TORM (Investment Case): High profits largely locked in for 2026
Summary
- Q3 net profit was USD 199m and EBITDA was USD 274m, down from record Q2 but still strong. Fleet TCE earnings averaged USD 40,102 per day.
- TORM upgraded guidance for the fourth time this year to TCE earnings of USD 1,750–1,900m and EBITDA of USD 1,350–1,500m. It has covered 88% of 2026 earning days.
- The company declared a Q3 dividend of USD 1.35 per share, equal to 75% of adjusted net profit. Net loan-to-value rose to 25.9% from 22.4% in Q2.
- At DKK 232.4, shares traded at a 12% discount to reported NAV and below peer valuation multiples, including 2.9x 2026E EV/EBITDA versus peers’ 3.4x.
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Following TORM’s Q3 2026 report, we have updated our investment case on the company, covering the key investment reasons, risks, and valuation perspective relative to product tanker peers.
Results. Q3 earnings came down from the record second quarter but remained strong, with net profit of USD 199m, EBITDA of USD 274m and TCE earnings of USD 353m. The fleet earned USD 40,102 per day against USD 59,301 in Q2, still supported by the disruption around the Strait of Hormuz. LR2s earned USD 52,575 per day against USD 36,137 for MRs, as about two-thirds of the global LR2 fleet traded crude, which TORM estimates has cut clean-product capacity by around 4% this year. After the sale of two older vessels, the fleet counts 95 vessels: 22 LR2s, 9 LR1s and 64 MRs.
Distribution and balance sheet. TORM declared a Q3 dividend of USD 1.35 per share, 75% of net profit excluding non-recurring items and USD 139m in total, covered about 1.8x by quarterly free cash flow of USD 256m (ex-dividend 16 November in Copenhagen). Net loan-to-value rose to 25.9% from 22.4% in Q2, partly reflecting committed newbuilding capex, but remains below the 29.3% at year-end 2025. Net interest-bearing debt was USD 697m against liquidity of USD 799m, of which USD 449m was cash. Fleet market value rose to USD 4,333m, some 53% above carrying value, against a reported NAV of USD 39.60 per share.
Outlook. Guidance was upgraded for the fourth time this year to TCE earnings of USD 1,750–1,900m and EBITDA of USD 1,350–1,500m. The midpoint implies around USD 79,000 per day on the remaining 4,060 open days, in line with USD 78,419 already covered on 53% of Q4 days; with 88% of 2026 earning days covered, USD 1,000 per day moves EBITDA by only about USD 4m. The fleet grows to 101 vessels through 2028 and 109 by 2030, plus eight LR2 newbuildings in a 50/50 joint venture. Consensus looks for FY2026 EBITDA of USD 1,468m and net profit of USD 1,149m, before a step down to USD 995m and USD 703m in 2027. In October, Oaktree-managed OCM Njord Holdings sold its remaining 6.3m TORM shares in a secondary offering of about USD 254m; TORM issued no new shares, and Hafnia is now its largest shareholder.
Valuation. At DKK 232.4 TORM trades at 2.9x 2026E EV/EBITDA and 3.5x EV/EBIT against product tanker peer medians of 3.4x and 4.6x, discounts of 16% and 25%, and at 3.1x 2026E earnings against a peer median of 4.8x. The shares trade at a 12% discount to reported NAV, and EV/EBITDA rises to 4.2x on 2027E (peer median 5.2x) as consensus earnings normalize.
You can also watch or rewatch our latest event, in which CFO Kim Balle presents the quarterly results and answers questions from the audience: https://www.inderes.dk/videos/torm-praesentation-af-regnskabet-for-3-kvartal-2026
Disclaimer: HC Andersen Capital receives payment from TORM for a Digital IR subscription agreement. /Rasmus Køjborg, CFA & Nikolaj Pedersen 17:00 09/11-2026
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