For the year ended 31 December 2023, TORM grew time charter equivalent earnings (TCE) to USD 1,084m (2022: USD 982m) and realized a historically high EBITDA of USD 848m (2022: USD 743m) and a net profit for the year of USD 648m (2022: USD 563m).
The product tanker market remained strong and volatile in 2023 reflecting increased ton-mile demand as geopolitical tensions and refinery dislocation continued to affect shipping routes. Also, product tanker fleet growth remained at a relatively low level, thus supporting the positive supply and demand situation.
In this market environment TORM achieved TCE rates of USD/day 37,124 on average (2022: USD/day 34,154) and available earning days increased to 29,152 in 2023 (2022: 28,756). Our vessel class LR2 achieved TCE rates of USD/day 47,718 (2022: USD/day 39,612), the LR1 vessels USD/day 37,326 (2022: USD/day 36,879), and the MR vessels USD/day 34,745 (2022: USD/day 32,795).
In the fourth quarter of 2023, TORM realized an EBITDA of USD 234m (2021: USD 267m). The profit before tax amounted to USD 185m (2022: USD 222m). TORM achieved TCE rates of USD/day 37,985 on average (2022: USD/day 47,520), and available earning days increased to 7,312 (2022: 6,854). Our vessel class LR2 achieved TCE rates of USD/day 44,048, the LR1 vessels achieved TCE rates of USD/day 40,498, and the MR vessels achieved TCE rates of USD/day 36,122.
Market
The product tanker market was strongly impacted by geopolitical events in 2023. The EU/G7 sanctions against Russian oil products officially took effect in February 2023, which reinforced the trade recalibration that had already begun in 2022 ahead of the sanctions. In early October 2023, a military conflict in the Middle East and subsequent attacks against vessels forced vessels to re-route away from the Red Sea. This added to the ton-mile growth already seen from the sanctions against Russia.
On top of geopolitical factors, restrictions on Panama Canal transits similarly resulted in longer sailing patterns.
The consequent trade recalibration towards long-haul trade led to a step change in product tanker freight rates towards a higher average level. However, the recalibration also increased rate volatility as the product tanker fleet moved closer to the point of full utilization, where even small changes in underlying demand and supply created high volatility in freight rates.
Vessel transactions
During 2023 TORM acquired 22 newer eco vessels and divested 11 of its oldest vessels, and in the first quarter of 2024 TORM acquired one additional LR2 vessel in a partly share based transaction with issuance of approximately 0.6 million shares. Thus, TORM has in total acquired nine LR2, seven LR1 vessels and seven MR vessels. These transactions have both increased the long-haul fleet significantly and further improved the environmental profile of the total fleet. TORM sees attractive returns over the coming years by increasing the share of the larger vessel classes due to changing trading patterns, not least caused by the change in the global refinery landscape.
In total, the vessel transactions during 2023 and Q1 2024 have increased TORM’s operational leverage and thereby purposely increased TORM’s capacity to benefit from an expected continued strong market.