TORM (Investment Case): TORM lifts 2026 EBITDA guidance by 27% to a record USD 1.3-1.5bn
Summary
- TORM has raised its 2026 EBITDA guidance by 27% to USD 1,300–1,500m, reflecting improved freight rates and fleet utilization, with a significant portion of earnings already secured.
- Geopolitical unrest has driven high oil prices and freight rates, but these conditions may change rapidly, with consensus predicting lower earnings in 2027.
- TORM declared a Q2 dividend of USD 2.40 per share, with net loan-to-value reduced to 22.4% and a fleet market value significantly above carrying value.
- At DKK 267.6, TORM trades at a discount to product tanker peers, with a focus on the upcoming Q3 report and future dividend coverage.
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Following TORM’s third guidance upgrade this year, we have updated our investment case on the company, covering the key investment reasons, risks, and valuation perspective relative to product tanker peers.
Guidance: TORM now expects 2026 TCE earnings of USD 1,700–1,900m and EBITDA of USD 1,300–1,500m, up from USD 1,400–1,600m and USD 1,000–1,200m. The USD 300m lift at both ends of the ranges shows how far freight rates and fleet utilisation have moved in the second half of the year, and the upgrade rests on TORM’s current forward freight coverage, so a large part of the remaining 2026 earnings is already locked in. Consensus EBITDA of USD 1,139m still sits below the new range and does not yet appear to reflect the upgrade.
Market: Oil prices and freight rates are exceptionally high because of geopolitical unrest. Disruption around the Strait of Hormuz has increased waiting times and the war premium and lengthened routes, while shifts in refining capacity support tonne-mile demand. The clean-product fleet has contracted by approximately 5 % this year as LR2 vessels moved into crude trading. These drivers can ease as quickly as they arose, and consensus already assumes lower earnings in 2027, with EBITDA falling to USD 786m.
Distribution and balance sheet: TORM declared a Q2 dividend of USD 2.40 per share, 73 % of net profit and USD 246m in total. The dividend is a variable claim on spot earnings — quarterly distributions over the last five quarters have ranged from USD 0.40 to USD 2.40 per share — so the amount will decline when freight rates and free cash flow weaken. Net loan-to-value fell to 22.4 % from 29.3 % at year-end 2025, with net interest-bearing debt of USD 715m against liquidity of USD 804m, and a further USD 217m of financing secured for ten vessels after quarter-end. Fleet market value stood at USD 4,056m, some 39 % above carrying value, against a reported NAV of USD 36.50 per share. Oaktree has sold its entire shareholding, and Hafnia is now the largest shareholder with close to 20 %. The fleet counts 97 vessels — 22 LR2s, 10 LR1s and 65 MRs — growing to 103 through 2028 and 109 in 2029.
Valuation: At DKK 267.6 TORM trades at 4.2x 2026E EV/EBITDA and 5.2x EV/EBIT against product tanker peer medians of 5.6x and 6.4x, discounts of 24 % and 20 %. The discount narrows in 2027E, where TORM trades at 6.2x EV/EBITDA against a peer median of 6.6x and 9.0x EV/EBIT against 11.1x. On NTM EV/EBITDA the shares trade at 5.3x, in line with the peer median and above their own three-year average of 4.8x. The step up from 4.2x in 2026E to 6.2x in 2027E shows that consensus already assumes lower freight rates next year. The next milestone is the Q3 report on 4 November, where focus is expected to be on the dividend and the coverage into 2027.
Disclaimer: HC Andersen Capital receives payment from Torm for a Digital IR subscription agreement. /Rasmus Køjborg, CFA and Nikolaj Pedersen 13:00 15/10-2026