Torm Exits Dry Bulk Sector
Danish shipping company Torm said on Wednesday it would withdraw from the lacklustre dry bulk shipping market after selling two vessels to an undisclosed buyer and handing back another leased bulker at the beginning of October.
The sector, transporting commodities such as coal, timber and steel, has never fully recovered since the 2008 financial crisis. Several dry bulk shipping firms went bankrupt earlier this year and the scrapping of ships has increased.
Torm will continue as a refined products tanker company.
Its exit from dry bulk marks another step in a recovery plan after going through a long debt restructuring process. Funds managed by alternative investment firm Oaktree Capital Management control 62 percent of Torm's shares now.
The Copenhagen-based shipping company kept its full-year profit guidance of earnings before interest, taxes, depreciation and amortization (EBITDA) between $190 million and $230 million.
Until a few years ago, Torm was one of the largest product tanker shipping companies in the world and had big ambitions, launching a takeover bid for rival compatriot D/S Norden, which also had dry bulk activities.
That takeover failed, and Torm then borrowed heavily for new ships including dry bulk vessels, before the 2008 crisis took its toll and left it with debts and redundant ships.
The company has now 68 owned and four chartered product tanker vessels which carry refined products such as gasoline, diesel oil and jet fuel. At the end of June its debt was $1.34 billion, eclipsing the book value of its fleet.
By contrast, D/S Norden has managed to maneuver through the crisis much better and had at end of June cash and securities of $340 million and undrawn credit facilities of $420 million.
Chief Executive Jan Rindbo from D/S Norden said earlier this week the company was committed to both the tanker and dry bulk business going forward although focusing on fewer vessel types.
Spot rates for dry bulk vessels are around $9,000 a day compared to rates as high as $200,000 a day before the crisis for the largest vessels. This is due to overcapacity and slow trade growth.