Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM First Quarter 2025 Results. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will have a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Jacob Meldgaard, CEO. Please go ahead.

Thank you. Thank you, Janice, and a warm welcome to everyone joining us on the call today. This morning, we released our report with the interim results for the first quarter of 2025. TORM achieved a solid result in the quarter, in line with our expectations. But again, it was a quarter that has been influenced by a wide range of external factors that we need to take into consideration. The first quarter reflected a more stable market environment compared to the volatility we experienced in the latter half of last year. TCE amounted to US$214 million, thus broadly in line with the previous quarter, signaling early signs of stabilization following the declines we saw in the second half of 2024. Fleet-wide freight rates remained consistent with the levels seen in the fourth quarter, enabling us to deliver solid earnings. For the quarter, we achieved a net profit of US$63 million, demonstrating that while our income has normalized compared to the elevated levels a year ago, we continue to generate strong and sustainable results. I would also like to highlight that we successfully divested several older vessels. Despite a quiet second-hand market with buyers and sellers struggling to align on pricing, we secured the sale of three 20-year-old MR vessels during the first quarter and one 17-year-old LR2 vessel after the end of the quarter. These transactions underscore the high quality and strong maintenance standards of our fleet. Looking into the remaining part of 2025, the shipping market remains highly dynamic, with sentiment continuing to shift and new factors emerging at a faster pace. This environment presents both challenges and opportunities, and it reinforces the need for us to be agile and adapt quickly to changes. To stay ahead, we maintain a sharp focus on monitoring and analyzing new trends,…

Thank you, Jacob. Now, please turn to Slide 11 for an overview of the financials. In the quarter, our TCE amounted to US$214 million. And based on this, we achieved US$136 million in EBITDA and US$63 million in net profit. Fleet-wide, we averaged TCE rates of close to US$27,000 per day with LR2s close to US$34,000 per day, LR1s at US$25,000 and MRs slightly below this. All these numbers are in line with the 84% coverage that we published in connection with our full-year results in March. Thus, freight rates have stabilized at a level compared to Q4 2024, reflecting strong underlying fundamentals. This renewed stability offers a solid foundation as we move throughout the year, with our earnings remaining highly sensitive to market volatility due to our operational leverage. Based on this, TORM achieved basic earnings per share for Q1 of US$0.64 per share, and the Board has decided to declare a dividend of US$0.40 per share. We believe that our approach ensures that distributions align with actual financial performance, maintaining a disciplined, transparent and sustainable capital allocation strategy. Please turn to Slide 12. On this slide, we show the quarter-by-quarter development of our TCE since the first quarter of 2024. Looking back, it is now clear how the elevated freight rates in the first half of 2024 gave way to softer conditions later in the year, impacting our overall performance. Today, freight rates have stabilized at a lower but still healthy level that supports solid financial performance. Despite ongoing geopolitical uncertainties, ton-mile demand fundamentals remain supportive, although we remain mindful that conditions can shift quickly. In this market, we generated TCE of US$214 million and EBITDA of US$136 million based on a fleet-wide rate of US$26,807 per day. As a reminder, due to our operational leverage, a change…

[Operator Instructions] Your first question comes from the line of Jon Chappell with Evercore ISI. Please go ahead.

Thank you. Good afternoon.

Good morning, Jon.

Jacob, you laid out a bunch of different geopolitical and macro uncertainties and maybe the different paths forward. No offense, but I imagine you don't have any better idea on how many of these things are going to play out than we do. So knowing what you can control, which is capital allocation, capital structure, vessel sales, purchases, chartering, et cetera, has there been any shift to any of those strategies, financial or operational than maybe 12 months ago, just given all of these different moving parts and the different somewhat binary outcomes?

That's a good question. I would say on the financial side, really, it's really extremely stable. I mean, we keep the discipline and we also sort of keep the discipline around where our cash is headed when we deliver the strong results like in this quarter. So, I would say on that. On the business side, I think we are – as I also alluded to, I think we are seeing that, that I think we are gradually sort of meeting a new normalization of the freight rate compared to where we were a year ago. And that in this more normalized environment, I think it's time to maybe take a calculator out again and see what makes sense in terms of the fleet composition. But it's probably a little early. We've divested, as we normally do, when vessels are of a vintage, which is not really servicing our clients that well, which is around the 20 years. We've done that this year. I think we'll continue to do that. And then it's really up to Mr. Market to see what comes out of opportunities in terms of acquiring assets. We haven't seen anything yet that is also transpiring to be interesting, but obviously, in a normalized rate environment, that could be something to look at. Early days, but I think that's probably the changes.

Okay. Two quick follow-ups to that. One, the payout ratio on the IFRS earnings was about 64% for the dividend in the first quarter. Is that just coincidentally lower than the last several quarters? Or does that somewhat reflect maybe a bit of the uncertainty going forward? And then the second follow-up is you had mentioned in your prepared remarks, somewhat – I don't know what the right term is, but maybe less liquidity in the second-hand market. As you talk about that fleet path going forward, do you envision that, that second-hand market may gain more liquidity in the near term? Or do you think it may be status quo in the industry for the next six or so months until we get a little bit more clarity on some of these outcomes?

Yes. Good. So let me start with your second follow-up question, and I'll let Kim talk to the first. So, I think what we are seeing is that in a market where the secondary sales are less frequent, so lower liquidity as we discussed. Then what has served us really well is that the vessels that we have, which we keep in-house, we have the technical and everything operational sort of under the control of ourselves has meant that the type of buyers that are active in this relatively illiquid market, they gravitate towards the type of vessels that we've got because they are maintained to a standard where they can actually meet any customers' requirements on any day. So, I actually don't need so much to qualify whether there will be more liquidity because what we are seeing is that there is a low liquidity, but it's sufficient for us to transact the deals that we want to do. I do think that as the market sort of normalizes, I would be inclined to think that you will see more meeting of minds between buyers and sellers. But irrespective, that is my expectation over the coming months that we will see sort of that to normalize more.

Hi, Jon, it's Kim.

Hi, Kim.

Regarding the payout ratio, of course, there's one thing that you can adjust for that is we have the impact of the sale of vessels. So if you take that out, of course, you can normalize it a bit and then we are above 70%, probably more like 73%, 74%. But the way we do it is consistent with what we have done throughout this whole period until – ever since we changed the dividend policy actually. So, I think you alluded to the right thing. It is more working capital fluctuations that can deviate a bit. So one quarter can be 74%, another quarter 79% or 72%. So, that is where you shall sort of see the slight deviations. We basically not changed anything. But of course, as Jacob also said, that the conservativeness that we have when we divest vessels where we basically just keep the cash, that, of course, has a little impact on the payout ratio. And we've done that consistently throughout the whole period. So, we just maintain it on the balance sheet. And for that, therefore, you can see some deviations. But you should find it in the working capital because it's the same methodology we use every quarter.

Understood. Thanks Kim. Thanks Jacob.

Thank you.

Next question comes from the line of Bendik Nyttingnes with Clarksons. Please go ahead.

Hey, guys.

Hi, Bendik.

I'll jump on the market, I think. So, we were talking about there essentially being no real support from the Red Sea disruption recently. And with – I think the U.S. President tweeting that there is a deal with the Houthis going on, while that is still a bit up in the air. How do you view sort of the market in the event of a reopening? Should we expect some disruptions and movement on cost rates in the short term in the event of a reopening?

Yes. I mean, time will tell on both parameters, whether there is a deal that we can all trust with the Houthis. But let's just make the assumption that, that is actually the case, then what will happen with the market. I think what we are seeing with our customers, we had a client meeting actually earlier this week with one of the largest producers of oil in the world. And their team on the sales said, they couldn't really recall when it was last that the arbitrage for them was open for the diesel going – moving from Middle East into Europe. So right now, the producers are really not incentivized to hold bigger volumes of diesel from Middle East into Europe. You will, of course, have the odd trade that needs to be done, but sort of the marginal trade is not done. I think it would actually – in that sense, in the short end, I think you would see a reopening of the Red Sea that you would have more demand coming quite quickly because we would definitely be much more supported by that particular trade route. But I do think that if we sort of average out over a longer period, then I think it is demand neutral. I don't think that it is going up or down as such. But I think there would be kind of an immediate kind of flurry of cargoes that could move quite fast in the case of that you had a reopening.

Yes. Perfect. That's a great color. I'll go back to queue.

Yes. Thank you.

Your next question comes from the line of Jae McGarry with Jefferies. Please go ahead.

Hey guys, thanks for taking the question. Just had a market question. You mentioned the supply and how it can play out down the road given the current fleet age and maybe some scrapping down the line. But just for now, the LR2 deliveries certainly coming in more so than previous years. Can you describe just the impact in today's market with that oncoming supply, just how noticeable is it and if you see those ships staying in the clean trade or switching over?

Yes. Well, at least going forward, we don't know yet. But if we just take the data points that we had on hand from, let's say, the last couple of quarters, then as you point to, there is more LR2 newbuilds that has sort of been placed and that are labeled on the ordering and sort of out of the yard as here comes a new LR2. And as I alluded to a little in the prepared remarks also, we saw that you had globally around 250 LR2s that were trading as clean vessels in the end of the third quarter last year, whereas as of today, right now, as we speak, you probably have around 230. So actually, the number have declined by 20. And in the interim period, you've had exactly as you point to, you've had about 24 newbuild deliveries of this type of vessel. So if the world was flat, we would today say, okay, you had 250 clean trading vessels, you added 24 newbuilds, so you would have 274. But actually, trading is 230. Going forward, of course, what we believe is that you should look upon LR2 and Afra as an integrated trade. The shipowners, the investors, they are not that caring about whether the vessel as they come out of a yard will enter one market or the other. What they care about what is the return on investment. And that's, of course, also how we operate our LR2 fleet. We will, from time-to-time, operate in clean. We will from time-to-time, operate as an Afra. And I think this swing factor will be very dominant going forward. And obviously, given that the age profile of the Aframax fleet globally is much more prone to that – this is older vessels, you will see that there will be more scrapping potential as new vessels come into the market. So, I think this market is actually much more finely balanced than what sort of the labeling of the ships, i.e., that we only have LR2s coming out of yards. Well, they may be coming into the CPP market, but they may just as well be trading as Aframaxes. And I think the data points that we've had, as I just pointed to over the last six months, nine months, actually sort of points to that, that is a fair way to think about that market.

Great. Thanks for the color. I'll turn it over.

Thanks. Thanks for the question.

I will now turn the call back over to Jacob Meldgaard, CEO, for closing remarks. Please go ahead.

Yes. Thanks a lot, Janice. Thanks for everyone for dialing in to the first quarter 2025 results presentation. Have a great day.