TORM plc (NASDAQ:TRMD) Q4 2024 Earnings Call Transcript

TORM plc (NASDAQ:TRMD) Q4 2024 Earnings Call Transcript March 6, 2025

TORM plc misses on earnings expectations. Reported EPS is $0.75 EPS, expectations were $0.81.

Operator: Thank you for standing by. My name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM 2024 Annual Report Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to CEO, Jacob Meldgaard. You may begin.

Jacob Meldgaard: Thank you, and a warm welcome to everyone joining us on the call here today. So as you all know, this morning we released our annual report for the full year of 2024. And I dare say that all in all, it was a very satisfactory year for TORM, but also a year that has demonstrated that we operate in a volatile industry, influenced by a wide range of external factors that we need to take into consideration. As usual, I’ll start with a few comments on our business and how we’re doing. And then I will provide you with our take on the current market and how we see the development in the quarters to come. Looking back at the past year, we are pleased to report a very satisfactory performance, with TCE earnings climbing to a new all-time high of $1.135 billion, supported by the additions made to our fleet during the year.

Freight rates remained at high levels throughout most of the first three quarters, enabling us to achieve fleet-wide rates of $39,626 per day. However, in the fourth quarter, freight rates decreased, and the normal seasonal strengthening of the market did not materialize. Despite continuous vessel rerouting, volumes on long-haul voyages from east to west were lower, and our fleet-wide rates decreased to $25,775 per day, thus adding to the downward trajectory seen from Q2 to Q3. While the rate levels in the last quarter were lower compared to the strong performance in the first three quarters of the year, we still delivered solid earnings. For the full year, we achieved a net profit of $612 million and a return on invested capital of 24.3%, demonstrating resilience despite a challenging market environment.

Now, looking into 2025, the ever-changing nature of shipping presents both challenges and opportunities. Geopolitical developments, trade flow shifts, and oil demand fluctuations require that we continuously adapt our business. We remain confident in the factors that are within our own control. These include fleet efficiency, disciplined cost management, prudent capital management and a well-executed commercial strategy. However, we acknowledge that geopolitical risks introduce a wide range of potential earnings outcomes for the year ahead. Beyond geopolitics, market conditions will be shaped by trade disruptions, regulatory changes and broader macroeconomic factors such as the global oil demand and economic growth trajectories. These variables will dictate both freight rates and fleet utilization.

So to stay ahead, we continuously monitor and analyze geopolitical trends, ensuring we remain well-positioned to navigate uncertainties effectively. So here, I return to slide 5. For the past three years, geopolitical tensions have driven product tanker rates to a new higher average level. However, in recent months, as already noted, we have seen a decline in rates as short-term factors, such as intensified crude tanker cannibalization have softened the positive impact from geopolitical factors, and the general market uncertainty has increased. The rates have nevertheless remained at levels which are still strong in historical terms. Please turn to slide 6. To conclude on the year 2024, we saw a very strong positive impact on ton miles from the Red Sea disruption, which led to longer trading distances at the same time as growing oil demand and changes in the refinery landscape increased volume of products being transported.

This positive ton-mile effect was, however, front-loaded for product tankers, as after the first half of the year, crude tankers cleaning up in order to benefit from lucrative rates from transporting clean products from the east to the west via Cape of Good Hope took up most of the incremental ton miles. For full year 2024, clean product tanker ton miles increased by 9% in 2024, but due to this crude clean-ups, product tankers benefited from only two-thirds of that. While crude cannibalization declined toward the end of the year, trade volumes on the routes mostly affected by the Red Sea disruption fell to levels that offset the longer trading distances. With this, the ton-mile impact of the Red Sea disruption, in fact, became non-existent by the start of this year.

Please turn to the next slide, to slide 7, and I’ll elaborate a bit more on that. So as the main trade route affected by the Red Sea disruption is from the Middle East to Europe, the outcome of the potential future Red Sea normalization really depends on this route. Currently, Europe’s diesel imports are down by 30%, with especially flows from the Middle East affected. This has effectively pushed ton miles on this trade route down to pre-disruption levels, although distances have increased. At the same time, we believe that such low imports levels are not sustainable, especially taking into account that European diesel demand is expected to increase slightly this year, supported by increased demand for diesel from the Mediterranean Emission Control Area, ECA, from May of this year.

At the same time, three refineries will close down in Northern Europe this year, while diesel stocks are at below average levels. We expect that a potential reopening of the Red Sea Passage will encourage intra-basin trade and return the volumes lost since the end of 2024. At the same time, incentives for crude cleanups would decline, even with shorter sailing distances ton miles would stay at around the current levels, with any upside to imports would add to product tanker ton miles. We deem it unlikely that the volumes would not increase, as the current levels are unsustainable, and any increase in imports needs to be met by the Middle East, given refinery capacity closures in the U.S. Now please turn to the next slide, to slide 8. This brings me to the conclusion that the impact of any potential reversal of the latest geo-political drivers will likely be less pronounced, as much of the impact is currently non-existing.

As I just explained, the potential Red Sea normalization could in fact be neutral for product tanker ton miles, with an upside to this from potential increases in European diesel imports. Shorter trade distances may be offset by potential return of currently lost trade volumes and lower incentives for crude tanker cleanups. Similarly, any potential easing of sanctions against Russia would not hit the product-sector market by a full effect, as some of the gained ton miles have receded by now. Due to the uncertainty with regard to the prospects for ceasefire, we do not foresee a quick abolishment of EU sanctions against Russia. And finally, we also have some new potential geo-political drivers which could have a positive ton mile impact, such as a potential tariff war between the U.S. and its closest neighbors, Canada and Mexico, leading to potentially new trade redirection towards longer distances.

Now please turn to slide 9. So let me now also take a look at the ton supply side. 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. With 50% of the fleet being more than 20 years old, this would potentially offset a large part of the fleet growth in the coming years. Furthermore, we see that as vessels turn towards 20 years of age, their average utilization drops significantly compared to younger vessels. That would lead to a gross share of the fleet operating at lower utilization. And in addition, a large share of especially the older fleet is sanctioned, which is expected to support exits from the market. This is especially the case for the combined LR2/Aframax fleet, where almost three quarters of the older fleet are today under U.S. sanctions.

We’ll now turn to slide 10. To sum up on the market, geopolitics are expected to drive the product-tanker market also this year, on top of the demand and supply fundamentals. Yet the level of uncertainty is even higher, and the speed of change has increased significantly, with the new U.S. administration’s more aggressive approach to geopolitics and trade policy. I already touched upon potential normalization of the Red Sea situation, potential easing of sanctions against Russia, and the proposed tariffs on oil from Canada and Mexico. Another element of uncertainty on the market stems from the U.S. administration’s proposal to implement a port fee to operators with vessels built or on order in China. On the other hand, the new U.S. administration’s more tough approach towards Iran and Venezuela is expected to benefit the product-tanker market via the reduced risk of crude cannibalization.

I’m certain that TORM is well positioned to navigate in this environment of increased uncertainty through our strong capital structure, operational leverage and integrated platform. And now here, with these comments, I conclude my part of the presentation, and I hand it over to my colleague Kim, who will walk us through the financials.

Kim Balle: Thank you, Jacob. Now please turn to slide 12 for an overview of the financials. In the fourth quarter, TCE amounted to $215 million and based on this, we achieved $142 million in EBITDA and $77 million in net profit. Fleetwide, we averaged TCE rates of close to $26,000 per day, with LR2 slightly above $34,000 and LR1s at over $22,000, and MRs at more than $23,000. These numbers are in line with the coverage that we published in connection with our Q3 results, coupled with the lowest spot rates in the last half of November and the month of December, thus in line with our overall guidance communicated back in November. For the full year 2024, we generated TCE of $1.135 billion, EBITDA of $851 million and net profit of $612 million.

As you can see on the right side of the table, full year 2024 rates were close to the elevated levels we saw in 2023. However, the composition of these rates tells a more nuanced story. The high annual rates were largely driven by exceptionally strong market conditions in the first half of the year, high supply demand fundamentals and favorable trade patterns supported elevated spot rates during this period. In contrast, Q3 saw some softening, reflecting cannibalization by crude carriers that captured a significant part of the additional ton mile demand. While rates remained healthy, they trended lower compared to the earlier part of the year. The fourth quarter brought an additional setback with no seasonal upswing and rates declined further.

Due to the industry’s natural spot exposure, our earnings per share are closely tied to movements in trade rates and this dynamic becomes especially evident in a very volatile market environment. In Q4, we experienced a sharp decline in trade rates, which had a direct and material impact on our earnings per share. Thus, basic earnings per share for Q4 decreased to $0.77 per share compared to $2.18 per share in the same period last year. This time, our Board of Directors has declared a dividend of $0.60 per share. We believe that our approach ensures that distributions align with actual financial performance, maintaining a disciplined, transparent and sustainable capital allocation strategy. Slide 13, please. This slide provides a clear overview of our top line performance for the full year 2024 compared to 2023, as well as the quarter-by-quarter development throughout the year.

The numbers illustrate how the strong markets in the first half of the year gave way to softer conditions in the last half of the year, impacting overall performance. Feedback rates remained elevated in the first half of the year, hoovering above $40,000 a day. However, as we moved into Q3, rates started to decline and this trend accelerated further in Q4. This reflects broader market softening due to the positive ton-mile impact from the Red Sea disruption, diminishing as crude tankers shifted back to dirty trades and the trade volumes on affected routes declined, effectively neutralizing the earlier gains. While fleet-wide rates declined by about 40% from Q1 to Q4, our TCE saw a smaller decline of 35%. This demonstrates the positive impact of our fleet expansion and operational efficiency.

EBITDA amounted to $142 million in Q4 and as a reminder, everything else being equal, a change in daily freight rates of $10,000 translates into an EBITDA impact of approximately plus-minus $80 million for a quarter based on approximately 8,000 earning days in a quarter. This illustrates the significant earnings sensitivity to market movements, which is a key consideration for our financial outlook. Please turn to slide 14. Likewise, on this slide we provide a breakdown of the quarterly development in net profit and key share-related ratios. A key factor to note is that the total number of shares increased by around 10 million over the year. The decline in freight rates has translated into a corresponding downward trend in net profit earnings per share and dividend per share.

This is a direct consequence of the softer market conditions seen in the latter half of the year. As in previous quarters, our dividend policy remains unchanged. We continue to distribute excess liquidity on a quarterly basis while maintaining a prudent financial buffer. Our threshold liquidity level is determined by two key factors. First, a fixed liquidity requirement of $1.8 million per vessel and second, a discretionary element set by the Board. This discretionary component considers our capital structure, future obligations, and broader market trends to ensure a balanced approach to capital allocation. Consequently the payout ratio for Q4 is 75%. Slide 15, please. As shown on this slide, vessel values have been on a steady upward trajectory over recent quarters but saw a decline in the fourth quarter to $3.6 billion with an average broker valuation down 4.6% relative to the end of 2023.

In the chart in the middle, we highlight the development of our net interest bearing debt which now stands at $948 million against $773 million a year ago. This increase reflects our fleet expansion over the past year. Despite this, our net loan to value remains stable at 26.8%, in line with the same quarter last year, ensuring a conservative financial foundation as we move forward. Additionally, in the chart to the right side, we provide an overview of the debt maturity profile. This year, we have only borrowings of $168 million maturing and committed to scrubber installations of $12 million. Beyond 2026, our obligations remain relatively modest until a larger loan matures in mid-2029. Overall, our financial position remains strong, allowing us to manage our commitments while maintaining flexibility for future risks and opportunities.

And now, please turn to slide 16. As already shown on slide 12, based on the quarterly results, the Board of Directors has declared a Q4 2024 dividend of $0.60 per share, which corresponds to a payout ratio of 75%. Also on this slide, we provide a full overview of the key dates. The ex-dividend date for shares on NASDAQ Copenhagen is set for March 19, while on NASDAQ New York, it will be on March 20. The record date will be on March 20, and payment date will be on April 2. And now, turn to slide 17. In the annual report that we have published this morning, we are taking a significant step forward in our sustainability reporting, placing transparency at the core to provide stakeholders with a clearer view of our priorities. With the implementation of the Corporate Sustainability Reporting Directive, we are refining how we communicate our corporate responsibilities.

This framework strengthens our ability to report on material impacts, risks, and opportunities across environmental, social and governance factors, and I encourage you all to have a look at this. Our approach to sustainability includes clear, measurable targets across safety, diversity, and carbon intensity reduction. Starting with safety, our key performance indicator is long-term accident frequency, which tracks accidents per 1 million exposure hours. In 2024, we achieved an LTAF of 0.42, and although this number is very sensitive to single accidents, we will continue working towards further improvements. On gender diversity and leadership we are committed to increase women in leadership positions to 35% by 2030. Lastly, on carbon intensity reduction, we are well on track.

By the end of 2024, we reached our 40% reduction target, thus already now meeting the IMO 2030 targets. Looking ahead, we remain committed to our next ambitious 2030 goal of a 45% reduction, and ultimately to achieve net zero CO2 emissions from our fleet by 2050. Sustainability remains a core part of our long-term strategy, and we will continue taking decisive actions in these areas. We have set new ESG targets for 2024, reinforcing our commitment to reducing CO2 emissions, enhancing staff safety, and improving gender diversity in leadership. These actions demonstrate our dedication to making a changeable impact while creating long-term value for stakeholders. And now, please turn to slide 18 for the outlook. We forecast TCE earnings of $650 million to $950 million against the 2024 actuals of $1,135 [ph] million, and EBITDA of $350 million to $650 million against the 2024 actuals of $851 million.

This reflects expectations of lower freight rates year-on-year based on current spot and forward market trends. Based on our rates and coverage as of 3 March 2025, we had fixed a total of 84% of our earning days at $26,612 per day in the first quarter across the fleet. Likewise, for the full 2025, we have fixed a total of 27% of our earning days at $28,916 per day for the full year across the fleet. And with this, I conclude my remarks and hand back to the operator.

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from Jon Chappell with Evercore. Please go ahead.

Jonathan Chappell: Thank you. Good afternoon. Jacob, we’ve seen your strategy over the last three years with the elevated market, with the fleet replenishment, selling of the older vessels, even the dividend policy. As we enter this year, or I guess we’re well into this year at this point, with a lot more uncertainty, a lower starting point, how does that strategy change, if at all, as it relates to both operations and fleet evolution, as well as capital structure and capital return?

Jacob Meldgaard : Yeah, thanks for that question, Jon. So I will answer it in a little more detail, but I think the short end of it is that there’s no change. So if I just take it one by one, on operations, as I alluded to also in my prepared remarks, then we do see that geopolitics and associated change is obviously still front and center, as it has been over the last three years. I think the difference is really the speed with which we at least perceive that we can potentially have these changes coming to us. And what you need on an operational platform in that scenario of, I would say, from the outside, that the playbook is changed, and if redefined, is to have agility, and it is to be prepared for all scenarios. And there, I actually, I really think that the value of an integrated company is in that scenario, as we deem it, the very best you can have, because we will be able to redefine our operational optimal way of setting it up with a very short notice.

So that’s number one. I don’t expect us to change anything there. Then on fleet, it’s not been part of the presentation, but you should see that it’s more of the same. And I think the testament to that is that we did, after the end of the year, and we have announced as a subsequent event, we have sold, again three older vintage vessels, three MRs built in 2005, in a marketplace where the dynamic clearly has been that the liquidity in the market has been relatively lower, because of the uncertainties. But we have been able to stick to our strategy around, maintaining a fleet where the average age is in line and at par with the global product tanker fleet, but where we can utilize them all the way up to, you can say, of course, it depends a little on the specific of the vessel, but in this case up until the year of 20 [ph].

And again, that fleet strategy will not change. We are going to look at that, we have not experienced that we cannot execute on that particular strategy. And you can say, of course, if it is the other way, if it would be inbound, that we should have vessels coming to our fleet, we are also ready for that, when and if the right circumstances are there. And then on our strategy, on our financials, that’s again, really no change, I think we’ve demonstrated also here with the way that we pay out in this — for this quarter $0.60. I think Kim and I and the rest of management, I feel very comfortable with our capital structure, with the leverage, and with still maintaining a strategy, the same intent around the use of excess capital to be paid out.

Obviously, there may be circumstances where you would argue that, that it gets so compelling to buy back shares, but it’s really not. It’s not really been the fact. And I think it would be have to be a real special circumstance if we were to look at that as a tool in the toolbox. So for now, I would argue you should expect more of the same.

Jonathan Chappell: Great, I appreciate that answer. My second one relates a little bit more to the market. You mentioned the crude cannibalization, so to speak, and that kind of reversing entering this year. Kind of a two-parter, where do we sit today on kind of crude encroaching on traditional product trades, maybe relative to the peak of the second half of last year? And then I guess, bigger picture, is it just becoming more easier — I guess we were kind of always under the impression that it was difficult for a crude ship to get into the product trade, several voyages, process of kind of slowly cleaning up, via the cargo. Does it just become easier that you can go kind of back and forth between crude and product, and we should look for that impact and volatility going forward?

Jacob Meldgaard : Yes, maybe I’ll do it in reverse order, if it’s okay. I think — so you’ve been around — maybe, I’ve not been around maybe as long as you, I’ve only been in the product trading business 15 years, but I think what we’re raised with in shipping is that crude tankers, they carry crude, and as you point to, it really — it is possible to carry clean, but you’re kind of, it’s not really what you want to do, not as a ship owner with the risk associated, and also not as the customer, because you sort of have the risk of contamination of your cargo, and it will be devalued, on arrival, and all these kind of operational hindrances, leading to that we have actually not, over the last 30 years, been able to observe that you had existing vessels in crude that cleaned up.

You will see, first voyage after you come out of the yard as a newbuild, yes, and maybe even more than one voyage, but it’s really been a change of tact to see that business go in and out of the trade, as you point to. And now I’ll come to, our reflection is that it is actually the circumstances around the Red Sea and the impact of that you, in a way, have a new trade between Middle East and Europe with diesel that only came about in 2022 in bigger volumes, because until then, most of the needs of Europe were served by Russian diesel. So that’s the first component. Well, then you look further away, and then you take diesel, as we all know, you take it then from near by with the U.S. into Europe, and then your sort of second option would be to then replenish the balance from the Middle East.

So that was the first thing that happened in 2022 and continued into 2024. But then, of course, at the beginning of 2024, 70% of product makers decided that it was not a safe option to transit through Bab el-Mandeb [ph] Strait and to go to that route. That meant that certainly the LR2 market that was servicing this diesel in ’22, ’23 and ’24 for the first time, they became, you can say, at par with a Suezmax or a VLTC on the particular routing that you did, because before a VLCC would have to go Cape of Good Hope and up, but the LR2 would do the, you can say the Suez Canal and save 12 days. So it was on a per ton basis, it was significantly cheaper to do this transportation on an LR2 than a V. But what happened is obviously that the freight rate in the first half of ’24 per ton for an LR2 to carry diesel became so high that it was relevant for the traders to think, well, this product, diesel in itself, is less risky around contamination than, for instance, gasoline or jet fuel.

So it was product specific and it was the trade lane specific to the off that the small vessels and the big vessels would travel the same distance. And you would therefore call for, you can say, that size matters and that scale of the business was there. So this is, I don’t think any of us could have played out, let’s say 10 years ago that we had the discussion, will crude tankers cannibalize? Well, you would need to see something akin to this before you could imagine it, i.e. a product that is less risky in high volumes going between, how can I say, ports that are well developed. And that’s exactly what you have. Released refiners come on stream being relatively modern. You have the receiving infrastructure in Europe being, some of the largest ports, etc.

So you could substitute, and then what you had left is actually only the operational thing about the cleanup. So to my point here, or your question, is that it is something that can occur when you have, but I don’t think it’s something that I would put into my sort of forward thinking. Of course, in the circumstance I just described and something like that, yes. But in general, this is not going to be it. Right now, we see that 3% of CPP on water is on VLs and Suezmaxes. At the peak in September last year, it was 8%. And we think that this, let’s say 3%, is more what we would calculate as being a normalized level.

Jonathan Chappell: Great. That was all very helpful. I appreciate it, Jacob. Thank you.

Jacob Meldgaard : Thanks Jon. Thanks for the questions.

Operator: The next question comes from Omar Nokta with Jefferies. Please go ahead.

Omar Nokta: Thank you. Hey, guys. Good afternoon. Yeah, just a couple for me. Obviously, you’ve given a wide guidance range for the year. It makes sense, beginning or early in the year, and the spot market. And you outlined, all the geopolitics and a bit of the uncertainty. But just maybe, in terms of, say, seasonality, I wanted to get your sense of how you’re thinking about that now. Any kind of ideas or how you think seasonality is going to play out here? Not perhaps throughout all of 2025, but maybe the first half. Is there anything that you could see at the moment that suggests there’s a shift in how seasonality is going to be, given obviously, there’s a lot of uncertainty and geopolitics probably factoring into the seasonality also? But just any sense of how you think the market’s going to be shifting here in the coming months?

Jacob Meldgaard : Yeah, I think we will have seasonality. I think that currently, we are more observant about the items that I described around geopolitics. I mean, another key that I think will impact our market indirectly is, of course, the OPEC+. We’ve not mentioned this. Some of these things will be a higher prioritization for us to try and understand what takes place rather than the seasonality, because over the long term, there is seasonality. But in the last years, it’s actually different. And I don’t have a particular view on how it will play out for this year, to be honest.

Omar Nokta: No, that’s fair. No, I appreciate you at least giving some of that context. And I guess maybe I know this is still fresh and it’s early days, but the U.S. proposal of taxing Chinese tonnage, I just want to get a sense from you or say for Torm, has that affected anything in how you’re doing business? Whether — how you think about allocating vessels into the U.S. market or holding off the ships that are Chinese built or contemplating new buildings? Has there been any shift or thought of changes as a result of that?

Jacob Meldgaard : Yeah, well, that’s a good question. I mean, if we looked a little up above Torm then in the product tank market, our count is that about 26% of the total product that is Chinese built and around 70%, maybe even a little higher of the new builds. And as you — if you read the material, the proposals that have come out and which we’ll be hearing here end of the month, it is both, you can actually, I would say, get a fee based on both your percentage on the 16 feet and on your order book. And if we take it sort of then at a Torm level, we are at 41% after the latest sale of vessels. We are — Chinese ratio is 41% and we have zero new builds. We have zero new builds overall, but we also, of course, have zero China built.

So you can say if we take it for us, it would really be the currently the U.S. trade is approximately 20% of our overall trade. And it would really be a question of whether the cost associated with a potential fee on our vessels, given our ratio, would make sense for us or whether we would redirect our vessels. Currently, we don’t have any plans. But I think coming back to my point a little more or a little before that, I think an integrated platform like ourselves where actually we have, I would say, the highest degree of flexibility about where we maneuver our fleet. I’m comfortable in saying that that I think that this will be something that I would rather be without. I think it’s going to be costly for the refiners and for that industry.

But how it will all play out, whether you will have lower U.S. volumes, because it will simply not make sense for the U.S. refiners to, I would say, crack their oil and have refined products which is not competitive in the global market because the all-landed cost, for the product plus, insurance plus freight will be non-competitive compared to others and that others will then raise. I think that dynamic is yet to be seen. And we will basically just again be a receiver of that and maneuver in it.

Omar Nokta: Yeah. Great. Thank you, Jacob. Appreciate the comment. I’ll pass it back.

Jacob Meldgaard : Thanks.

Operator: Your next question comes from [indiscernible] with Clarkson Securities. Please go ahead.

Unidentified Analyst: Thank you. I have a quick one on growth or fleet renewal going forward. It seems to have been quite a flip in activity in the [indiscernible] compared to the last two years for you guys and for the market in general when it comes to PBL. But how do you view this going forward? Should we expect sort of pair trade to be the main theme for the next few months or do you expect any sort of larger type of transaction?

Jacob Meldgaard : Yeah, I think — thank you. So looking forward, I think it’s going to be depending on the circumstances, but I think looking a little back and bringing to your good point around the liquidity in the market, in the secondary market on sale and purchase in the fourth quarter was significantly lower than what we had then experienced for, let’s say, a number of years. And I think the fact is that when prices recalibrate to now a step change down to healthy rates in a historical sense and good rates for companies like ourselves, but lower than what they were. I think the market and potential buyers and sellers simply need to be comfortable with that you have found a new level and then transactions, in my opinion, will start to creep up.

I think a testament to that is that we have sold here very recently three vessels of vintage 2005. So I think that liquidity comes back when both the earning potential and sort of prices, they recalibrate from where they were. Are we then at that point now? If we, let’s just argue that that is the case, then I think we will see that there will be more meeting of minds between buyers and sellers and that you will have an uptick in volume on transactions. But hey, time will tell. But I think it’s quite explained. And I think it behaves — our market on S&P behaves pretty much like we all understand real estate market that, when it is a shock to, let’s say, the price of houses or apartments I mean, those markets tend to also come to a grind because people need to evaluate, okay, what is then the next clearance price?

And I think it’s very much the same here.

Unidentified Analyst: Thank you, Jacob. That makes total sense. I’ll return to the queue.

Jacob Meldgaard : Thanks, Vendig.

Operator: Thank you. There are no more questions. I will now turn the conference back over to CEO Jacob Meldgaard for closing remarks.

Jacob Meldgaard : Yeah, thanks to all of you for listening in to the presentation of the annual report 2024 for TORM. Thank you.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.