Torm PLC “Delivers Significant Dividends to Shareholders”
Until we’re all behind the wheel of a flying saucer, we’re still going to need oil to make the world move. And while the U.S. is home to one of the world’s biggest oil and gas reserves, many countries need to import the vast majority of their crude oil. When it comes to shipping oil and gas over the oceans, pipelines won’t cut it, and that’s where a midstream oil and gas company like Torm PLC (NASDAQ:TRMD).
From 2023 to 2024, the global oil and gas midstream market grew from $29.01 billion to $30.65 billion. It is projected to continue expanding at a compound annual growth rate (CAGR) of 5.92%, hitting $43.41 billion by 2030. (Source: “Oil & Gas Midstream Market by Transportation, Application Sector – Global Forecast 2025-2030,” Research and Markets, last accessed April 8, 2025.)
Those growth projections should help Torm continue to maintain its position as a leader in the midstream oil and gas shipping market.
Torm PLC is one of the world’s largest owners and operators of product tankers that transport refined oil products and chemicals. (Source: “About,” Torm PLC, last accessed April 8, 2025.)
Its fleet consists of approximately 90 owned and operated vessels that range in size between 45,000 and 114,000 deadweight tons (DWT). That’s how much weight a ship can safely carry, including cargo, fuel, provision, and other materials on board. (Source: “Investor Presentation,” Torm PLC, January 8, 2025.)
The company’s fleet covers all large vessel classes in the product tanker market, with specific focus on the Long Range 2, Long Range 1, and Medium Range tankers, as these segments offer the greatest synergies. (Source: “Our Fleet,” Torm PLC, last accessed April 8, 2025.)
Long Range 1 tankers are designed to carry both refined products and crude oil from the Middle East to Europe. Long Range 2 tankers are generally used on long trade routes, such as carrying diesel from the eastern hemisphere into the Atlantic. A typical trade for Medium Range vessels would be gasoline from Europe to the U.S.
Torm’s highly diversified customer base is made up of blue-chip giants like Shell PLC (NYSE:SHEL), Chevron Corp (NYSE:CVX), and Exxon Mobil Corp (NYSE:XOM). No client accounts for more than 10% of revenue.
A Strong 2024 for Torm
Management noted that the 2024 product tanker market demonstrated a strong but volatile performance. This was supported by increased ton-mile demand positively impacted by geopolitical tensions and refinery dislocation. This forced vessels to take longer global shipping routes and extended voyage distances. (Source: “TORM plc Annual Report 2024, Dividend Distribution, and Financial Outlook 2025,” Torm PLC, March 6, 2025.)
Limited fleet growth throughout the year further enhanced the favorable supply-demand balance. Despite the positive tailwinds, anticipated seasonal rate improvements failed to materialize in later 2024.
Still, within this market framework, Torm continues to report strong results. For the year ended December 31, 2024, the company’s time charter equivalent earnings (TCE) came in at $1.13 billion, up approximately five percent from $1.08 billion in 2023.
The company reported earnings before interest, taxes, depreciation, and amortization (EBITDA) of $851.0 million, up three percent from $847.9 million in 2023. Its adjusted EBITDA were down 2.2% at $844.2 million. Torm reported a net profit of $612.0 million, down from $648.0 million in 2023.
While the broader industry ended 2024 on a softer note, the company was still able to achieve TCE fleet-wide rates of $36,061 per day, down slightly from $37,124 per day in 2023. The number of available earnings days increased to 31,287 from 29,152 in 2023.
Commenting on the results, Jacob Meldgaard, Torm’s chief executive officer, said, “2024 was a strong year for TORM, driven by increased ton-mile demand and limited fleet-growth. Throughout the year, we strengthened our market position, expanding TORM’s fleet through partly share-based transactions, and delivered significant dividends to our shareholders.”
2025 Outlook
Looking ahead, management noted that its outlook is based on its current product tanker expectations. Moreover, the current market outlook is characterized by unpredictable geopolitical changes that could impact results. This, of course, includes uncertainty surrounding President Donald Trump’s global tariff wars.
For now though, Torm expects to report:
- TCE earnings of $650.0 million to $950.0 million
- EBITDA in the range of $350.0 million to $650.0 million
As of March 3, 2025, the company had covered 26.9% of the 2025 full-year earning days at $28,916 per day. Or, put another way, 73% of the 2025 full-year earning days are subject to change.
Fourth-Quarter Dividend of $0.60/Share
Thanks to Torm’s expanding fleet, market penetration, and strong cash generation, it is able to provide investors with a reliable, variable distribution.
For the fourth quarter, the company’s board declared a dividend of $0.60 per share, or $5.10 per share on an annual basis, for a frothy forward dividend yield of 36.56%. (Source: “Distribution,” Torm PLC, last accessed April 8, 2025.)
Because Torm’s dividend is tied to profitability, it will fluctuate from quarter to quarter. The company paid out $1.20 per share in December 2024, $1.80 per share in in September, and $0.10 per share in May 2020.
Does TRMD Stock Have 232% Upside Potential?
In light of President Trump’s global trade war, it’s tough to find a stock that hasn’t taken a hit. And Torm PLC is no exception. As of this writing (April 8), TRMD stock is down 23% year to date and 50% on an annual basis.
The company’s fortunes could change should the White House continue to pause tariffs for a longer period of time, cut back on tariffs, or even back off from its tariff policy. In the meantime, the markets will probably remain volatile until we get a clearer picture of what’s happening with the global economy.
Before Trump unveiled his global tariffs on April 2, Wall Street was bullish on TRMD stock, with a 12-month share price target of $48.00. At current prices, this points to potential gains of 232%.
There’s a good chance that analysts will update their forecasts in the near future.
Chart courtesy of StockCharts.com
The Lowdown on Torm PLC
Torm PLC is a pure-play product tanker company with a strong balance sheet and a growing fleet that continues to report strong results. In April, the company paid a quarterly dividend of $0.60 per share. On the downside, TRMD stock has taken a hit, but so too has the global stock market. The outlook for the oil and gas midstream market remains, for the time being, robust.
Torm’s strong market penetration, reliable dividend, and long-term industry tailwinds are why 187 institutional holders account for 62.9% of all outstanding shares. The three biggest holders are Oaktree Capital Management, Arrowstreet Capital, and The Vanguard Group. (Source: “TORM plc (TRMD),” Yahoo! Finance, last accessed April 8, 2025.)