Torm (NASDAQ:TRMD) executives highlighted strong full-year 2025 results, a late-year pickup in freight rates, and a constructive setup for product tanker markets as the company issued its 2026 guidance and detailed the market forces currently supporting earnings.
Full-year and fourth-quarter financial results
CEO Jacob Meldgaard said the company was “satisfied with the results,” pointing to what he described as consistent execution supported by TORM’s “One TORM” operating platform, which is designed to accelerate decision-making using real-time data and analytics.
CFO Kim Kristensen added that Q4 results included EBITDA of $156 million and an average fleet TCE of $30,658 per day. By segment, the company said LR2s earned above $35,000 per day, LR1s above $31,000, and MRs just under $29,000 per day. Kristensen noted long-range vessel earnings came in “a bit better” than what TORM had indicated during its Q3 update, aided in part by strong crude tanker rates.
For the full year, TORM delivered TCE of $910 million, EBITDA of $571 million, and net profit of $286 million. Meldgaard said the company finished toward the high end of its prior TCE guidance range of $650 million to $950 million. He also said freight rates strengthened from the first half to the second half of the year, and that TORM achieved fleet-wide rates of $28,703 per day, which he said demonstrated outperformance versus the broader market.
Dividends and capital allocation
Management emphasized a direct link between earnings and shareholder returns. Kristensen said fourth-quarter earnings per share were $0.88 and the $0.70 dividend represented an 82% payout ratio. Total dividends for 2025 were $2.12 per share. Meldgaard said $204 million of the year’s profit would be returned to shareholders.
Kristensen said TORM’s approach remains to distribute excess liquidity quarterly while keeping a prudent buffer to protect the balance sheet.
Fleet moves and balance sheet update
During Q4, the company was active in the sale and purchase market. Meldgaard said TORM acquired two 2016-built LR2s and six MR vessels built between 2014 and 2018, while selling one 2008-built LR2. Several vessels were delivered before year-end, bringing the fleet to 93 vessels; after completing remaining deliveries at the start of 2026, the fleet comprises 95 vessels.
Management said the acquisitions were well-timed. Meldgaard stated that, based on current broker valuations, the acquired vessels had already appreciated by a “double-digit” amount in U.S. dollars. Later in the Q&A, he added that one LR2 asset delivering shortly was “already up by 20%,” while cautioning that rising asset prices make additional acquisitions harder to underwrite under TORM’s return methodology.
On the balance sheet, Kristensen said broker valuations for TORM’s fleet stood at $3.2 billion at year-end, and net asset value increased to $2.6 billion. Average broker valuations rose 4.2% during the quarter, driven primarily by LR2 appreciation. Net interest-bearing debt was $848 million, corresponding to 29.4 net loan-to-value, which management said remained within its typical 25% to 30% range even after funding vessel purchases. Kristensen also noted $135 million of borrowings mature over the next 12 months, excluding terminations already refinanced.
Market backdrop: crude strength, sanctions, and trade shifts
Meldgaard said product tanker rates, after a “softer but still historically strong” 2025, had returned to average levels seen in the 2022–2024 market. He attributed the recent uplift primarily to developments in the crude tanker segment, pointing to VLCC spot rates in the $200,000 per day range and reports of one-year deals above $110,000 per day. He said this strength has been spilling over into Suezmax and Aframax markets and then into clean product tankers.
He also highlighted sanctions as a major factor tightening vessel availability, particularly in the dirty Aframax segment, prompting LR2s to shift from clean to dirty trade and reducing clean LR2 supply. TORM said that while nominal product tanker capacity has increased, the effective fleet trading clean products has not.
- TORM said nominal product tanker fleet capacity is up 8% since the start of 2024, while capacity actually trading clean is 1% lower than at the beginning of 2024.
- Compared with the start of 2025, management said there are 20 fewer LR2s transporting clean products, even though 65 LR2 newbuildings were delivered over the same period.
- One in four vessels in the combined Aframax/LR2 segment is currently under U.S., EU, or U.K. sanctions, according to the company.
- Management said more than 200 Aframax and LR2 vessels were sanctioned in 2025, and that 60% of those were older than 20 years, limiting the likelihood of a return to the mainstream market even if sanctions were lifted.
On the demand side, TORM said seaborne volumes of clean petroleum products have been trending upward in recent months. However, it described the overall impact of Red Sea rerouting as “largely neutral” due to lower trade volumes and a partial return to Red Sea transits. Management said Middle East/Asia to Europe trade volumes started the year 30% below pre-disruption levels, which it attributed largely to lower flows from India following an EU ban on imports of oil products derived from Russian crude. TORM added that an average of 40% of clean petroleum product volumes on that route traveled via the Red Sea in 2025, up from under 10% in 2024.
2026 outlook and guidance methodology
For 2026, Kristensen said TORM had already secured 70% of Q1 earnings days at an average TCE of $34,926 per day. The company guided for full-year TCE earnings of $850 million to $1.25 billion and EBITDA of $500 million to $900 million. Management said the ranges are built from a midpoint internal forecast and then widened to reflect uncertainty and potential market volatility.
In response to an analyst question, management described its guidance approach as using already-fixed coverage for Q1 and applying the forward curve for unfixed days for the rest of the year, then deducting normal costs to arrive at EBITDA. Kristensen provided additional detail, saying Q1 covered days totaled 8,177 days at $34,208, while uncovered days were 25,691 at $30,371, with the resulting average then “stressed” by an interval that increases with higher TCE levels.
During the Q&A, management also said it had not seen the dirty market materially affect LR1 trading in its fleet, while estimating that 10% to 20% of its LR2s traded spot dirty and an additional 10% were on term charter dirty.
About Torm (NASDAQ:TRMD)
Torm A/S (NASDAQ: TRMD) is an international shipping company specializing in the transportation of refined petroleum products. The firm owns and operates a modern fleet of product tankers, including both Handysize and MR vessels, which are designed to carry a broad range of clean petroleum cargoes such as gasoline, jet fuel and diesel. Torm’s core business revolves around voyage and time-charter contracts with major oil companies, trading houses and other energy sector clients around the world.
The company’s fleet is deployed on global trade routes, with particular focus on major refining and consumption regions in Europe, North America and Asia.
