the longer term, maybe one or three contracts that are out there? And maybe as part of that question, can you speak to the liquidity of that market and how representative it is of the current spot rate environment?

Yes. Thanks for that question, Jon [indiscernible] So we've had the same I think conversation over the last couple of quarters, what would be sort of the time when you start to take color a bit deeper. Clearly, we would be more inclined to look at it today than in the last quarter. Rates on, let's say, on an LR2, just an example, have gone from three years being sort of in the mid high 30s to probably around 40 now. So given that you -- in the meantime, as you can see, have had the benefit of a strong spot market. It's of course encouraging that the long end of the market is creeping up at the same time as more time had passed on your asset at rates that are above that. But I don't have a precise idea about what it is that we would look at. But of course, it's a better return today than having done it three months ago.

Okay. The other one is, I'm sure you're getting great returns on the secondhand vessels, you are buying the seven LR1s and the three MRs that you just announced today. But a little curious that the market seems incredibly strong from an asset value perspective, especially for ships of that age. So you're still up there buying ton of liquidity to do so. Why haven't we seen kind of the greater unwinding of some of the older tonnage in the fleet? So kind of a one for one sets achieving a 10 year old or maybe a 15 year old and taking advantage of the strong secondary market for those older ships?

Yes. We actually did do that in a way. I mean, we sold, I think, eight assets [indiscernible] over the course of last year. So that movement is more or less already baked in. But we are constantly evaluating as you point to what is the right balance for us around maintaining vessels or selling off. We are quite comfortable in ordering our fleet right now, to be honest. And we don't see a big price differential between older tonnage and newer tonnage in -- when we operate in the spot market. So therefore, for now, I don't have a particular sort of circle going offloading more tonnage. But of course, we may decide to sell slightly all of this if the price is right.

Okay. Thanks for the answer, Jacob.

You're welcome.

[Operator Instructions] We have the next question from [Peter Halgan] (ph) from ABG. Please go ahead, sir.

Good afternoon, guys. And sort of I think continuing on the former question. And I wanted to ask you what to think about the new building opportunities out there now and to what extent TORM would be contemplating to not only add secondhand tonnage, but also newbuildings to its fleets.

So we confirm, as you can see, vessels that are on the water now. I mean, this is a cyclical industry and it can be quite volatile over the years. So for now, our preference is for tonnage where we can, I'm going to say, see at least the immediate future. If you then look at, let's say, 2026 delivery, I think if we were to think about it, it would be to be investments that are difficult to get to by virtue of buying the assets today. And my strong preference is for assets today, I think it would have to be really something special. On price or special on features, capability on an asset that has a long dated delivery.

Okay. Well, thanks for that. The sort of the obvious question here is that, at some point someone needs to build more ships, these ships, as we all know, deteriorates by the day. And at least one needs some sort of replacement for outgoing tonnage. But I guess then the question, how do you suspect the continuation or what do you expect the order book to fleet ratio to stand at if sort of your billion dollars for 2023 comes through, will we see more ordering do you think through 2023 if markets all hoped up as most of us expect?

I think it is that is [indiscernible] that you will have more ordering, more contracting in 2023 than what you had in 2022. Significant people are also going longer dated. I think in 2022, people were probably more reluctant to buy, let's say, a 2025, 2026 position today. There's not much capacity as we discussed. So I think the contracting itself will probably be bigger. But what you will -- what I expect is that, it will not at least in 2025, 2026 climb above sort of this 3% 4% that we've been concentrating. And then, of course, when you get into the second half of this decade, what is interesting is to look at the 25 year old sort of scrapping potential is increasing dramatically once you get out there. As I'm sure you've also looked at it Peter.

Oh, yes. And that's a point here. I'm very curious to see how –

The way we think about it is that, we actually did spend time in China and in Korea a little earlier this year when it was opened up, and we sort of -- we have our own view on what is the realistic availability of the shipyard capacity in 2025, 2026, 2027. And we model it here as if all of that will be filled and when we get that, that's the extreme case, that's where these shipyards do not get attracted by dry cargo or container or LNG or other segments. And in that scenario, there is still a very manageable order book that you get to. This is all -- it's quite dynamic obviously. And it is outside of our two to three year discussion that we've just had. I think that it is totally plausible that the fleet -- additional fleet will be subdued at least up to and including 2026. And then when you get past that point, the fleet that needs to go to recycling is increasing dramatically. That's why we like that on the water now because we think that there is -- now having 88 vessels on the water now, I think it's better and let's say having whatever 60 now and 20 out in the future.

Understood, understood and agreed. The final question from my side, the ship per share transaction you just did now. Should we expect more of that for the next quarters?

To be honest, we are quite positive around utilizing our equity at past payment. We think it's good for the -- in this case for the new shareholders. I think they get on board with significant upside potential for them and for us we are growing the company without losing the strength of the potential to have the same payout ratios as we've just discussed. So, yes, if and when these opportunities arise, we would be willing to entertain that.

Thank you, Jacob. Thank you. That's all for me.

There are no further questions from the phone, and I hand back to Mr. Hein for the web questions.

Thank you. We have no further questions on the web. So this concludes the earnings conference call regarding the results for the fourth quarter and full year 2022. Thank you for participating.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you very much for joining and have a pleasant day. Goodbye.