Torm Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: Our Q2 performance delivered a TCE of USD 208 million, net profit of USD 59 million and a quarterly dividend of USD 0.40 per share.
  • Positive Sentiment: Based on secured fixtures and market momentum, we have raised our full-year 2025 guidance to USD 800–950 million in TCE and USD 475–625 million in EBITDA.
  • Positive Sentiment: We advanced our fleet optimization strategy by divesting three 2008-built vessels to maintain a modern, high-quality and commercially attractive fleet.
  • Positive Sentiment: TORM secured commitments for up to USD 857 million of refinancing at attractive rates, keeping net interest-bearing debt at USD 767 million and LTV at 27 percent.
  • Negative Sentiment: While product tanker rates have remained stable and trade volumes hit 16-month highs, geopolitical uncertainty and evolving sanctions continue to pose market challenges.
AI Generated. May Contain Errors.
Earnings Conference Call
Torm Q2 2025
00:00 / 00:00

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Operator

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM Second Quarter twenty twenty five Conference Call. All lines have been placed on mute to prevent background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the conference over to Jacob Milkgaard, CEO. You may begin.

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. Thank you very much, and a warm welcome here to everyone joining us on TORM's Q2 twenty twenty five conference call. Earlier this morning, we did release our interim results for the 2025. I'm pleased that, again, we can report market leading performance. In the quarter, we witnessed a continuation of the most stable operating environment established in the first quarter, offering a clear contrast to the freight rate volatility seen in the latter part of last year.

Jacob Meldgaard
CEO & Executive Director at TORM

Our TCE came in at USD $2.00 8,000,000, broadly consistent with both the 2024 and the 2025. This translated into a net profit of US59 million dollars leading to another quarter with attractive dividend distribution of $0.40 per share. We also advanced our fleet optimization strategy by divesting one LR2 vessel and two MR vessels, all built in 02/2008. This aligns with our ongoing approach of phasing out older tonnage to maintain a modern, high quality and commercially attractive fleet. These well placed transactions underscore the strong condition and upkeep of our vessels and do reinforce our commitment to operating an efficient and competitive platform.

Jacob Meldgaard
CEO & Executive Director at TORM

Looking ahead, the macro environment continues to be fast moving and marked by geopolitical uncertainty, but market sentiment remains broadly positive. We have entered the third quarter with strong momentum, supported by firming rates across our vessel segments and an encouraging degree of visibility into our upcoming fixtures. Despite the external challenges, both the underlying fundamentals and the forward curve for freight rates, they remain positive. Based on this and the rates we have already secured, we have raised our full year guidance to reflect a stronger earnings outlook for the remainder of this year. As always, we remain vigilant and agile.

Jacob Meldgaard
CEO & Executive Director at TORM

And with that, let us turn to the key drivers shaping the market and our positioning going forward. Please turn to Slide number five. Here, let me just go into first is a snapshot of the market landscape and product tanker rates have remained both stable and attractive across the board. And here, as illustrated in this graph, benchmark earnings for MR and LR2 vessels, they show resilience and with recent figures reflecting a healthy uptick. This stability is underpinned by increased trade flows and the limited net growth in CPP trading fleet.

Jacob Meldgaard
CEO & Executive Director at TORM

And here, please turn to Slide six, I'll elaborate on that. Trade volumes have surged recently. They reached a sixteen month high at the start of This growth has been driven by increased east to west middle distillate flows. And for the past two quarters, we've been pointing out that low trade volumes on this route have not been sustainable. With inventories in North West Europe falling into the lower end of the five day range, we have recently seen a surge in East to West middle distillate trades, further supported by strong exports from The United States.

Jacob Meldgaard
CEO & Executive Director at TORM

This has lifted tonne miles again to levels well above what we saw before the Red Sea disruption. At the same time, crude cannibalization has normalized at more at the historical levels. Looking further ahead, the product tanker market is expected to continue to be driven by geopolitical factors, high uncertainty, but we expect market fundamentals to continue to support trade flows and vessel utilization. And please turn to Slide seven. Since the start of this year, two refineries in North West Europe have closed with two more expected to close by the end of the year.

Jacob Meldgaard
CEO & Executive Director at TORM

These closures combined correspond to 6% of the region's refining capacity, leading to a lower local product supply and increased need for imported mill distillers in an environment where product supply is already tight. According to our calculations, if all this supply were replaced by imported diesel and jet from the Middle East Gulf, this would translate into an additional demand of 15 to 24 LR2 equivalents per year depending on whether vessels transit the Red Sea or sail around the Cape Of Good Hope. To put it into perspective, this corresponds to 6% to 10% of the current TPP trailing LR2 fleet. Refinery clauses are not limited to Europe. In less than one year from now, two refineries with a combined 11% of the region's capacity will close on The U.

Jacob Meldgaard
CEO & Executive Director at TORM

S. West Coast. This we expect to lead to increased need for gasoline and jet imports, which according to our calculations will translate into an additional demand of more than 25 MR equivalents on a round trip basis if they all come from Asia. Please turn to Slide eight. Geopolitical development remains a key driver in the market.

Jacob Meldgaard
CEO & Executive Director at TORM

In its latest sanctions package against Russia, the EU introduced a ban on third country petroleum products obtained from Russian crude oil from January, which mainly affects diesel imports from India and Turkey. We do not expect any significant effect on tonne miles from this with alternative sources available from the same distance, but there will be a slight positive impact if imports are replaced by supplies from further away. While it is still unclear whether President Trump's threat of additional tariffs on India will force Indian refineries to shift away from Russian crude. Potential reshuffling of crude flows with China taking more Russian oil and India more Middle East and Western oil is likely to be positive for larger crude tankers while negative for the Aframax segment. Nevertheless, we expect the demand loss for Aframaxes to be offset by a substantial share of sanctioned Aframaxes not returning to the mainstream trades.

Jacob Meldgaard
CEO & Executive Director at TORM

Clearly, it is still highly uncertain what the U. S. Administration next move vis a vis Russia is, but we do not foresee any reversal of EU sanctions anytime soon. Please turn to Slide nine. And let's take a look at the tonnage supply side.

Jacob Meldgaard
CEO & Executive Director at TORM

And as we pointed out earlier, the relatively high product tanker order book should be seen in combination with the fact that the average age of the fleet is the highest in two decades. In addition, a large share of especially older fleet is sanctioned, which is expected to support exits from the market. This is especially the case for the combined LR2Aframax fleet, where every fourth vessel in the global fleet is under either OFAC, EU or UK sanctions. It is especially the OFAC sanctions that had a strong impact on fleet utilization with our data showing that tonne mile on vessels sanctioned since January has declined by 75%. Lower utilization on sanctioned Aframaxes has incentivized LR2s to move to dirty trades.

Jacob Meldgaard
CEO & Executive Director at TORM

As a result of which, we have seen a 2% decline in the CPP trading fleet over the past twelve months. This is while the nominal product sector fleet has grown by 4%, driven by newbuilding deliveries. Please turn to Slide 10. Looking ahead, several factors will continue to shape the product tanker market, including ongoing geopolitical uncertainty, additional EU sanctions against Russia, evolving U. S.

Jacob Meldgaard
CEO & Executive Director at TORM

Trade policy and continuing Red Sea disruption. In addition, returning crude output from OPEC is indirectly supporting our market. On the demand side, oil consumption remains robust, and changes in the refinery landscape are increasing tonne miles. On the supply side, increased newbuild deliveries need to be seen in combination with the increasing number of scrapping cannabis, alongside reduced trading on the section fleet. This will influence tonnage availability and market balance.

Jacob Meldgaard
CEO & Executive Director at TORM

I'm certain that TORM is well positioned to maneuver in this environment through our conservative capital structure, the operational leverage and the integrated platform. So with that, I'll hand it over to you, Kevin, who will walk us through the financials.

Kim Balle
CFO at TORM

Thank you, Jacob. Now please turn to Slide 12 for an overview of the financials. In the second quarter, our TCE amounted to $08,000,000 and based on this, we achieved $127,000,000 in EBITDA and $59,000,000 in net profit. Meanwhile, we averaged TCE rates of 26,700 and dollars per day with LR2s above US35000 dollars LR1 slightly above US27000 dollars and MR is around US23000 dollars Thus, freight rates during the quarter remained broadly in line with the previous two quarters underpinned by solid market fundamentals. This stability provides a strong base as we progress through the year with our earnings continuing to reflect performance well above market rates.

Kim Balle
CFO at TORM

And now, please move to Slide 13, please. This slide illustrates our revenue progression quarter by quarter since Q2 twenty twenty four. With this quarter's results, we now mark three consecutive quarters with stable freight rates and earnings, highlighting a period of sustained performance and consistent market conditions. Despite continued geopolitical uncertainty, underlying tonne mile demand remains solid, though we stay alert to how quickly market dynamics can evolve. Against this backdrop, we delivered a satisfying result generating TCE of US208 million dollars and EBITDA of US127 million dollars based on a fleet wide range rate of US26672 dollars per day.

Kim Balle
CFO at TORM

Adjusting for gain on sold vessels, EBITDA amounted to US122 million dollars thus at par with the US126 million dollars realized in the previous quarter. With our current operational leverage, we are well positioned to benefit from any future improvement in freight rates. So for every 1,000 increase in daily rates, our quarterly EBITDA could rise by approximately US8 million dollars based on around 8,000 earning days, highlighting the meaningful earning upside should the market strengthen further. Slide 14, please. Here, we show the quarterly development in net profit and key share related ratios, which closely follow the trend in EBITDA.

Kim Balle
CFO at TORM

As a result, earnings per share for the second quarter amounted to US0.60 dollars Our approach to shareholder return remains clear and consistent. We continue to distribute excess liquidity on a quarterly basis while maintaining a disciplined financial buffer to safeguard our balance sheet. So for the second quarter, this approach has led to a declared dividend of US0.40 dollars per share, representing a payout ratio of 67%. This aligns with our free cash flow after debt repayments and reflects both our solid earnings performance and our ongoing commitment to responsible capital allocation. And now, please turn to Slide 15.

Kim Balle
CFO at TORM

As illustrated on this slide, following several quarters of steadily rising vessel values, broker valuations for our fleet were at billion dollars at the end of the quarter, reflecting both lower vessel valuation as well as our described divestment of vessels. Although vessel values were down around 7% across the fleet, then it is worth noticing that this number is heavily influenced by older tonnage from 2010 to 2012, while newer tonnage has held up relatively well, showing only low single digit declines. Turning to the center chart. Our net interest bearing debt now stands at $767,000,000 with a stable net loan to value of 27% consistent with the levels debating for the last couple of quarters and underscoring the strength of our conservative capital structure. So on the right side of the slide, you can see our debt maturity profile.

Kim Balle
CFO at TORM

And over the next twelve months, we only have $157,000,000 in borrowing maturing, just around 14% of our total debt. And we face no significant maturities until 2029, giving us ample runaway and financial stability. But to further strengthen our capital structure, TORM has secured commitments for up to US857 million dollars on the most attractive refinancing terms in our history. This refinancing package covers two existing syndicated loan facilities and our lease agreements. The new structure will be divided between term loans and revolving credit facilities, enhancing our liquidity and giving us greater financial flexibility.

Kim Balle
CFO at TORM

Thus, the package also extends the maturity profile with the new financing running into 02/1930. Our loan facilities are expected to be refinanced in Q3 twenty twenty five, while the lease agreements will be refinanced on a rolling basis as buyback options are exercised, with final completion expected before Q2 twenty twenty six. Altogether, our solid financial foundation gives us flexibility to navigate current market conditions and to pursue value creating opportunities as they arise. And now please turn to Slide 16 for the outlook. Our strong performance in the first half of the year sets a solid foundation for the remainder of the year.

Kim Balle
CFO at TORM

As of August 4, we have secured 56% of our earnings days in the third quarter at an average of TCE of $30,617 per day across the fleet. For the full year 2025, we have fixed 66 of our waiting days at an average TCE of US2783 dollars per day. These levels provide us with solid earnings visibility and reflect continued market strength across our business segments. While geopolitical volatility remains a factor, we are seeing improved sentiment in the market environment. And on that basis, we are confident in both increasing and narrowing our full year guidance range.

Kim Balle
CFO at TORM

We now forecast TCE earnings of US800 million dollars to US950 million dollars compared to our previous guidance of US700 million to US900 million And similarly, we raised our expectations for EBITDA for the year to US475 dollars to US625 million up from US400 million to US600 million dollars previously. This revision reflects our secured coverage and the future market expectations while acknowledging the potential for continued fluctuations. Overall, we remain well positioned to deliver strong results in 2025. So with this, I will conclude my remarks and hand over the mic to the operator.

Operator

Your first question comes from the line of John Chappell with Evercore ISI. You may go ahead.

Jonathan Chappell
Jonathan Chappell
Senior MD at Evercore ISI

Thank you. Good afternoon. Jacob, on Page 13, the TCE fleet wide TCE EBITDA chart, the consistency over the last three quarters is really noticeable, especially for an industry that's notoriously volatile and especially given all the geopolitics and macro uncertainty that you mentioned in your prepared remarks. What do you think has caused this consistency over the last nine months or so? And does that restrict you at all with the things that you could do with TORM, whether it's positioning vessels or S and P activity or charter in, out? Does it kind of restrict some of your flexibility?

Jacob Meldgaard
CEO & Executive Director at TORM

Well, that's a good question. I think I agree with the fact that it is really a remarkable stability that we've seen, I would say, let's say, over the last three quarters predominantly. But it really doesn't restrict us of any I always see these markets as that we need to establish, I want to say, a clear view on where is the market kind of headed and what range we're in. And I think we've been range bound for some time here. And I think that, as also in my prepared remarks, that I think that we're illustrating that I think there is some option of that things could change.

Jacob Meldgaard
CEO & Executive Director at TORM

The dynamic could change to the upside. Of course, if we look at, for instance, additional oil coming to market, the fact that trade routes will, everything else being equal, still remain stretched. And there's further closure of refineries in the parts of the world where we already have a need for import. I think that sort of the headwinds that we've seen, which have sort of put a cap on the market, could, in the coming quarters, change the dynamics so that we have more tailwind. So I see it more from that perspective, that this is really a solid, I would say, foundation for creating more upside potential as the oil markets also will change their dynamic, think, with the OPEC change in sort of turning on the taps.

Jonathan Chappell
Jonathan Chappell
Senior MD at Evercore ISI

Okay. And then just a follow-up, Kim. I think it needs to be asked. I understand you have a calculation for your dividend policy. The payout ratio thus far this year has been lower than it was last year.

Jonathan Chappell
Jonathan Chappell
Senior MD at Evercore ISI

Now that you've completed this tremendous financing, do you think that the calculation, if we kind of look beyond the leases, maybe fourth quarter or first quarter next year, becomes a bit more favorable in the magnitude of payout ratio?

Kim Balle
CFO at TORM

Yes, I do. That is our expectation. So our expectation is that when we look into 2026, for several reasons, our cash flow breakeven will decrease, notable. And with that, you will also you should expect, of course, it depends on where we are in the markets, but you should expect the payout ratio to or the dividend to be higher, but the payout ratio also to in itself be higher. Yes, I would expect we would expect that.

Jonathan Chappell
Jonathan Chappell
Senior MD at Evercore ISI

Do you have any sense on what the magnitude is? Is it kind of 75,000,000 to 80,000,000 again, similar to what it was in twenty twenty four million

Kim Balle
CFO at TORM

Good question, but probably yes. I would imagine that now I'm going out of a little limp here because I don't have a calculator for this meeting, John, but I would expect that 80 would be a 75%, 80% would be a fine place to be.

Jonathan Chappell
Jonathan Chappell
Senior MD at Evercore ISI

Okay, great. Thanks, Kim. Thanks, Jacob.

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. Thanks. Thanks, John.

Operator

Your next question comes from the line of Omar Nokta with Jefferies. You may go ahead.

Omar Nokta
Omar Nokta
Managing Director at Jefferies

Thank you. Hi, Jacob and Kim. Thanks for the update. Yes, well, nice to hear kind of the thoughts of lower breakeven and a potential higher payout ratio as we look into next year. I wanted to maybe just ask about kind of what we're seeing here in the third quarter.

Omar Nokta
Omar Nokta
Managing Director at Jefferies

Obviously, some pretty good guidance in terms of your bookings, but especially on the MRs where you're showing $28,000 which is quite a bit above kind of peers, but also what you have been capturing the prior few quarters and which is interesting because the LR2s and LR1s are kind of flattish to slightly higher, but it's really the MRs that have gone up. Can you maybe just talk about what's driving that upside? And what can we expect from here for the rest of the year to the extent you can say?

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. So I think on a granular basis, what I've been thinking about, and I think it's the right question, is okay, what has been driving this? And really, as we look at the data points, the fact that CPP on the water now has, going into the third quarter, gone up to the highest that we've seen for more than a year is significant in combination with that if we go back exactly twelve months, I think we were all sort of a bit puzzled by the fact that crude tankers, predominantly Suez, but also some VLCC, were really turning their attention to the CPP market, taking away demand for about 8% or so. And now we are back to 1% of the trading Suez and VLCC being in our mind. So I think the combination of that, really, you've seen a trading uptick sort of in general. You've seen these the cannibalization, at least for now, having more or less evaporated from a very high historically unusual high level. And that really just shiggles down more into the MRs because you only have that many LR2s trading, as I alluded to. It is a little fascinating that I think we have all been following the order book of LR2s, watching and thinking, okay, that seems to be quite a hefty order book.

Jacob Meldgaard
CEO & Executive Director at TORM

But the fact is actually that even I think the numbers, let's say, that there's 50 vessels that have been delivered over the last three quarters or so, the trading fleet of LR2s is the same sort of in broad strokes. So I think it's just this filtering down into that there's just more there's been more trade at a granular basis in the AMR. And then we've also then been assisted by the fact that in the larger segments TPP has simply not been moving on our sister vessels or the sister segment to the extent that it was. So it's been very I think the fact that it is so widespread demand is extremely positive because I think it demonstrates a very solid market when you see that. It's not like for Mr. Dan, it was like that we should count just, okay, how many cargoes are there of Natza out of the AT to Asia? I mean that will not tell you the dynamic and the strength of the market. It is actually a lot of progress of strength.

Jacob Meldgaard
CEO & Executive Director at TORM

And that's what in aggregate leads us to, that we've got more CPP on the water now than at any point in time over the last sixteen months. And it's really that underlying strength that translates into the MR rates that you've seen.

Omar Nokta
Omar Nokta
Managing Director at Jefferies

Thanks, Jacob. That's very helpful to get a good lay of the land there. And so I guess maybe just with that backdrop, a lot more cargo in the water, less cannibalization, so the fleet in general is seemingly tighter. You talked in the presentation just about values having been softer. You're obviously very transaction oriented with the acquisitions and the sales.

Omar Nokta
Omar Nokta
Managing Director at Jefferies

What are you seeing right now in terms of the S and P market? Are values finding a floor? Is there any potential for them to rise just given this improvement in rates? Any color you're able to share on that front?

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. I think it's a very good question, Omar. Our thinking is that in these markets, the first thing that to observe is obviously if spot rates drop, they can, as we all understand, the volatility and trend over the last three years, FUD rates are very volatile, and they can change really fast. And that's what they actually did over the last year, is that they kind of also from the slide that was referenced before on the EBITDA. It seems as if actually, rates have been stable over at least three quarters, whereas asset prices have been like slowly coming down.

Jacob Meldgaard
CEO & Executive Director at TORM

And I think this is a little like you would expect also in, let's say, a real estate market. It's rare that you like certainly get that everybody puts the price down of their assets at the same time. It takes a little time to sort of get the clearance prices. And I think we've reached in our opinion, we're sort of at that inflection point where rates have stabilized for a longer period. It has meant that asset prices have also been creeping down.

Jacob Meldgaard
CEO & Executive Director at TORM

But that right now, if we sort of take a snapshot, I would argue that they're probably stabilizing. Around the prices that we've seen also reflected in our Q2 end of Q2 numbers. And that now it remains to be seen what happens over the course of this quarter and the next quarter. And I think that there is potential if freight rates, they start to climb up in a general sense, that asset prices could either stay or go up from where they are now. That would be the logical.

Omar Nokta
Omar Nokta
Managing Director at Jefferies

Okay. Very interesting. Thank you, Jacob, again for that. I'll turn it back.

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. Thanks.

Operator

Your next question comes from the line of Srude Morado with Clarksons Securities. You may go ahead.

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

Thank you. Hi, guys. This is Srude Morado with Clarksons. Just looking at this slide you provided on Page five or six, I think, on the CPP somewhere else, it sounded like it was trade volumes driving that up. So the question is really, have you seen any change to the miles component?

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

I feel like a lot of the it has been more like a regionalized trade for a while, and we've basically been waiting for, let's say, the inter basin trade to pick up on the LR2s, right? So are you seeing any change there?

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. So yes, trade volumes, it is exactly as you say on Slide six, I believe it is, has gone up. The tonne mile on this is reflected also in the fact that the incentive to bring middle distillates from especially Middle East, Eastern Hemisphere into the West has also increased in this period. So it means that everything has been equal, will both have an effect on volume but also on the businesses sales. So it is a combination of both.

Jacob Meldgaard
CEO & Executive Director at TORM

Of the restart, we could say, of Mietzel Diesel into the inventories in North West Europe. I think we were if you followed our last couple of calls, I think we have been a little puzzled that sort of from a strategic point of view that the suppliers of middle distillate were not, to a larger degree, still maintaining their inventories at higher levels. But towards the end of the second quarter, it was then clear that now you could no longer just eat out of inventory and that you needed to replenish, and that was done predominantly from Middle East and also U. S. Gulf, but also Middle East, driving up volumes and miles.

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

Great. And then on the next slide, which was also great, the refinery closures, right? Can you talk a bit more maybe you talked you said it already, but what's the time line here? When can we expect this positive effect to kick in?

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. No. So we believe that in the 2025 already, so within this year, we will see the European refiners be closing down. So they have been, I would say, moving along at a slow pace, but the decision has been made for them to finally close business and are no longer viable. So that will already be from the end of this year, whereas in The U.

Jacob Meldgaard
CEO & Executive Director at TORM

S. West Coast, as I mentioned, that will be in about a year time from now. This one you will say, Kotar. It's middle of next year expected.

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

Yes. Next year.

Jacob Meldgaard
CEO & Executive Director at TORM

It's obviously the greater picture around that, if I just may add a little comment, is that obviously that from a political standpoint, it is the ambition to close the local refineries down in, for instance, Western Europe and also U. S. West Coast. But it has just proven that those actions have sort of accelerated compared to how fast the transition on the demand for exactly the products that they're producing is. So it may be that the consumption, let's say, on The U.

Jacob Meldgaard
CEO & Executive Director at TORM

S. Vessels is slowly going down, but the pace of closures is much faster than that. And that means that we will be called upon in the broader product tanker market to carry more cargoes actually.

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

Yes, indeed. I guess my final question is on the this Russian price cap change. Specifically, I guess, I mean, there's a lot of LR2s that are trading into dirty trades, right, which hasn't been positive. But then when the EU lowers the price cap, you might see Aframaxes, right, that are trading legally Russian crude today will lose that compliance, and then they have to move out of that trade and into the conventional market, which would put downward pressure on Metamax crude rates probably. Do you see that as a threat to that switching for LR2S or not?

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. I think that it is clearly the jury's out on the real effect of this. I think the fact that these vessels, if you look at the type of vessels that have been sanctioned, which in many cases also would be the vessels that you point to, whether they can easily, both from sort of a commercial point of view, be accepted back in the trades that we operate in as number one. And whether they are also actually maintained in that is what I would probably argue that on the margin, a lot of vessels will not easily come back. And I think quite a lot of vessels are actually not maintained to a standard where it makes sense for them to sort of be retrofitted into the standard of our type of customers.

Jacob Meldgaard
CEO & Executive Director at TORM

So obviously, the jury's out, but it does seem to me as if when investments have been made by people into the grey fleet or the dark fleet and that they subsequently then get sanctioned, they are not looking for a long term investment. They are looking for the short term gains of being in a trade that few people wants to touch. And sort of the operating earning is what they're looking at. It's not the maintenance of the vessel. That is the main focus.

Jacob Meldgaard
CEO & Executive Director at TORM

So the jury's out. I think that it could be negative, as you point to, for midsized vessels and more positive for VLCCs as this trade goes on. But most likely, there is quite a part of this, let's say, crude trading LR2Aframaxes of older vintage already sanctioned that will have a hard time coming back either for sort of commercial reasons or for because of after a period of time that they are substandard.

Frode Morkedal
MD - Shipping Equity Research at Clarksons Platou Securities

Okay. Great. Thank you, guys.

Jacob Meldgaard
CEO & Executive Director at TORM

Thanks. Thanks for those good questions.

Operator

Your final question comes from the line of Clement Mollins with Value Investor's Edge. You may go ahead.

Climent Molins
Head - Shipping Research at Value Investor's Edge

Hi, good afternoon and thank you for taking my questions. I wanted to start by following up on John's question on the cash breakeven. Could you talk a bit about the average margin on the sale and leasebacks you're buying back relative to the margin on the new financing facilities?

Kim Balle
CFO at TORM

I think it is I think you can actually find this in our 20 F. I would recommend you take the recent 20 F where you can find both find a full overview of our leasing arrangement. The reason why I'm saying that it is a split on the specific arrangements. And of course, it's not of course, but it is a fixed rate there. So the comparison here is when you then do get into syndicate facilities we've made, that will also be published.

Kim Balle
CFO at TORM

We've not published it, but the rate is. It will also be visible in our upcoming twentieth or 2025. But it is notably lower than what you can see that we have in our current syndicated facilities that are around $1850000000.001900000000.0 So it's significantly lower than that.

Climent Molins
Head - Shipping Research at Value Investor's Edge

Makes sense. Thanks for the color. And you sold the 2008 build Thorn Discover and the Thorn Voyager. Could you disclose the selling price for modeling purposes?

Kim Balle
CFO at TORM

We have agreed now to disclose prices for those vessels with the buyer of them. But we will not

Climent Molins
Head - Shipping Research at Value Investor's Edge

All right. I have that right. Thank you for taking my questions.

Operator

That concludes today's question and answer session. I would now like to turn the call back over to Jakob Meldgaard for closing remarks. You may go ahead.

Jacob Meldgaard
CEO & Executive Director at TORM

Yes. Thank you very much. And I just want to say thanks to all of you for being interested in Zohrman for listening in today. Have a great day. Thank you.

Operator

This concludes today's conference call. You may disconnect.

Analysts
    • Jacob Meldgaard
      CEO & Executive Director at TORM
    • Kim Balle
      CFO at TORM
    • Jonathan Chappell
      Senior MD at Evercore ISI
    • Omar Nokta
      Managing Director at Jefferies
    • Frode Morkedal
      MD - Shipping Equity Research at Clarksons Platou Securities
    • Climent Molins
      Head - Shipping Research at Value Investor's Edge
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