Danish shipping company Torm downgraded its full-year guidance when missing forecasts for second-quarter core profit, as freight rates remained under pressure.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $29.5 million in the three months to end-June from $23.6 million a year earlier, the dry-bulk and tanker operator said on Thursday.
That was below analysts' average forecast of $34.6 million in a Reuters poll, with estimates in a $26-$43 million range.
Gains from vessel sales in the second quarter were $7 million, against no gains for the same period last year, said Torm. Its fleet numbered 157 vessels at the end of the quarter.
"The near-term outlook is affected by renewed uncertainty in the global economy and freight markets," Chief Executive Jacob Meldgaard in the statement.
Operating and net results were in the red, weighed down by depreciation and impairment charges. But Meldgaard told Reuters the company reached breakeven in May, so profitability would not be far off once markets normalise. "And we are optimistic that, over time, the world
will normalise, and so will freight rates," Meldgaard said.
"There is a very sour summer market, but in the long term the product tanker business is something we believe in."
Continued tonnage inflow and dedicated Japanese vessels entering the market put the bulk freight market under pressure, Torm said, adding it "continues to expect improving medium and long-term supply and demand fundamentals for the product tanker market".
If market conditions and freight rates do not change, that would hit its forecast by about $50 million. "Therefore, the forecast for the full year of 2011 is now a loss before tax of $100-$175 million."
Torm had previously guided for a loss of $100-$125 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $29.5 million in the three months to end-June from $23.6 million a year earlier, the dry-bulk and tanker operator said on Thursday.
That was below analysts' average forecast of $34.6 million in a Reuters poll, with estimates in a $26-$43 million range.
Gains from vessel sales in the second quarter were $7 million, against no gains for the same period last year, said Torm. Its fleet numbered 157 vessels at the end of the quarter.
"The near-term outlook is affected by renewed uncertainty in the global economy and freight markets," Chief Executive Jacob Meldgaard in the statement.
Operating and net results were in the red, weighed down by depreciation and impairment charges. But Meldgaard told Reuters the company reached breakeven in May, so profitability would not be far off once markets normalise. "And we are optimistic that, over time, the world
will normalise, and so will freight rates," Meldgaard said.
"There is a very sour summer market, but in the long term the product tanker business is something we believe in."
Continued tonnage inflow and dedicated Japanese vessels entering the market put the bulk freight market under pressure, Torm said, adding it "continues to expect improving medium and long-term supply and demand fundamentals for the product tanker market".
If market conditions and freight rates do not change, that would hit its forecast by about $50 million. "Therefore, the forecast for the full year of 2011 is now a loss before tax of $100-$175 million."
Torm had previously guided for a loss of $100-$125 million.
"I had counted on a downgrade, but not that big," Sydbank analyst Jacob Pedersen said.
Torm shares, which have lost 65 percent this year, rebounded from initial losses to trade up 0.4 percent by 0824 GMT on a soft Copenhagen bourse .
The product tanker market saw a temporary surge in demand in the western hemisphere in the second quarter, Torm said.
"However, the continued oversupply of tonnage and adverse effects from Japan and Libya, as well as the release of strategic petroleum reserves, postponed the market recovery," it said.
Copenhagen-based shipping industry organisation BIMCO said in a market overview on Wednesday that freight rates in all crude and product tanker segments appeared to be headed for a sluggish autumn, as demand continues to soften.
Torm shares, which have lost 65 percent this year, rebounded from initial losses to trade up 0.4 percent by 0824 GMT on a soft Copenhagen bourse .
The product tanker market saw a temporary surge in demand in the western hemisphere in the second quarter, Torm said.
"However, the continued oversupply of tonnage and adverse effects from Japan and Libya, as well as the release of strategic petroleum reserves, postponed the market recovery," it said.
Copenhagen-based shipping industry organisation BIMCO said in a market overview on Wednesday that freight rates in all crude and product tanker segments appeared to be headed for a sluggish autumn, as demand continues to soften.