Ladies and gentlemen, thank you for standing by. I am Natalie, your conference call operator. Welcome and thank you for joining TORM plc Fourth Quarter 2021 Results Call. [Operator Instructions]. I would now like to turn the conference over to, Andreas Abildgaard-Hein Please go ahead.

Thank you. And thank you for dialing-in, and welcome to TORM's conference call regarding the results for the fourth quarter of 2021. My name is Andreas Abildgaard-Hein and I'm Head of Investor Relations in TORM. As usual, we will refer to the slides as we speak. And at the end of the presentation, we will open up for questions. Please turn to slide 2. Before commencing, I would like to draw your attention to the Safe Harbor statement. Please turn to slide 3. The results will be presented by Executive Director and CEO, Jacob Meldgaard, and CFO, Kim Balle. Please turn to slide 4. I will now hand it over to Jacob.

Thank you, Andreas, and good afternoon. Thank you all for dialing in. I'm pleased to be here today as we've now publish our results for the fourth quarter of 2021. And although the market is still challenging due to the continuing stock fall, we did see signs of market recovery already here in the fourth quarter of 2021. And we ended with an EBITDA of $42.9 million, and we had a loss before tax of $8 million. The return on invested capital ended at 0.8%. The first thing that here we realize an average TCE rate of close to $14,000 per day, our largest segment, the MR segment achieve rates of $13,329 per day, whereas LR1 and LR2 segments obtained rates above $15,5 per day. Here now looking into the first quarter of this year we at this stage, we've seen a further recovery and the bookings we've secured is around $15,500 per day. And here once again, we have outperformed peers in the largest segment in the MR. Now early part of this year, we did close the last of the sale and leaseback of nine months that we entered into late in Q3 last year on attractive terms and thereby we have been securing a solid liquidity base and obviously also optionality during and at the end of these leasing periods. In the fourth quarter of last year, we also increased our scrubber commitment to 57 scrubbers thereby increasing our access to lower fuel prices in the current quite volatile and uncertain market. Now, kindly turn to the next slide to slide 5. The product tanker market as I said remain challenged here in the fourth quarter. Oil supply remained insufficient to keep pace with the demand recovery, and therefore, logically, inventories continued to drop. The market here…

Thank you very much, Jacob. So please turn to slide 13. At the end of 2021 we have as Jacob mentioned seen a recovering in tanker market with rate reaching just below $14,000 a day in the fourth quarter of 2021. And a further increase going into Q1 of ‘22, where we fixed 85% of our days at $15,569. In the fourth quarter of ’21 and in 2021 as a whole, our operating expenses increased mainly due to COVID-19 related expenses. So when we correct for these expenses, our OpEx was slightly lower than the pre-COVID-19 levels of $6,354 a day compared to $6,371 in 2019. We will maintain our focus on cost optimization without jeopardizing quality and customer focus. Please turn to slide 14. Early in 2020 to TORM reached the largest fleet ever with 85 vessels across the main tanker segments at total of $320 million was invested in new and secondhand vessels in 2021. Whereas we sold one vessel, which was delivered to the buyer in 2021. We recently sold two older vessels with expected delivery in the first half of 2022. They were at attractive prices. So our expansion of the feed was done while maintaining and conservative debt structure and keeping a strong cash position. Early in 2022, we ended our new billing program by taking delivery of the last of the two outstanding LR2 scrubber fitted vessels. So we're now ready to take advantage of a potential market recovery. Please turn to slide 15. As of 2021 TORM had available liquidity of $210 million, cash total $172 million and we haven’t [Indiscernible] the undrawn credit facility of $38 million. The total cash CapEx commitments related to our new buildings and scrubbers were $48 million as of 31 December 2021. With a strong liquidity profile,…

[Operator Instructions] And the first question is from the line of Jonathan Chappell from Evercore.

Thank you. Good afternoon. Jacob, if I could start with you kind of a two parter on the market. Want to re-ask the question I probably asked three months ago which is we lay out such a favorable inventory situations such a favorable supply, side demands recovering, OpEx producing just kind of your views on why we've yet to see event less increase, substantial increase in the markets and maybe my second part to that is it was noteworthy to me that you called out Iran and OPEC, the Russian Ukraine, a lot of things that impact the crude markets. So do you feel that you really need a crude market recovery before the product or even at the same time as a product tanker recovery or can one do better without the other?

Okay, Thanks Jon and good morning. So I think we probably need to like pretend that we have a world where the current crisis is not affecting the market then we fundamentally sitting last Wednesday, where we had a discussion with our Board of low likelihood of worsening crisis in Ukraine, which within 24 hours after that discussion proved to be wrong. But let's just if we pause and sort of set the time there, and I will say that what we experienced on to that time is that inventories were actually still drawing rather than building and that OPEC were under delivering on the needs of the world. And clearly, oil prices, even without Russian invasion of Ukraine have been creeping up over the past 12-months. Of course, also, because of this acute answer, in terms of ramp up production by OPEC. Now, that all leads me to the what we have been experiencing is that crude tankers have still, up until this, let's say we could go up in cannibalizing into the product tanker space, leading also to what I described before around, you actually had this rather unusual situation with the largest ships turning significantly below in the spot market, what a massive LR2 significantly lower than the MR. Also, because of this cannibalization, I believe that fundamentally we need to that situation to change before you will see a real recovery in product tanker rates. That is my thing. Now, fast forward, now one week later, the world has, I think dramatically changed, because the whole ecosystem of crude and also refined oil products is right now under change. Because of that, ship owners, all traders and end users in general are taking a position generally to be very careful or even shying away from trade with Russian oil and or transportation of the same oil. And that is changing the landscape. And as we speak freight rates for crude tankers been going up. And it is also spilling into our segments LR, MR and the rate environment is today higher than what we have seen since early part of 2020. And it is also weighing the forward curve significantly. So let's say a week ago, and LR2 could make probably $5,000 per day. Today, what is being discussed is a rate environment in the low 20s. And if you add the scrubber premium, which is clearly going up, and it's probably around $1,000 on an LR2 today, then you add 30 and it was five. So it's a significant step change.

Yes, that's true. And that scrubber premium. You're right. That's something that some good optionality, super quick one for you, Kim, I was looking at the debt repayment schedule on slide 16. The $188 million kind of stood out to me. So I went back to look at your third quarter presentation and it was only $133 million. So it's up $55 million for this year. $12 million of that is the lease financing, which makes sense given the closing of the remainder of the sale leaseback transaction, but the debt, mortgage debt went up about $33 million as well, what was the reason for that kind of reset the repayment profile in this year?

Yes, you are sharp as always, Jon, it is, we simply we have the RTF that we had on drawn and we tend to just draw it, it is basically equal to cash, but we decided to draw it so it is cash at hand and we can have it there or we can redeem the RTF once again. So that's the reason.

Okay, and then just the final one, if I can slip one more in, you announced two more vessel sales make sense asset values keep going up while the market remains relatively nailed to the bottom. Any more thoughts of kind of playing that asset or so to speak, monetizing today with probably some of the older vessels? Before the rate environment kind of takes off?

Yes. Good point again, and we will subscribe to that currently that up is open, and we are pursuing a couple of similar deals like the ones we've just done. So yes, that is definitely high on the agenda.

The next question is from the line of Anders Karlsen from Kepler Cheuvreux.

Yes, good afternoon, gentlemen. Just a little bit back to the market. I mean right levels are making up but are you seeing actual fixtures yet or is it just hearsay numbers?

So, Anders, that's a good question, as I say, it has already proved to be real fixtures, especially in the crude FMX segment. And there we are seeing elevated fixtures being concluded, of course, also in the largest segments in [Indiscernible] but so far, this is what is driving up also the LR2 rates that has been quoted, but it is within the last 24 to 48 hours. So it's pretty new, let's see where it settles, but there is a strong push on rates being quoted right now, but nothing concluded.

Okay. That’s just interesting, in terms of, if how and I don’t know this is, if sudden done on all things changing every moment. Now, if you were to replace the Russian diesel volumes to Europe. Is there sufficient capacity in other regions to fully replace that on quick note or do you think there's going to be a time lag too to do so.

So that is a very good question that we also obviously looking into, because for the refined for Russia, the impact on Russian oil is a, crude and then b, diesel. And we will say that Russia would need to find new markets for the products that they are currently exporting into Europe, and let's say the countries that are currently shying away. So if I take it in a simple manner, if we started with crude, clearly today, the biggest buyer of crude from Russia, one of the big is China. And you could expect, what we're seeing is China is publicly articulating that they will not put sanctions on Russia, they have also taken some of the Russian controlled tonnage on [Indiscernible] charters of Unitec clearly signaling that they will continue to trade flow on crude between Russia and China. And I think that there is a relatively high likelihood that it will increase from what it was a week ago. And there's nothing that would indicate anything different, then the question is obviously, what will happen, then, with the volumes of diesel that is currently produced in Russia and being exported to Europe? What is the new home? And I don't have the answer yet. But our opinion would be that some of it would flow to South America. And other part of it would flow to West Africa. And that would sort of make room for other diesel volumes that would normally go into those areas, to then go into Europe, for instance, US volumes that would no longer go to South America or with Africa, but they will be incentivized to sell into Europe to have a redistribution with longer ton-mile of the same volumes. That's our main -- that's how we think that it could play out. The alternative is obviously that Russian refiners are no longer producing. I don't think that is -- that seems to be somewhere down the road because it's not in there. I mean, their motivation would clearly be even if they need to sell at a discount to other market participant would be to continue the flow.

Yes. I think it's an underlying so I'm thinking to myself, so one last question. It's on the refinery shutdowns. You're not listing any refinery shutdowns in China, but my understanding is that some of the new refineries may replace all the old ones. And that’s what you're thinking or do you think it's just going to be all refiners are going to continue as they do today?

Yes, good point. So the way we have describing rather than having the gross new, and the course closure, we have netted it out in the description that we have on the slide. So you see there, that we have said that the refinery addition for the years $0.22 three in China is about a million barrel per day. And that is net. So there you have more additions, but you also have closures. So that's the net addition.

The next question is from Climent Molins from Value Investor's. Please go ahead.

Good morning. You conducted several acquisitions during 2021. So, could you provide some commentary on your appetite to continue expanding the fleet? Are you seeing any attractive opportunities?

Yes, we are constantly obviously, following the opportunities that is in the market. And let's see is a very volatile market that we have entered into. So time will tell but we are always open for the type of opportunity that we saw last year. So one as you point to, we did shared based transaction to acquire chemical tankers from incorporating the team tankers, and b, we did enter into an agreement to buy not new, but relatively new tonnage in the LR2 segments. So, these type of fields would be examples of some that we are still interested in adding to the portfolio, I have nothing concrete at this stage.

Right, make sense. The current environment is disturbing the positive impact vehicle component and scrubbers and relative performance. Within of premium, are you able to skew in your modern assets versus the older ones? And regarding Q1 guidance, could you approximately quantify the positive effect of scrubbers?

Yes, so a, on the modern versus old, actually we have alternates in our fleet there have scrubber where the economics is the same as a modern vessel. So I'm not really seeing a discrepancy in terms of this, it is small characteristics around [Indiscernible] and other things relative to whether it is young or old that is dictating the earning potential. Now, on the scramble currently, as I mentioned the scrubber premium right now, in Singapore, the spread is close to $300 between high sulfur and low sulfur, it is only at the very beginning of the IMO2020 implementation back in early part of 2020 that we have seen this and if you use that as your calculation, then we estimate that LR2 are currently, right now in that area of the world having benefit of around $7,000 to $8,000 and LR1 $5,000 to $6,000 and MR. $3,000 to $4,000 higher earning potential, but this is very lately that we have seen is only over the past week has the level gone come to that.

Right, that's helpful. And final question for me, you have a dividend policy of distributing 25% to 50% of net income as dividends, but the shield line term is trading at a substantial discount to net asset value. Are share repurchases something you would consider in the current environment?

No, we are not contemplating share repurchase at the world is right now that has not been part of our discussions internally.

There are no further questions at this time. I'd like to hand back to Anders Redigh-Karlsen for closing comments.

Thank you. We have one more question on the webcast from Danske Bank, Håvard Sjursen, it’s for you Kim, can you comment on the sales price of the two vessels you have sold and the net cash effect.

The two transactions we've made is part of our ordinary replenishment focus. So it's older vessels and one handy, one of them handy size that we have divested. We do not usually comment on the precise price that we have sold them forward but our reference point is of course, the reason the values motivated of the business and we are very satisfied. Regarding proceeds, net proceeds, net liquidity additions, I can disclose that it's in the level of $13 .5 million.

There are no further questions. So this concludes the earnings conference call for the fourth quarter 2021 results. TORM’s annual report will be released on 23rd of March 2022. Thank you for participating.

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