TORM PLC Class A Stock

Thank you for standing by. My name is Janine, and I will be your conference operator for today. At this time, I would like to welcome everyone to TORM's Third Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Jacob Meldgaard, the Chief Executive Officer. Please go ahead.

Yes. Thank you, and welcome to everyone joining us here today. As we addressed last time, we believe the One TORM platform is fundamental to understanding how we create value. So by integrating our commercial, technical and operational capabilities, we can make decisions quickly and optimize the value of each vessel throughout its life cycle. For us, this is not simply about replacing vessels at a certain age. Through disciplined maintenance, we preserve the quality and commercial flexibility of our fleet, giving us the option to retain well-performing vessels for longer when that creates more value.

At the same time, we actively buy and sell vessels and invest in the fleet when we see attractive opportunities. The objective is to maximize the earnings and value of each vessel throughout the cycle. This approach is supported by our commercial performance. From 2023 through 2025, our MR fleet generated more than USD 200 million of additional TCE earnings compared with the peer average, and we have continued to outperform during 2026.

Finally, strong operating performance generates cash, which allows us to balance attractive shareholder distributions with disciplined investments in the fleet. That combination of operational performance, active fleet management and disciplined capital allocation is at the core of the One TORM model.

Turning to Slide 4. You can see how that approach has translated into both fleet investment and shareholder returns. Since the end of 2022, we have expanded the fleet from 78 to 95 vessels while also building a significant pipeline of future deliveries. Importantly, while some of our peers have taken a different approach, we have deliberately maintained more vessels on the water over the past year. In a strong freight market, this has allowed us to capture more of the economic value from our existing fleet rather than accelerating disposals simply because of it.

And we have done this while returning substantial cash to shareholders. Since 2023, TORM has distributed USD 17.45 per share in dividends. We also used the equity market selectively when it made sense, including issuing shares as part of the consideration for vessel acquisitions. In total, approximately 20 million shares have been issued over the period, helping us capture attractive fleet investment opportunities.

So our approach is not to choose between distributions and investment. It is about allocating capital dynamically, maximizing the value of the existing fleet, returning cash to shareholders and investing when we see opportunities to strengthen future earnings capacity. And that brings us naturally to the third quarter, where we continued to actively manage both the existing fleet and our future delivery pipeline.

Kindly turn to Slide 5. During the third quarter, we generated TCE earnings of USD 353 million compared with USD 236 million in the third quarter of last year. EBITDA was USD 274 million compared with USD 152 million, while net profit reached USD 199 million compared with USD 78 million a year ago. These results came after an exceptional second quarter and demonstrated that earnings remained at very strong levels throughout the third quarter.

We also continue to actively manage the existing fleet. During the quarter, we sold the 2007-built LR1 TORM Venture and the 2008-built MR TORM Laura. Following these divestments, our fleet comprises 95 vessels on the water.

At the same time, we continue to advance our fleet renewal and growth program. Following the acquisition of 6 MR resale vessels during the second quarter and our previously announced order for 6 MR newbuildings, we exercised options for an additional 2 MR newbuildings during the third quarter.

After end quarter, we agreed to invest in 8 LR2 newbuildings through a 50-50 joint venture and secured options for an additional 2 MR newbuildings. Taken together, these investments give us a significant pipeline of future fleet deliveries through 2030, supporting both the ongoing renewal of the fleet and our future earnings capacity.

So when we look at the quarter, there are really 2 messages: First, the existing TORM platform continues to generate very strong earnings and cash flow. And second, we continue to actively manage and invest in the fleet with a focus on future earnings and long-term shareholder value.

Let me now turn to the market environment supporting those earnings. And here, please turn to Slide #7. The product tanker market remains exceptionally strong with recent geopolitical developments adding an additional tailwind to an already robust market. The important point is that the market was already strong before the latest disruption. Limited effective fleet growth and sanctions have created a favorable supply-demand balance, while geopolitical developments have introduced further logistical inefficiencies and reduced effective vessel availability. This dynamic has been particularly evident in the crude tanker market where rates have reached exceptionally high levels, lifting sentiment and earnings across the broader tanker sector.

This is reflected in our commercial performance, where our fourth quarter bookings secured to date averaged USD 78,000 per day across vessel classes, demonstrating our ability to capture value in a rapidly strengthening market. At the same time, the historical ranges on this slide also remind us that shipping remains a highly cyclical and volatile industry. Market conditions can change quickly, which makes commercial flexibility increasingly important.

Turning to Slide 8. If we step back from product tankers and look at the broader oil market, the key element here is that Persian Gulf crude exports are recovering towards pre-conflict levels. That matters because crude flows are the starting point of the entire value chain. While it may take longer for the Middle East clean product flows to return to pre-war levels, improved feedstock availability globally enables this refiners in other regions to increase utilization and ultimately export more clean products.

In that sense, product exports could represent the next leg of the recovery. And importantly, these additional volumes will enter a product tanker market that is already tight and generating attractive earnings. At the same time, operational inefficiencies in the Persian Gulf continue to constrain effective vessel availability. So we potentially have additional cargo demand entering a market where effective vessel supply is already constrained.

And that brings us directly to the next slide to Slide 9, where here, we see the other side of the equation, effective vessel supply. One point we have highlighted repeatedly is that headline fleet growth figures overstate the actual supply available to the clean product tanker market. This slide is a good illustration of that dynamic. While the nominal product tanker fleet has grown by around 7% year-to-date, the fleet actively trading clean products has actually contracted by roughly 4%. Reason is straightforward. A growing number of LR2s have migrated into dirty trades, effectively removing capacity from the CPP market.

In fact, despite significant newbuilding deliveries this year, there are fewer LR2s trading clean products today than at the start of the year. So the important metric is not simply how many vessels are being delivered, it is how much effective capacity is actually available to the clean market.

Turning to Slide 10. The longer-term supply picture is also more nuanced than the headline order book suggests. Newbuilding deliveries need to be considered against a significant amount of existing capacity that will require replacement over time as well as vessels that are currently unavailable to mainstream trades. This is particularly visible in the combined LR2 and Aframax segment, where more than 1/4 of the fleet is currently sanctioned and effectively removed from conventional trading patterns.

We have also spent considerable time discussing the potential return of sanctioned tonnage. Our view remains that the actual market impact is likely to be smaller than the headline numbers suggest given the limited pool of younger vessels that could realistically return to mainstream trades.

The key takeaway here is that fleet replacement remains a powerful balancing mechanism. When combined with the reduced availability of sanctioned vessels, effective fleet growth appears considerably lower than the headline order book could indicate.

Turning to Slide 11. The final point is what the market could look like as the current disruption eventually normalizes. As inventories have been drawn down, replenishment of strategic and commercial stocks could become a meaningful source of incremental demand. We estimate that inventory rebuilding alone could increase global oil trade volumes by roughly 1% to 2% over the next 12 months.

Importantly, product tanker fundamentals were already strong before the disruption. Effective fleet growth remains constrained, while demand continues to be supported by resilient trade activity. We, therefore, do not view the reopening of the Strait as the end of the story. Rather, it marks the beginning of a new adjustment phase that can continue to support tanker demand.

To conclude, while the current geopolitical environment continues to support freight markets, our constructive view does not rely on disruption. Whenever tensions in the Middle East begin to ease, we believe the underlying fundamentals will remain supportive with resilient Strait activity, inventory rebuilding and constrained effective tonnage supply. This includes EU sanctions against Russia, which we believe will continue to support longer trading distances and ton-miles for the foreseeable future.

At the same time, the current environment highlights the importance of adaptability, a strong balance sheet and operational execution. These are core strengths of TORM and position us well to capture opportunities, navigate volatility and create value across market cycles.

With that, I'll hand it over to Kim, who will take us through the numbers.

Thank you, Jacob. Turning to Slide 13. The third quarter delivered another very strong financial performance with earnings significantly ahead of the same period last year. TCE earnings reached USD 353 million, up from USD 236 million in the third quarter of 2025. This was translated into EBITDA of USD 274 million and net profit of USD 199 million compared with USD 152 million and USD 78 million, respectively, a year ago.

On a fleet-wide basis, we achieved an average TCE rate of approximately USD 40,100 per day compared with approximately USD 31,000 per day in the same quarter last year. Performance was strong across the fleet with LR2s earning around USD 52,600 per day, LR1s around USD 38,700 and MRs around USD 36,100 per day.

While earnings came down from the exceptionally strong second quarter, Q3 continued to demonstrate the significant earnings power of our platform, supported by a strong product tanker market and solid commercial performance.

Operating expenses were USD 7,894 per day, mainly driven by higher crew change expenses and consumable costs. Overall, Q3 represents another quarter of strong earnings and cash generation, leaving TORM in a strong financial position.

And with that, let us turn to the development in our TCE earnings and EBITDA. Turning to Slide 14. This chart puts the third quarter performance into perspective over the past 5 quarters. While earnings moderated from the exceptionally strong second quarter, EBITDA of USD 274 million remained materially above the same quarter last year, demonstrating continued earnings strength of the One TORM platform.

That strong earnings generation continues to translate into significant shareholder returns, which brings us to Slide 15. Net profit for the third quarter was USD 199 million compared with USD 78 million in the same quarter last year. Basic earnings per share increased to USD 1.94 from USD 0.79 a year ago. Based on these results, the Board has approved an interim dividend of USD 1.35 per share, more than double the USD 0.62 per share distributed for the same quarter last year. This represents a total cash distribution to shareholders of USD 138 million.

In determining the distribution, the Board has taken a prudent approach to capital allocation while maintaining a payout ratio of 78%. This reflects the significant newbuilding pipeline ahead of us and our objectives of preserving financial capacity to fund these investments while maintaining a strong balance sheet and healthy liquidity.

This allows us to invest from a position of financial strength, which brings me to our balance sheet on Slide 15. Net interest-bearing debt was approximately USD 697 million, while our net loan-to-value ratio stood at 25.9% at the end of the quarter. Importantly, our loan-to-value calculation already reflects the newbuilding investments we have committed to, both directly and in the joint venture setup. Once an investment is agreed, we include both committed CapEx and the corresponding value on the vessel in the calculation.

At the end of the quarter, this includes approximately USD 650 million of committed newbuilding CapEx, bringing total loans and committed -- sorry, commitments to approximately USD 1.3 billion. This is measured against total vessel values of approximately USD 5 billion, which similarly include the value of the vessels under construction. So the 25.9% loan-to-value already incorporates our committed newbuilding program and demonstrates that we continue to have significant asset backing and financial flexibility.

Finally, as shown on the right-hand side, our debt maturity profile remains well spread over the coming years, including the USD 200 million bond maturing in 2029.

Please turn to Slide 17 for our financial outlook, where strong freight environment and our high level of coverage provides good visibility for the remainder of the year. Our freight coverage for the fourth quarter provides further evidence of the exceptional market strength. For LR2s, we have covered 656 spot days at approximately USD 185,000 per day, contributing to average LR2 coverage of approximately USD 112,000 per day. Overall, coverage is very strong for LR2s at approximately USD 106,000 per day and MRs at approximately USD 60,000 per day.

Importantly, this shows that the strength extends across our fleet and is not solely an LR2 story. Based on this strong coverage and our expectations for the continued market strength throughout the remainder of the fourth quarter, we are raising the low end of our full year TCE guidance by USD 50 million. We now expect full year TCE of USD 1.75 billion to USD 1.9 billion compared with USD 1.7 billion to USD 1.9 billion following our guidance upgrade in October.

We're also raising the low end of our EBITDA guidance by USD 50 million with full year EBITDA now expected at USD 1.35 billion to USD 1.5 billion compared with USD 1.3 billion to USD 1.5 billion previously.

And with that, I will hand it back to the operator for questions.

Our first question comes from the line of Jon Chappell from Evercore.

Jacob, you've been pretty consistent with the One TORM strategy for several years now. The newbuilding plans that you've announced kind of subsequent to the quarter end seems to be a bit more aggressive, let's just say, not disparaging it, just saying it seems to be a little bit more aggressive than in the recent past. So is this a function of kind of the incredible times we're in right now? And the view from the management team and the Board that investing in new tonnage is the way to recycle a tremendous amount of cash that you're bringing in today?

And are there any other potential acceleration, so to speak, of the TORM strategy that we can look forward to as the cash flow remains robust?

That's a good question. So no, actually, the fleet strategy and the strategy about the continued return of capital to shareholders remains the same. What we have seen is that in our fleet, we have a position that is across the LR2, LR1 and MR segments. And that when we look at the fleet profile of our LR2s over the next couple of years, we have approximately 50% of the fleet that will turn 20 years of age.

And we are simply just of the opinion that the planning process of that sort of keeping -- maintaining at least the same position in the market will require us to make substantial investments into the fleet renewal, and we are starting that now rather than waiting for that to later stage. So this is just really fleet maintenance. And the same -- on the same token, we have not changed anything about our distribution to shareholders.

Okay. Just as a quick follow-up, as you invest in these newbuilds, is there an arb opportunity for you to continue to dispose of some of the older tonnage? I understand right now, they're earning tremendous returns, and there's something to be said for making incredibly high rates on older tonnage that's been fully written down and depreciated, but also could be a source of funds for this newbuild program, especially as your ships approach 15 or 20 years. So how do you kind of consider those puts and takes?

Yes, absolutely. I think you've seen that we have divested a couple of vessels that is older in our fleet. If the rationale for doing it would be the same as we saw in those, i.e., the value that we would be getting upfront exceeds on a conservative basis, what we expect to be earning, we could do more of that. But it's not a necessary tool in order to establish any type of funding, as Kim also alluded to, our loan-to-value standing, including all CapEx committed at mid-20s.

That can obviously change, depending on the values of the assets. But I don't see that vessel sales is a necessary action to support the fleet renewal program that we have ongoing. But we will do it opportunistically when it's the right thing.

Our next question comes from the line of Frode Morkedal from Clarksons Securities.

I think -- yes, let's start on the market. It was this Strait related article today where you discussed the shuttle and STS operation around Hormuz, which is interesting, I think. Maybe you can talk about that. I mean I feel like the crude shuttle runs are fairly well understood. How is it for clean products right now? How big is it? What type of inefficiency do you see?

Yes. Thanks, Frode. So when we go specific on the CPP exiting the Persian Gulf, then pre-war, it was standing at sort of also around 2.5 million barrels of clean product on a daily basis that we're transiting. Then we saw just pretty much the same pattern as on crude that it went to very close to negligible volumes right at the beginning and that it has come up from summer and up until now to around 1 million compared to the 2.5 million pre.

So the latest surge that we have experienced on the crude side, i.e., that more or less -- maybe there's a little piece missing, but more or less you are on crude at the same supply of crude out of the region, including the Yanbu facility and the STS that is taking place as pre-war, it's not the case for clean. So it stands at around 40% and has done some for a period of time.

We -- it's the current political and military conflict stays the same, I am not confident that we will see a significant uptick or uplift from this 1 million to, let's say, back to where it was with the same pattern that we saw on crude, simply because, a, the risk involved with transportation of refined fuels and the risk of having whether it's a drone or a missile attack simply has much higher consequences for the asset in question, number one.

And number two, the refinery side in the Middle East Gulf, I'm sure the producers there are a little wary about going back to -- coming back to, let's say, 100% of production because you are sitting duck should the situation deteriorate on the conflict side that then you would be much more critically vulnerable having your facility up and running. So let's see.

But to me, it feels like if the political and also military situation would stay where it is now, you would not necessarily see an increase of the clean product exports, but we will continue to see the crude. But of course, the important piece in this is that crude is now being made available with some certainty to the various refiners in -- for instance, in Asia, and they can, on their side, start to behave more commercial in their export volumes, which is actually what we have been benefiting from over the last 1 to 2 months that there is a recovery in that activity.

Right. So it sounds like if Strait of Hormuz reopens to more normal levels, it's actually a positive thing. You'll get more CPP volumes out and it's not like the logistical bottlenecks or inefficiency around the STS operation is more important than the volume, right? So that's correctly...

I agree with that. If we only zoom in on this particular, I would say, area of focus, then clearly, if you saw the exports of CPP out of the refineries were both available and safe, you would see a significant higher uplift in ton-miles from the additional volume and from the inefficiency that is currently in place for clean vessels.

That's good. Next question was on, I guess, one of your peers last week talked about fairly good 3-year and 5-year time charter deals being offered or for newbuilds in, let's say, next year, 2027 deliveries, et cetera. Are you seeing the same? And just, I guess, more broadly, would you consider more time charter business? I assume you still favor spot-oriented model, but how do you see this?

Yes. Currently, we, of course, explore all avenues with our clients, but we've not seen something where our fundamental belief is about normalization and the utilization rates that, that would dictate. Time charter would need to be more supportive, obviously, than our model. And at this stage, we are not seeing much of the forward curve being significantly above where our own models around supply-demand comes out.

But that can change, obviously. We will be very dynamic around that if the right opportunities arise. But it's not like we are seeing that the forward curve currently has a lot more value to offer than our own sort of model apparatus around the freight dynamic that we expect in a normalized market where you kick off the inefficiencies we've just discussed, we are still seeing a robust earning that is at par of what the TC rates are.

Yes. Makes sense. Final question is on the LR2 newbuild joint venture. Is that something you were invited into, and that's why it's a 50-50 structure rather than, let's say, full ownership?

Well, it's something where we have been in dialogue with a partner for considerable periods about various ways to work together. The thing here is that, what is important for us on our assets is that we have full control of the value chain when we operate them on the One TORM platform towards our clients so that we've got technical, commercial, sort of the full in-house model. And this particular JV, we've come to an agreement where we, once the vessels have been delivered, have that and that we will share the economic of that venture with our partners.

So it's exactly something that is -- has been in the making for a longer period and where we share the view about the fact that the One TORM platform is the best place to have these assets.

Okay. Just a follow-up. Can you maybe quantify the equity portion of your, let's say, CapEx for this JV?

No, we have confidentiality agreements on this as many of our commercial contracts. So unfortunately, I'm not allowed to give that.

Our last question comes from the line of Climent Molins from Value Investor's Edge.

Most has already been covered, but I wanted to ask regarding the latest MR 2 options you secured. Those are at your side for now, right? And if that's the case, until when can those options be exercised?

So we have time still within this quarter to evaluate whether we will exercise the 2 options that you referred to.

There are no further questions at this time. I will now hand the call over back to Jacob Meldgaard for closing remarks.

Yes. Thank you very much to everybody who has shown an interest and listen in. Have a fantastic day.

Thank you for your participation for today. You may now disconnect.

Good morning, and thank you for standing by. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM Second Quarter 2026 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Jacob Meldgaard, CEO. You may begin.

Well, thank you, and welcome to everyone joining us today. We are pleased to report a record second quarter, reflecting both exceptionally strong market condition and the strength of the platform we have built over many years.

Before turning to the quarter itself, I would like to briefly revisit what continues to differentiate TORM and creates value for our shareholders across market cycles. At the core is what we call the One TORM advantage. This is our equated operating model where commercial, technical and operational decisions are aligned across the organization. It allows us to react quickly to changing market conditions, optimize fleet deployment and consistently capture opportunities as they emerge. Our culture is equally important. Through a unified organization and centralized decision-making process, we are able to execute faster and more effectively than many of our peers. This alignment creates accountability, improves utilization and supports disciplined cost management throughout the business.

The results are measurable. Over the period from 2023 through 2025, our MR fleet generated more than USD 200 million of additional TCE earnings compared to the peer average. This demonstrates the strength of our commercial platform and our ability to consistently create value across different market environments. At the same time, we remain committed to active fleet renewal and disciplined capital allocation.

Recent investments in retail and newbuilding vessels demonstrate our confidence in the long-term fundamentals of the product tanker market while helping ensure that TORM maintains a modern and efficient fleet. Our approach to fleet growth has always been driven by value creation and customer needs. Over recent years, we have primarily expanded through vessels already on the water. But the relative economics have evolved. With secondhand vessel prices continuing to increase, we now see attractive opportunities in newbuildings. As a result, we have established a phased pipeline of resale and newbuilding deliveries from 2027 through 2029 and potentially into 2030. This ensures that we continue to renew our fleet, maintain a modern offering for our customers and secure future earnings capacity in a disciplined manner.

Importantly, these initiatives have not come at the expense of shareholder returns. Our approach remains to balance growth and investment with attractive cash distributions, ensuring that shareholders benefit from both today's earnings and tomorrow's value creation.

Please turn to Slide 4. The second quarter was the strongest in TORM's history, driven by exceptionally strong freight markets, following heightened geopolitical tensions in the Middle East and the resulting disruption to global oil trade flows. During the quarter, we generated TCE earnings of USD 512 million, more than doubling the level achieved in the same period last year. The market benefited from significant inefficiencies created by disruptions around the Strait of Hormuz, which supported freight rates across all vessel classes. This translated into EBITDA of USD 416 million and net profit of USD 338 million, highlighting both the strength of the market and the operating leverage embedded in One TORM platform.

Reflecting the continued strength in freight markets and the visibility provided by our contract coverage, we are also increasing our full year guidance. Thus, we now expect to generate the highest annual TCE earnings in TORM's history, surpassing all previous years, and underscoring the exceptional market conditions currently supporting the product tanker sector. Reflecting these results, our Board has approved an interim dividend of USD 2.4 million per share, corresponding to a total distribution of USD 26 million.

Fleet renewal also remained a key priority during the quarter. Our fleet stood at 97 vessels at quarter end, and we further strengthened our growth pipeline through investments in resale newbuildings with deliveries scheduled from first quarter of 2027 through 2029. Overall, we ended the second half of the year from a position of strength, supported by a modern fleet, a robust balance sheet and a market environment where geopolitical uncertainty continues to create opportunities for product tanker owners with scale, flexibility and strong execution capabilities.

And here, finally turn to the next slide, to Slide 5. And a key element of TORM's strategy is maintaining a balanced approach to capital allocation. While we are committed to growing organically and renewing the business, it has been equally important to ensure that shareholders directly benefit from the strong earnings generated by the company. Since 2023, we have distributed USD 15.1 per share in dividends, returning a significant share of our earnings to shareholders. In total, this amounts to EUR 1.5 billion, representing a very significant sum of money relative to the total market capitalization of TORM. This reflects our philosophy that value generation and creation should translate into tangible cash returns, allowing investors to participate directly in the strong cash generation of the business.

At the same time, we have continued to invest in the platform. Over the same period, we have expanded the fleet from 78 vessels at the end of 2022 to 97 vessels today, increasing our earnings capacity while also renewing the fleet profile. This balance is important. Shipping remains a cyclical industry, and our objective is not only to maximize returns today, but also to ensure that TORM continues to have a modern and competitive fleet in the years ahead. By maintaining our pipeline of vessel acquisitions and new building deliveries extending through 2029, we position ourselves to participate fully in future market opportunities. We believe this approach creates long-term shareholder value. It allows us to distribute meaningful cash today while ensuring that we continue to have vessels on the water here now as well in the years ahead, particularly during periods when market conditions are exceptionally attractive.

Importantly, the pipeline of vessel acquisitions and newbuilding deliveries, we also gradually replace older vessels that over time, resonates well divestment becomes the most attractive option.

As illustrated in the appendix on Slide 27, the delivery profile through 2029 and potentially 2030 supports a continuous renewal of the fleet while preserving earnings capacity and maintaining a modern fleet for our customers. In short, our strategy is to keep high operational leverage, renew the fleet, maintain financial discipline and return excess cash to shareholders.

And now please turn to Slide #7. The product tanker market remains exceptionally strong. The reason Middle East tensions have further tightened what was already a fundamentally robust market. Disruptions to key trade wars had increased voice distances and reduced effective fleet availability directly supporting freight rates. This is reflected in our commercial performance where average earnings in the second quarter exceeded USD 59,000 per day, while third quarter bookings secured to date averaged USD 38,600 per day across vessel classes.

It is also worth highlighting the historical perspective shown on this slide. Market conditions were already robust prior to the latest geopolitical developments. Limited effective fleet growth and sanctions had already created a favorable supply-demand balance. The 5-year average earnings levels for both MRs and LR2 show that product tankers have generated solid returns under changing market conditions. The wide gap between historical highs and lows illustrates the significant volatility inherent in our industry with freight rates sometimes moving sharply from one month to the next.

What we are experiencing today is a market operating well above historical averages, supported by geopolitical disruptions and structural inefficiencies. At the same time, the volatility shown by the historical ranges reinforces the importance of maintaining a flexible commercial platform that can respond quickly to changing market conditions and capture opportunities as they emerge.

And now please turn to Slide 8. Despite major disruptions to global outflows, the product tanker market has remained highly resilient. While the closure of the Strait of Hormuz reduced order volumes, the loss was more than offset by longer haul movements and extensive trade rerouting. Fewer barrels moved, but they trailed significantly further.

Following the temporary ceasefire, oil flows improved from roughly 17% below pre-conflict levels in April and May to around 10% below by July demonstrating how quickly global LNG markets adapt. However, renewed facilities are again disruptions -- disrupting trade, rising tensions around the Strait of Hormuz and routing level broad against Saudi Arabia are forcing additional rerouting and creating further inefficiencies across the supply chain. For tanker owners, those inefficiencies matter because they increased vessel utilization and support freight rates.

Let me illustrate that on the next slide. And here, please turn to Slide 9. And the closure of the Strait of Hormuz immediately disrupted oil flows equivalent to roughly 20% of global oil consumption. Part of the disruption was absorbed through increased pipeline exports from Saudi Arabia and the UAE as well as higher exports from the Atlantic Basin.

Nevertheless, lower crude availability in Asia and reduced refinery runs and clean product exports from the region. Since then, rerouting inventory releases and the ceasefire period have stabilized trade flows. What is particularly interesting is how Gulf producers have adapted. The UAE and others are increasingly using dedicated shuttle operations and ship-to-ship transfers to sustain exports.

Today, more than 30 VLCCs and around 14 LR2s are engaged in these activities. To restore pre-closure export volumes entirely, these short operations could require 2 to 3x more VLCCs and over 3x more LR2s than currently employed. Even before reaching that level, every additional vessel tied up in shuttle trades reduces effective market supply and creates incremental support for freight rates.

Please turn to Slide 10. The latest escalation around the Strait of Hormuz combined with the continued Red Sea disruptions is driving another round of Strait rerouting. Cargoes that previously moved on direct routes are increasingly being diverted through the Suez Canal and around the Cape of Good Hope. In some cases, these changes add weeks to voice duration. We have experienced firsthand.

In July, our LR1 vessel TORM innovation was fixed to load in Yanbu for Dias in Asia. The original routing was through Babel Mandel, following renewed security concerns, the voyage was redirected via Suez and around Cape of Good Hope under the terms of the charter party. The result was an extension of more than 30 days. A single voyage exchange of more than 30 days effectively removes a vessel from the market from additional months. When this is replicated across the industry, the impact on effective supply becomes significant. This serves as a practical example of how geopolitical events translate directly into increased ton mile demand and tighter little supply.

Please turn to Slide 11. And let's now look in more detail on supply. While vessels trapped in the Persian Gulf were gradually released during the ceasefire, another and potentially more important trend has emerged. A record number of LR2 vessels have shifted from clean product transportation into crude transportation, a process known in the industry as dirty up. By the end of July, approximately 70 fuel LR2s were available for CPP transportation than at the start of the year. As a result, the effective CPP capacity overall has declined by roughly 5%, despite nominal fee growth of a similar magnitude.

In other words, headline sea growth suggests more supply. The reality is that the fleet available to transport clean petroleum products has become tighter.

And now please turn to Slide 12. All those strong markets have encouraged additional newbuilding orders, particularly in fuel tankers, fleet growth remains constrained by an aging fleet profile and sanctions. In the combined L2 and Aframax segments approximately 1 in 4 vessels is currently subject to U.S., EU or U.K. sanctions. Importantly, around 60% of those sanctioned vessels are more than 20 years old. Given the age, many are unlikely to return to mainstream trading, even if sanctions were eventually lifted. As a result, headline sea growth overstates the increase in effective market supply.

Taken together, sessions, fleet aging and replacement requirements suggest that effective fleet growth is likely to remain limited for the next several years.

Please turn to the next slide. The key message is simple. This is unlikely to be a temporary market event. It looks increasingly like a structural reset. We will not speculate on when the Strait of Hormuz may fully reopen. Our focus is on operating the business prudently and maintaining flexibility. What matters equally is what happens after reopening. Even if transits normalized, the market will not immediately return to its previous date. Vessel repositioning, trade normalization and fleet rebalancing will take time and create additional friction throughout the system.

At the same time, strategic and commercial inventories will need to be rebuilt. As an administration, replenishing inventories depleted so far could add approximately 1% to 2% to global trade volumes over the next 12 months. With further upside in stock rebuilding accelerates our sourcing patterns become more geographically diverse. Just as importantly, the product tanker market was already supported by strong fundamentals before the Strait of Hormuz disruption. Those supported fundamentals remain in place. Our view is, therefore, that reopening this Strait should not be viewed at the end of the story, but rather at the beginning of a new phase of market adjustment that can continue to support tanker demand.

Slide 14, please. To conclude on the market, the tanker industry is operating in an environment increasingly shaped by geopolitics. Sanctions, security risk, shifting energy flows are making global trade more complex and less efficient. This is not a temporary phenomenon. Since 2022, the number and significance of geopolitical factors influencing our industry has increased materially, and this continues to reshape global trade patterns. For the tanker market, greater inefficiency needs longer voyages, higher vessel demand, fleet dislocation and increased volatility. So TORM, it reinforces the value of our scale, commercial agility and operational execution.

And with that, I will hand it over to Kim, who will take us through the financial results.

Thank you, Jacob. Now please turn to Slide 16, and let me walk you through some of the drivers behind our performance. The second quarter delivered the strongest financial performance in TORM's history, driven by exceptionally strong freight markets, following the disruption to global oil trade flows in the Middle East. TCE earnings reached USD 512 million compared to USD 208 million in the same quarter last year, increase was driven by significantly higher freight rates across all vessel classes, reflecting the tighter market conditions and efficiencies that developed across global energy transportation networks during the quarter.

The strong market environment translated directly into earnings. EBITDA increased to USD 416 million from USD 127 million a year ago, while net profit reached USD 338 million compared to USD 59 million in the second quarter of 2025. On a fleet wide basis, we achieved an average TCE rate of USD 59,300 per day, more than double the level realized in the corresponding quarter last year. Performance was strong across all segments with LR2 vessels earning approximately USD 67,000 per day and both LR1 and MR vessels generating just above USD 57 per day to $7,000 per day.

At the same time, operating expenses remained well controlled at USD 8,315 per day. The increase versus last year was mainly driven by higher crude change expenses and consumable costs. PAUSE Despite these precious operating costs remain at competitive levels. The result was basically earnings per share of USD 3.31, reflecting the significant operating leverage embedded in our business when freight market strengthen.

Finally, the Board has approved an interim dividend of USD 2.4 per share corresponding to a total distribution of USD 246 million. This reflects our commitment to returning capital to shareholders while maintaining a better capital allocation approach.

Please turn to Slide 17. This slide illustrates the strong progression in our earnings over the past 5 quarters and highlights the extraordinary step-up we achieved during the second quarter of 2026. The most notable takeaway is the significant increase in both TCE and EBITDA compared to previous quarters. TCE earnings increased, as mentioned to USD 512 million from USD 286 million in the first quarter but EBITDA rose to USD 416 million from USD 201 million. This performance reflects a combination of exceptionally strong freight markets and TORM's ability to capture value through our fully integrated operating platform.

During the quarter, market conditions were heavily influenced by disruptions in Middle East oil flows, increasing geopolitical uncertainty and continue rerouting of vessels, all of which contribute to higher ton-mile demand and significantly stronger freight rates. FeedRite TCE rates increased to USD 59,300 per day compared to USD 34,937 per day in the first quarter. What is particularly noteworthy is how efficiently this increase in revenue translated into earnings. TCE increased by USD 226 million from Q1 to Q2, while EBITDA increased by approximately USD 215 million. In other words, the incremental TCE converted almost on 1:1 into EBITDA, demonstrating the strong operating leverage embedded in our business model.

With our largely fixed base costs, higher freight rates have a very direct impact on profitability and this means that when market conditions strengthen a substantial share of the incremental revenue flows directly into EBITDA and eventually cash generation. Overall, the quarter highlights both the strength of the current market environment and the earnings power of the Vital platform. It demonstrates our ability to convert a favorable freight market into substantial earnings, cash flow and shareholder value.

Now please turn to Slide 18. This slide highlights the development in net profit, earnings per share and dividend per share over the past 5 quarters. As illustrated, the exceptional market conditions we experienced during the second quarter translated into record profitability. Net profit reached USD 338 million compared to USD 122 million in the first quarter and USD 59 million in the same period last year. Correspondingly, earnings per share increased to USD 3.31, reflecting both strong freight markets and the operating leverage embedded in our business model.

The strong earnings also resulted in substantial free cash flow generation during the quarter. And as a result, the Board has approved an interim dividend of USD 2.4 per share corresponding to the total distribution of approximately USD 246 million to shareholders. This distribution reflects our dividend policy and means that all free cash flow generating during the quarter after debt installments will be returned to our shareholders. We believe this demonstrates a strong cash generative nature of TORM's business model and our continued commitment to delivering direct and tangible returns to shareholders when market conditions are favorable.

I now turn to Slide 19. Starting on the left side, broker valuation of our fleet increased to approximately USD 4.1 billion at the end of the second quarter reflecting the continued strength of both trade markets and tanker asset prices. As a result, our net asset value increased to USD 3.7 billion, representing another quarter of significant value creation for our shareholders. Increase in asset values demonstrates the strong earnings expectation currently embedded in the product tanker market and highlights the quality and attractiveness of our fleet.

Moving to the center chart, Net interest-bearing debt increased -- sorry, decreased to USD 715 million from USD 894 million at the end of the first quarter. At the same time, our net loan-to-value ratio improved further into 2.4% despite continued investments in fleet growth and renewal. The reduction in net interest-bearing debt was primarily driven by exceptionally strong cash flow generated from operations during the quarter. Strong earnings translated into significant cash generation, enabling us to simultaneously fund fees investments, distribute substantial cash to shareholders and further strengthened the balance sheet.

Importantly, we have achieved this reduction in leverage while operating the largest fleet in TORM's history. Net loan-to-value ratio in the low 20s provide considerable financial flexibility. It allows us to purchase -- sorry, pursue attractive investment opportunities, continue renewing the feed and maintaining resilience through market cycles, while preserving significant capacity for further shareholder returns.

Finally, on the right side, you see our debt maturity profile. We have USD 237 million of borrowings maturing over the next 12 months with maturities thereafter, well distributed across future years and no significant refining concentration. Overall, we believe TORM enters the second half of 2026 with a strong balance sheet, supported by higher asset values, moderate leverage, strong liquidity and substantial financial flexibility to report both growth and shareholder returns going forward.

Now please turn to Slide 20. Following a record first half of the year and continued strength we have seen in the freight market during the third quarter, we are once again updating our financial guidance for 2026. Compared to our previous guidance, there are 2 important changes: First, the sustained strength in freight rates have increased our earnings expectations for the year. Product tanker markets have remained significantly stronger than anticipated, supported by ongoing geopolitical uncertainty, freight disruptions, and continued inefficiencies across global oil and product flows. As a result, we are increasing the midpoint of our TCE guidance from USD 1.3 billion to USD 1.5 billion.

Second, with more than half of the year now behind us, a substantially larger share of our earnings is already secured. The number of remaining open days has therefore been reduced meaningfully now at 10,270 days, 30% of total days providing greater visibility on our full year outcome. This allows us to narrow the guidance range compared to early in the year.

Accordingly, we now expect full year TCE of 1.4 billion to 1.6 billion, corresponding to a range of plus/minus USD 100 million around the midpoint. This compares with our previous guidance of USD 1.15 billion to USD 1.45 billion. Reflecting the high expected revenue generation and the operating leverage inherent in our business model, we are also increasing our EBITDA guidance to between USD 1 billion and USD 1.2 billion. This compares with our previous guidance of USD 800 million to USD 1.1 billion.

The tighter range reflects increased earnings visibility. While we continue to monitor developments in the Middle East and other geopolitical events closely, a much larger portion of this year's earnings is now either reported or covered, reducing the impact of volatility in the remaining months of the year. Overall, we believe the updated guidance appropriately reflects both the exceptionally strong market environment and the visibility we have today, and it also highlights the earnings power of the One TORM platform when supported by favorable market conditions.

And with that, I will hand it back to the operator for questions.

[Operator Instructions] And your first question comes from the line of Jon Chappell with Evercore ISI.

Jacob, if you spend a lot of time talking -- Jacob, you spent a lot of time talking about the justification for the newbuildings, both on this call and apparently in the press this morning. I think it makes complete sense given the discrepancy between new build prices and secondhand values. Looking at it from the other side, it looks like roughly 30% of the fleet almost is 15 years or older. You have these incredible prices for secondhand vessels, including older tonnage at present. Have you considered an acceleration of maybe some divestitures to lock in some of these elevated prices on the resale side?

Yes. Well, that's a good question. We have considered that what we have found so far is that when we take the NPV of, obviously, of a potential sale of any of our assets versus what I would say, conservative then estimate that we will be earning until sort of our usual life, then that calculation will detail whether we do this or not. And yes, I'm not seeing any signs of that we should accelerate based on that calculation.

Okay. The second question I had relates to Slide 7. So the LR2 benchmark being near the all-time highs make sense given the dirtying up that you discussed. The MRs had a nice little spike when the conflict broke out in the Middle East in late winter, early spring, but they've since kind of normalized back to these long-term averages. Is there any other difference? Is it just a trade flow amount of products leading the Middle East, the disruption impact of ton miles variance between kind of bigger crude carriers and smaller product. That's meant that the MRs have been probably like the most consistent performers as opposed to every other subsegment of the market being exceptionally stronger year-to-date. And I guess if I can add a second to that as well. Is there kind of a catch-up trade to the MRs that you foresee once there is some return on normalization in global trade flows?

Yes. That's a very good observation. And of course, being in this day to day, we are making the same observation. I think that there is, of course, a lot of elements in the diesel is. But I think if we lifted up. Our conclusion so far, Jon, is that every day, we are depleting inventory globally. And the the crude oil and the product that is being moved is obviously lower volumes than what it would have been before the current closure effective more or less closure of Australia Homes. And it means that group is definitely moving to a higher degree. And it is arriving at destination of where is the end user the refinery side. But sort of what you would then have a spillover for the MRs to pick up of marginal trades, those marginal trades in an environment where there's not enough cargoes are simply less simply don't occur as often. So it's not a lot for the MRs and you would need, in our opinion, to see that you have more volumes of crude that meets or exceeds the daily consumption before you will see that refineries and sort of the arbitrage phase will really in early start to reopen so that the MRs can come in to us.

Can you follow? So as long as we're in this sort of environment where there's just an oval for there to be enough the spillover trades from the refinery side is less than the day when we see that you have a normalization of the amount of crude that goes to market.

Your next question comes from the line of Frode Morkedal with Clarkson Securities.

Yes. Yes. So it's really interesting times, right? Hormuz, at close, Red Sea, Black Sea, even Panama Canal disruptions. So I mean, I have to go back way back in the history books to find these type of conditions. But I just wanted to pick your brain on this. How important are these disruptions behind the receipt. Let's say, rebound in LR2 rates versus, let's say, cargo flows, right? So they obviously had the refinery shutdown that meant less in port volumes. And now you have this inefficiencies and rerouting and shop in sales and so what's driving the recent pullback in rates in view.

So the reason it again for I'm sure that'll add you a final question. Just repeat your question...

Yes LR2 rate coming up okay, is it driven by the ratings inefficiencies or part of those?

So I think there's 2 things on the supply side. Clearly, what we mentioned earlier that going into the year, I think we all recall that there was some discussion among analysts and of course, people like ourselves around the magnitude of the order book on LR2s and that, that could have potentially a negative effect on the freight rates because simply of supply coming to market.

And the fact that we see 70 fewer LR2s today has, of course, proven that, that was not the story on total. It was more that volumes have kept coming down because of the disruptions, especially in the Middle East, that a lot of the naphtha, a lot of the sort of long-haul LR2 natural cargoes, the diesel from Middle East to Europe have not been moving in these spots. So volumes have gone down, but of course, the effective supply of clean trading LR2 have also been coming down and sort of keeping the market more or less at bay.

Now the inefficiencies caused that you mentioned, then you only need a little more volume. You just need a little more of the ship-to-ship transfer to occur. And our listings are that currently there is a movement is also discussed in the public press that the national states in Middle East are contemplating having this oil bridge, which is basically that you looked in the Middle East, and you don't go for your end destination, but make the ship to share transfer that I think that is maxed out more or less on the capacity that they have and that they're looking to increase that further.

As a strategic response to the closure and sort of the Iranians and America currently having a tip around who is controlling this. And there, I think they are basically saying we would like to control our own destiny. So we will up the end on this all bridge because we don't know when the situation. So I think that is -- is 2 things: a, so volume has come down, but also supply. And now we're starting to see a little more tickling around that this strategic choice to have also LR2s hauling cargoes up to the Omani waters and make it to transfer is creating a stronger dent.

That's interesting. So yes, so I guess it multiple notice the crude shut business, but you're also seeing the sale of products, right? So how important is that? And is that something that is going to expand? Do you think going forward?

Yes. So when we had our Q1 results in May, I think we alluded to that we started to see a few of our vessels being engaged in this ship-to-ship transfer. And our estimation is that at that time, you would be seeing about 1 million barrels in totality of crude and CPP moving per day on this sort of shuttle. Now fast forward today, we estimate that it's about 6 million barrels of crude and 1 million-barrel of CPP. So obviously, not the same level as we saw before, but significantly more than in May.

Our expectation is that as a strategic answer again to that it is being communicated almost daily that Strait of Hormuz is either closed or open. To take it into our own destiny and sort of control the value chain for the producers where the oil is stuck they will, in our opinion, more likely than not increase the volume, both on crude but also on CPP in the months to come in order to sort of normalize PAUSE their economic stance and also, of course, to normalize their relation in terms of that they are not under the gun of somebody else saying there's a war or there's not a war.

So we believe that we are seeing a trend that will continue. Of course, that's a long way to 20 million-barrel that was what we saw prior to this conflict. It doesn't need to go to there. But as I mentioned, if you imagine that the volumes go back to that, instead of using, let's say, 15 LR2s you're probably closer to LR2 in that so trade. And that would be beneficial for LR2 in our opinion.

Yes, so very interesting. I mean how about the impact on investor values? I mean, at least you've seen on the crude side, other these Middle Eastern companies basically buying up whatever tonnage they can get hold of to just refill the shut-in services? Are you seeing the same dynamics on products perhaps?

We're nothing to these. We -- of course, with interest noted what you also described, we have not seen that yet on the clean side. It has been so far more a crude story, especially on lease, but also to some degree, as we can note also on Suezmax and to a lesser degree, I don't think it has played out on the product side yet. It's also -- so if you're overflowing and you are an oil producer, I think it is most important right now.

The first sort of dilemma that you would like to solve is what do I do with my crude and you clearly engaged with these in order to have that shorten service. And then sort of I think it is in the -- as a second step, I think you would strategically evaluate can we resume our operation at the refinery side and how do we then solve the delisting problem around that.

So I think it's natural that we have not seen anything yet.

Yes. Makes sense. But you are seeing the Chinese ramping up refining runs. So hopefully, that will add some volumes going into the fall. So how comfortable are you and how bullish are you on the next few months of products?

Well, we are constructive around it. But I mean, as we've just discussed, we have all these choke points. And probably, historically, we've never seen more. But our thing is that most of these choke points with either remain more or less as they are or be positive for product tankers. So that could be the Panama Canal. We have clearly not seen that play out yet. And I think in Strait of Hormuz I don't think that the current status quo is how it will stay.

I think that either we will find a solution and/or you will see that this oil bridge will be expanded. Both those scenarios are positive in our opinion for product tankers.

Your next question comes from the line of Bendik Nyttingnes with Danske Bank.

I have on the newbuilding program as well. You're sort of doubling down on the MRs here. Can you talk a bit through your reasoning on by doing MR newbuilds as opposed to LR2s?

Yes, absolutely. Thank you, Bendik. So we are not in love with any particular of the segments that we are active in. And the way we come to our investment decisions is basically that we look at what is the cost of an asset and what is our expected cash flow from that investment.

And I want to take here in the second and into the third quarter. It has been the better choice for our investment to place our money on the MR that we have alluded to the prices, the delivery, the specification rather than alternative investment. So that is what -- it doesn't mean that we could not do LR1s or LR2 at any time. But it just means that currently, that has been the best choice for the investment for our shareholders.

Makes sense. And I guess you haven't disclosed any prices on the new fixed plus 2 vessels. But can you talk a bit about what we should expect in terms of financial leverage as a percentage?

Yes. Pretty standard on that currently. So we would normally finance our business at 50% leverage. So that's a nice sweet spot, it can grow higher. Of course, not to go lower, but I think for us, it's the situation we are in gives us ample flexibility. Here, you have a sweet spot of very low margins, fairly long funding structures. So of course, we're trying to find the sweet spot. We think this is a very good place to be.

There are no further questions at this time. I will now turn the conference back over to Jacob Meldgaard for closing remarks.

Yes. Thank you very much, and thank you to everyone for listening in to our results for the second quarter 2026. Have a nice day.

This concludes today's conference call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM First Quarter 2026 Conference Call. [Operator Instructions]

I would now like to turn the call over to Mr. Jacob Meldgaard, CEO, you may begin.

Thank you, and welcome to everyone joining us today. We started 2026 with a very strong first quarter, delivering results that demonstrate both the earnings power of our platform and the strength of our execution in a supportive freight market. This morning, we released our Q1 2026 results, and we are pleased with the performance.

However, before I go into the details of the quarter, I would like to take a step back and briefly talk about TORM and the foundation that underpins these results and continues to differentiate us in the market.

Again, our performance was driven by a combination of strong freight rates, disciplined execution and the One TORM platform. While we remain attentive to global developments, we continue to align ourselves with market changes and believe we have a unique ability to react quickly to movements in spot prices. This is something we are often asked about. The answer is that it represents a quantifiable advantage over our peers, what we refer to as the One TORM advantage. It is now embedded in the way we operate and is a capability our competitors would undoubtedly like to replicate.

Importantly, this advantage is the result of a journey over many years, a journey that continues to evolve. We are able to track this across a range of performance indicators. For example, over a 3-year period, our MR fleet generated TCE revenue that exceeded the peer average by approximately USD 200 million, reflecting the strength and efficiency of our operating model through higher utilization, disciplined cost control and strong commercial execution. This culture of operational excellence is supported by our centralized management platform that coordinates and accelerates our decision-making. This is good news for our investors because it means we are now extremely well placed for the complex landscape ahead, and we remain confident that the shifting stance of geopolitical uncertainty continue to present opportunities for us. Thus, it's no surprise to us that TORM share are currently in focus among the investment community as a rout to unlock value from this uncertainty.

And now please to Slide #4. As always, I'll start with the key financial outcomes for the quarter to give you a clear picture of how the business is developing. During the first quarter, we delivered TCE of USD 286 million, representing a clear continuation of the positive earnings trajectory seen over recent quarters. This was significantly higher than the same quarter last year, driven by consistently firm freight rates throughout the period, which strengthened further towards quarter end. These additions reflect a value chain currently characterized by abnormal trade flows and structural inefficiencies, resulting in elevated margins, not only for tanker companies like us, but also for our customers who are capturing strong profitability across the trading and refining segments.

That top line performance translated into an EBITDA of USD 201 million and a net profit of USD 122 million, reflecting both the strength of the market environment and our ability to convert rates into earnings through disciplined commercial execution and operational leverage. Supported by the continued strength we see across our markets and the solid momentum entering the remainder of the year, we are therefore increasing our full year guidance to USD 1.15 billion to USD 1.45 billion, underscoring our confidence in sustaining profitable growth.

Also, we continued active fleet renewal, adding younger secondhand vessels and committing further acquisitions while divesting older tonnage. After quarter end, we also agreed to acquire 6 MR resales with expected delivery of 4 in 2027 and 2 in 2028. These acquisitions further enhance fleet flexibility and earnings capacity while preserving a prudent age profile. As of quarter end, our fleet consisted of 95 vessels. Once all the beforementioned transactions are completed, the fleet will increase to 103 vessels on a fully delivered basis.

Please turn to Slide 5. Before moving to the broader market, let me briefly address our current operating status. Safety remains our highest priority. We currently have 1 vessel inside the Persian Gulf, and I'm pleased to say that the crew are doing well, morel is high and provisions are not an issue. As we will describe on this call, the market impact has been significant, tightening effective supply and contributing to the sharp increase in freight rates. Bunker prices have also moved higher, although availability remains secure. Throughout this period, our approach has been clear and unchanged. We take a safety-first approach in all operating decisions.

Please turn to Slide 7. Following a strong close to 2025, product tanker markets entered the first quarter of 2026 with rates stabilizing at levels well above historical averages. This strength was supported by broader momentum in the crude tanker market, which benefited from record volumes of cargo on the water as well as the return of Venezuelan exports to the compliant fleet and generally more cautious use of sanctioned vessels globally. And on top of this, the development was further supported by the consolidation of the ownership in the VLCC segment.

The outbreak of the U.S., Israel, Iran war in late February and the subsequent closure of the Strait of Hormuz marked a further and unprecedented escalation in tanker rates. This is clearly reflected in our commercial performance with Q2 average bookings to date above USD 70,000 per day across vessel sizes. Taken together, these dynamics have created one of the strongest cross-segment market environments we've seen in several years, underpinned by both structural and event-driven factors.

And kindly turn to the next slide, turn to Slide 8, please. The closure of the Strait of Hormuz had an immediate and profound impact on global energy flows. Approximately 14% of global clean petroleum product volumes and around 30% of crude oil movements that would normally transit the Strait were suddenly constrained. Combined, this corresponds to approximately 20% of global daily oil consumption. In scale and immediacy, this represents the largest oil supply disruption the market has ever experienced. On the clean product side, the impact was uneven. Naphtha and jet fuel were disproportionately affected, reflecting the Persian Gulf's central role in global exports, accounting for 37% of global naphtha exports and 21% of jet fuel under normal conditions.

Diesel and gasoline were relatively less exposed. As the next slide will show, only a fraction of these lost volumes have been replaced so far, underscoring how structural this shock has been.

Please turn to Slide 9. In crude markets, part of the lost Persian Gulf supply has been mitigated through pipeline redirection from Saudi Arabia and the UAE alongside increased flows from the Atlantic Basin. However, reduced crude availability at Asian refineries has forced meaningful run costs, which in turn has sharply reduced clean petroleum product exports from the region. By the end of April, global clean petroleum product trade was down by roughly 16% as incremental supply from Western markets proved insufficient to offset the loss of Middle Eastern and Asian exports.

Crude oil trade saw a decline of similar magnitude. Despite this contraction in traded volumes, product tanker rates remained elevated. Some of this reflects longer replacement voyages and urgency premiums. But the more important explanation lies on the tonnage supply side, which I'll address on the next slide.

And here, please turn to the next slide to Slide 10. The closure of the Strait of Hormuz cuased significant vessel dislocation with more than 200 crude and product tankers stranded inside the Persian Gulf. This equates to roughly 3% of the global product tanker fleet and 6% of the crude fleet. As vessels were rerouted towards regions with replacement volumes, we saw higher ballast ratios and materially increased inefficiencies. In simple terms, ships spending more time sailing empty to reach their next cargo.

In the MR segment, increased East to West ballasting was partially offset by stronger West to East cargo flows as Asian product supply tightened. At the same time, we saw an unprecedented shift of LR2 vessels into crude trading, the so-called dirty-ups. By the end of April, the number of LR2s trading clean products had fallen by more than 50 vessels compared with the start of the year despite the delivery of 27 newbuildings. As a result, effective CPP trading fleet capacity declined by around 4% even before accounting for the vessels stranded in the Gulf.

Please turn to Slide 11. It is, however, important to recognize that this migration of LR2s into crude trading began well before the Strait of Hormuz closure. Since 2025, the Aframax and LR2 segments have faced extensive vessel sanctioning, largely linked to Russian crude trades. In 2025 alone, more than 200 Aframax and LR2 vessels were sanctioned. This has created a growing disconnect between newbuilding deliveries and effective fleet growth.

Since the start of 2025, nominal product tanker capacity is up 8%, yet the capacity actually trading in today is around 4% lower. The scale of sanctions is notable. 1 in 4 vessels in the combined Aframax LR2 segment is currently under U.S., EU or U.K. sanctions. This comes on top of an already balanced order book due to the high share of older vessels.

With 60% of the sanctioned fleet older than 20 years, the prospect of these ships returning to the mainstream clean market, even if sanctions were lifted, appears increasingly limited.

And now turn to Slide 12. Let me frame this slide with one central point. What we are facing is not a return to normal, but a structural market reset. First, on timing. The duration and persistence of the closure of the Strait of Hormuz remain uncertain despite recent diplomatic attempts to end the conflict. Currently, tanker transits through the Strait of Hormuz remain more than 95% below the pre-conflict levels. We don't know when transit will resume, and we're not speculating on the timing. That uncertainty is real, and we are managing the business responsibly with that reality in mind.

What is equally important, however, is what happens after reopening. When transits resume, the market does not simply switch back to where it was. There will be tonnage dislocation and significant vessel repositioning as assets reenter trade lanes that have been disrupted for an extended period. That creates friction, inefficiency and volatility, conditions where agile operators outperform. At the same time, depleted strategic and commercial inventories will need to be rebuilt, a multiyear process that supports sustained activity rather than a temporary outlet.

The UAE's recent exit from OPEC enables higher production, which is likely to accelerate the replenishment of global oil stocks. It's also important to remember that tanker market strength was already evident before the Strait of Hormuz closure. Those fundamentals were paused, not erased. From our perspective, the key is readiness. We have deliberately built an agile business platform that allows us to react immediately. So when the trade opens, we are well positioned to benefit from the market reset.

Please turn to Slide 13. Now to conclude on the market, the tanker industry today is operating in an environment shaped by an unusually large and growing number of geopolitical factors. Trade routes, cargo flows, sanctions regimes and security considerations are all contributing to greater market inefficiency. Importantly, this is not new, but it has intensified. Since 2022, the number of geopolitical variables we are navigating has increased significantly, adding friction and complexity to global energy transportation.

For the industry, inefficiency translates into longer voyages, dislocated tonnage and volatility. For well-positioned operators like us, it also creates opportunity, provided you have the scale, agility and discipline to navigate it effectively.

And with that, I'll now hand it over to Kim, who will walk us through the numbers.

Thank you, Jacob. Now please turn to Slide 15, and let me walk you through some of the drivers behind our performance. The product tanker market entered 2026 on a strong footing, and this momentum was sustained throughout the first quarter, supporting another solid set of results for TORM.

For the first quarter, we delivered TCE of USD 286 million, translating into EBITDA of USD 201 million and a net profit of USD 122 million. These results reflect firm freight markets across the quarter and our continued ability to consistently capture this across the fleet.

On a fleet-wide basis, average TCE was USD 34,937 per day. And by segment, LR2 earnings exceeded USD 41,000 per day, MRs earned just under $33,000 per day, while LR1s came in around USD 35,000 per day, i.e., up significantly compared to the freight rates we had a year ago. Our TCE earnings were affected by timing issues related to IFRS 15. Under IFRS 15, we recognize freight revenue from when cargo is loaded until it is discharged, not from when the voyage is agreed and hence influenced by changes in balance patterns. It does not impact our underlying cash earnings or the economic performance of the vessels.

Again, the realized earnings level highlight the continued strength of the underlying market, supported in part by very firm crude tanker rates, which again influenced product tanker dynamics positively. With that overview in place, let me turn to Slide 16, where we break down earnings down in more detail and walk through the underlying drivers.

This slide illustrates our quarterly earnings development since the first quarter of 2025. And what stands out very clearly is a step-up we see in the most recent quarter. For the Q1 results, we delivered a meaning uplift in earnings, continuing and accelerating the positive trajectory we have seen over recent quarters. This reflects the strength of the freight market and confirms that the supportive market conditions are translating directly into financial performance.

For the quarter, we generated TCE of UAD 286 million and EBITDA of USD 201 million, making this our strongest quarterly result since the second quarter of 2024. It is a clear validation of both the market environment and our ability to capitalize on it. The primary driver was firm freight rates supported by strong spillover from the crude tanker sector and continued geopolitical disruptions in the Middle East, which have introduced additional inefficiencies into the market.

Importantly, given the inherent operational leverage in our business model, incremental rate improvements translate efficiently into higher earnings. This sets out a solid foundation as we move through the remainder of the year.

Please turn to Slide 17. On this slide, we show the quarterly development in net profit alongside earnings and dividends per share. Starting with earnings. Net profit increased to USD 122 million, corresponding to earnings per share of USD 1.21. Turning to free cash flow generation and capital return. It is important to note that the combination of high freight rates and elevated bunker prices resulted in a net working capital increase of around USD 30 million during the quarter.

Against this backdrop, the Board has declared a dividend of USD 0.7 per share, equivalent to a payout ratio of 58%. This reflects the free cash flow generated after accounting for the working capital build. Absent to this effect, the implied payout ratio would have been in the range of 80% to 85%. We believe this once again demonstrates that our capital return framework strikes the right balance, remaining clear and disciplined while being firmly anchored in strong and sustainable underlying cash earnings generation.

And now please turn to Slide 18. As shown on this slide, broker valuations for our fleet stood at USD 3.6 billion at the end of the quarter. This reflects a continued positive sentiment across the tanker asset market and results in an increase in our net asset value to USD 3.1 billion. Importantly, average broker valuations for the fleet increased by 9.7% during the first quarter, with particularly strong appreciation seen in the LR2 and LR1 segments. This development is an acceleration of what we observed in the previous quarter and further underlies both the improving market backdrop and the quality of our asset base.

Turning to the center chart, you can see our net interest-bearing debt, which now stands at USD 894 million, and this corresponds to a net loan-to-value ratio of 25.1%, keeping us comfortably within the range we have maintained for many quarters. This highlights the strength of our conservative capital structure, maintaining stable leverage at these levels provide us with significant financial flexibility, allowing us to pursue value-accretive opportunities as we have demonstrated this quarter, while at the same time, preserving balance sheet resilience through market cycles.

Finally, on the right side, you see our debt maturity profile. We have USD 287 million in borrowings maturing over the next 12 months and beyond that maturities are modest and well distributed across the subsequent years. Overall, our solid balance sheet positions us well to navigate current market conditions with confidence while preserving the ability to act decisively on attractive opportunities as they emerge.

And now please turn to Slide 19, where I will walk you through our outlook for 2026. Based on the strong start to the year and the earnings visibility we now have in the near term, we are upgrading our full year 2026 guidance. For the full year, we now expect TCE of USD 1.15 billion to USD 1.45 billion, up from our previous guidance range from USD 850 million to USD 1,250 million. At the same time, we upgrade our EBITDA guidance to USD 800 million to USD 1.1 billion compared with the previous USD 500 million to USD 900 million.

Market conditions have reached exceptionally strong levels in the second quarter, supported by tight tonnage balance and continued trade dislocations. As a result, we have already secured 57% of our earning days in Q2 at a fleet-wide average of TCE USD 71,494 per day. A significant share of this quarter is therefore fixed at very attractive rate levels, providing a high degree of near-term earnings visibility. This strong coverage gives us a very solid foundation for the year and reflects the positive traction we have seen across all vessel segments.

Thus, this upgrade reflects 2 main factors: First, the strong earnings performance delivered in the first quarter; and second, the very strong coverage we have secured for the second quarter at rate levels that are unprecedented for the product tanker market. For the uncovered days, we have, as usual, used the forward derivatives market as a reference. And as always, the updated guidance remains subject to market volatility, geopolitical developments and potential changes in trade patterns, particularly as we move into the second half of the year.

That said, we believe our upgraded guidance properly reflects both the strength of the current market backdrop and the visibility we have today. And with this, I will hand it back to the operator.

[Operator Instructions] And your first question comes from the line of Jon Chappell with Evercore ISI.

Kim, I want to go back to the dividend slide. You mentioned it briefly, the 58% payout ratio, but would have been 83.5%. Can you remind us what that difference was? And then if it's associated with the new builds, how do we think about the payout ratio going forward? Is it closer to this 58%, which was the lowest payout ratio since 3Q '22? Or does it return something to that 80%-ish range that it's been for much of the last 3 years?

Jon, thank you very much for that question. What I tried to communicate was that when we saw the market rate increase during March. We will have DSOs, freight days outstanding of around, let's say, 45 to 50 days. So meaning -- so we booked the cargo, the fixing, but we will get the liquidity those days later. So i.e., it means that we will not get the liquidity in the same month of March, we will get that booking in April as an example. So in that sense, we build up net working capital. And if you add the increase in bunker prices, i.e., the effect on our bunker inventory, that in itself -- those 2 in itself equated to around USD 30 million. And that was why I added it to the earnings -- or sorry, to the dividend we paid out. And if you add that, you will get to the 80% to 85%. So it has nothing to do per se with the resales that we bought. It is just a reflection of the net working capital buildup when markets react as it did over 1 month and then over a quarter end where we report.

So does that mean that there's a catch-up, so to speak, in the second quarter, assuming rates stabilize or maybe even pull back a little bit from the highs, does that net working capital then work in your favor, whereas the second quarter or maybe some quarter in the second half, the ratio is well over the 80% to kind of make that timing even out?

Yes, exactly. I think you should think about it. So say that things were steady now throughout the next quarter, you would get it back. Would it increase -- rates increase further, you would probably tie up a bit more on net working capital. Would it decrease, you would get it even more released. So that's how we think about it.

That's super important. And then Jacob, kind of strategic outlook. You talked about the opportunities that you have if there is a normalization, also just thinking about the strategy, you obviously bought the resales. There's been a lot of time charter activity, especially in the bigger ships, LR2s. Are you still kind of fully exposed to the spot market? Or do you think there's some opportunities at some of these elevated levels and maybe some charters and traders reaching out for some term to get some fixed cash flows for 1 to 5 years?

Yes. So we have done a few charters, 1 year, 3 years. We've done some forward cover for next year on derivatives when markets were a little half year. That's an efficient way for us to sort of capture value, protect the level, but still have, let's say, the operational flexibility on our assets. So we've been doing that the way you describe it. Of course, it's a trade-off between, as you can see, the elevated rate environment that we have currently and then the forward projection. But we like to do a little of all in this environment. So some a little shorter, 1 year, some a little longer, 3 years and somewhat forward covering 2027 already now on some derivatives trades.

Okay. One last one for me. Sorry if this is too many. Obviously, the resales make sense in the framework of modernizing the fleet. You've been pretty active in some older vessel sales. And given the fact that older asset prices, at least on paper, seem to be even higher, it was maybe a little surprising that some of those resales weren't offset with older vessel dispositions. So is that just a function of trying to maintain as much leverage to the market as possible? Or is the liquidity in the secondhand market for older vessels maybe not as robust as it's been recently?

I think definitely it's robust. But we've simply just done -- yes, done simple math. We feel that our balance sheet is in pristine shape, as Kim alluded to. So I think we are of the opinion that the asset base we have longevity and optionality and also the way the market behaves with quite high volatility, it means that, that can be attractive earnings in -- yes, in many scenarios that we look at going forward. I think it's going to be volatile and choppy. In many ways, we've seen that here over the first and second quarter. I think that will continue.

But fundamentally, we believe that this is offering a lot of opportunity for our platform. But we do evaluate exactly as you described, Jon, what is the better sort of net present value that we will get selling an asset or keeping it with the rate environment that we predict.

Your next question comes from the line of Frode Morkedal with Clarksons Securities.

I wanted to follow up on the acquisition of the 6 MRs. I'm not sure if you talked about the price. Maybe you could talk about the price level versus, let's say, older ships, right? That's probably how you thought about it, resale value in 2027 versus somewhat older. And yes, that's it.

That we have come to the decision of the purchase of the 6 resale MRs is exactly, as you point to that we evaluate what is the earning that we will be having on various assets and various age profiles in the coming years. We then also compare it -- basically, you could say there are 3 buckets that you could invest in if you are looking to make an investment, it would be existing ships on the water with whatever age profile that you could dream up. It would be resales with relatively early delivery or it would be that you go to a shipyard and do complete new contracts, so newbuilding contracts.

And -- right now, what we found was that we did find kind of a gap where we saw the market being attractive from the pricing and timing of the delivery of these resales being better than paying, let's say, the same price for a deferred delivery out in 3 years out compared to having a resale 3 quarters out was just simply a better, more attractive solution for us and also better than identifying vessels on the water where prices, as also Jonathan pointed to, have been creeping up as of late. So it's simple math that has driven us to this price point and delivery point is, in our opinion, the better of the 3 choices if you are looking at it. And we found that this one also meet our return criteria for making the risk-adjusted return that we are looking for in any of our investments.

Yes, interesting. What kind of risk-adjusted returns are you talking about? I mean I understand it on your comments here, you basically are acquiring these ships, let's say, probably less than $60 million, right, per ship and then a 5-year-old ship today is probably at similar level, right? So you're arguing that you get more modern, better ships at the same price, something like that, right? And maybe you could tie it into the required MR rate to get a decent return on it?

Sure. Yes. So I mean, we don't disclose our forward thinking. But the way we model is exactly the way you more or less describe it. We would, of course, put in, yes, let's say, financing, our operating cost, et cetera. And at the end of the day, we would then compare with our earning potential. And I think to say that in our modeling, we probably look about 5 years out, and then we'll look at sort of a residual risk basis exactly what you also described, what would be a 5-year-old residual sort of market value at that point in time.

And what I then described is that the hurdle on that return on that invested capital is, of course, internal for us, but this way of making the investment exceeds our sort of hurdle for believing that, that's a good investment. So we think it's a good investment for our shareholders, and that is an asset that will be appreciated, obviously, by our customers at the time.

Yes. Understood. Yes, you probably a $50 million investment, you probably only need like $23,000 per day over time to get like a 10% to 12% return or something like that, right. Anyway, shifting gears on the market, I wanted to hear your thoughts on the drivers here. Clearly, it's been very, very strong start to Q2, right? Maybe you could talk a little bit about the trade flow adjustments, right? We've seen refineries closing down, obviously, in the Middle East, but also in Asia. And now even Gulf has come up and ramped up exports and clearly adding to ton miles. But then again, at the same time, you've seen freight rates come off the boil, so to speak, recently. So maybe you could talk a little bit about how you think rates will develop now in the short term? Do you think like there's more normalization to rates? Or could it let's say touch or find a bottom now?

Yes. Okay. So as you point to, then this sort of dislocation of the sourcing for many buyers have led to longer ton mile. We've already discussed that is -- that also translated into higher margins for our customers. It translated into higher freight rates for ourselves and the ecosystem of transportation. And just recently, we've seen that the -- I think our freight rates is driven by our customers and basically by how the arbitrages work. And you had a period where the arbitrage west to east was wide open. obviously leading to that when the [indiscernible] is open that customers in, let's say, in Asia, Australia, East Africa, these areas that would normally be looking towards the Middle East for their supply, they were bidding up cargoes that were available in the Western Hemisphere. This has come off a little.

Right now, there's been a period where our understanding is that the end users have been a little more reluctant. I think they've been looking at the situation in the Strait of Hormuz and sort of valuing, hey, if we get cargo out there, it's going to come faster and it's going to come cheaper. So maybe let's just cool the jets a little. So margins have come in less attractive. And of course, then volumes come down because the sellers of the product will then have also competing areas, more local areas that will also call -- make a call on exactly the same tons of products.

Let's see whatever -- I think 1 or 2 would happen in the near term, either the Strait of Hormuz actually opens and cargo volumes will increase and flow through the Strait due to that. If it doesn't, I think the call on products from the Western Hemisphere to the Eastern Hemisphere will yet again increase. Margins will widen again, and you'll see that trade. That is how I think that's the most likely that one of these two scenarios will play out. The current where there's no let's say, call on products from either Strait of Hormuz because it's impossible or from the West because the margins are not, how to say, sufficiently high. I don't think that is a long-term trend.

Your next question comes from the line of Bendik Folden from Danske Bank.

I'll just turn to your guidance for the second quarter, obviously, extremely strong. But I want to know if there's any effects we should be aware of here, sort of unpaid balance days, anything like that, that might sort of mess up our modeling on the quarter?

Yes. It's important for us to stress we use the methodology here. So we take Q1 and we take the coverage that we have for Q2. And then we have [indiscernible] as I said, to the forward market to take that as the benchmark. So you should not sort of see it necessarily as this is how we foresee the markets month by month. We very much on the freight markets see that we observe in the market. Of course, we have the Q2, but then [indiscernible] on fixed days [indiscernible] based on. I hope that clarifies it. So it's a guidance that we are obliged to present an update, and we have defined this methodology. And perhaps I should add that we do that and then we stress it with a plus/minus TCE around that. For this quarter, it's plus/minus 7,500. It's very mathematically easy to both explain and understand, but that's how we do it. So plain and simple model for that. Hope it makes sense.

And for the second quarter, specifically, utilization-wise, has it been like some ballasting or something like that?

Yes. So there's nothing that distracts the numbers as you point to, Bendik. So the numbers for Q2 includes ballast when and if a vessel has had to have a longer ballast prior to the employment. So all of our numbers includes the previous [indiscernible] included in the daily.

There are no further questions. I will now turn the call back over to Jacob for closing remarks.

Well, thank you very much. There has been very good questions. Thanks for listening in. And this ends the Q1 2026 report for TORM. Thank you.

That concludes today's call. Thank you all for joining. You may now disconnect.

[Audio Gap]

It is now midday and as we have a quorum, I now declare the meeting open. A video conference call has been set up for this meeting. As set out in the notice of meeting, shareholders cannot legally attend the meeting or vote on the business of the meeting virtually. However, it's been agreed that those persons on the conference call can attend the meeting informally.

Present today from the Board of Directors, we have myself, Simon Mackenzie Smith, Chairman of the Board. In addition, our CEO and Executive Director, Jacob Meldgaard, is joining us remotely via video link. We are also joined by Nick Lindsay from Elemental, our Company Secretary; and Christopher Everard, our General Manager. The Board of Directors has jointly agreed that only one director will attend the meeting in person on behalf of the Board.

Let me turn to the review of the year. So I want to take this opportunity to briefly reflect on my first few months at TORM, a period that has exceeded my expectations about the expertise and professionalism across the business. The period has also exemplified the ongoing complexities of the market in which we operate, whilst also providing an opportunity for TORM to demonstrate the flexibility, consistency and resilience that has been systematically built into the business.

Events in the Middle East are a reminder that geopolitics is a major influence on both the products we carry and the shipping lanes in which we operate. What never changes is TORM's ability to execute whatever the complexities that lie before us. I now have a deeper understanding of how TORM successfully navigates these market conditions in a way that delivers for our shareholders. And I am certain that we can continue to do this in a manner that exceeds the capabilities of our rivals.

What really sets us apart is the strong culture that runs through the business, which provides us with a true clarity of purpose and so creates a distinct competitive advantage.

Geopolitically, 2025 was, in many respects, a continuation of the tensions and shifting trade patterns that have influenced our industry in one way or another since 2022. Disruption in the Red Sea continued to affect our product tanker routes, while low diesel inventories and refinery closures across Europe supported stronger, clean product flows.

At the same time, reduced cannibalization from crude carriers strengthened demand for clean product tankers, driven primarily by longer-haul crude trades and reroutings that kept Aframax and Suezmax vessels fully employed in their core markets, limiting their availability to switch into clean cargoes. Regional developments, including Ukrainian drone attacks on Russian refineries, further influenced trade dynamics.

Despite a high number of newbuild deliveries in the LR2 and Aframax segment during the year, overall clean product tanker capacity ended slightly below the previous year. This was partly due to sanctions on vessels transporting Russian oil, which removed ships from the clean petroleum product fleet and tightened effective supply.

In this context, TORM once again demonstrated the strength of our One TORM integrated business model. We are the benchmark for our industry, and we owe this to the refinement of our model, the expertise and discipline of our people and the consistency and agility of our management team under our Chief Executive, Jacob Meldgaard. The evidence of this is in the numbers.

Financially, 2025 was another robust year for TORM. We delivered a net profit of $286 million, on TCE earnings of $910 million. While earnings moderated compared with the exceptionally strong markets of 2023 and '24, they remain well above historical levels and clearly demonstrated both the strength of the product tanker market and TORM's ability to perform across changing market conditions.

Operationally, across our fleet, we achieved average TCE rates of $28,783 per day, which is a strong performance across all vessel classes and a reflection of the value of our integrated commercial platform and global trading presence that enables us to achieve market-leading rates. We also upheld strict cost discipline with operating costs averaging $7,638 per day, supporting an EBITDA of $571 million and an operating profit of $356 million.

Cash generation remained very healthy. Free cash flow reached $346 million, enabling us to maintain our commitment to shareholder returns while further strengthening TORM's financial position. During the year, we returned $2.12 per share, a total of $212 million, to our shareholders in the form of dividends.

Throughout 2025, we continued to pursue a disciplined approach to fleet optimization. Through carefully considered vessel transactions, we focused on maintaining a competitive fleet, capable of capturing opportunities across global markets.

We also took important steps to further strengthen our balance sheet. During the year, we secured new financing commitments on highly attractive terms, enabling us to refinance 2 existing syndicated loans and lease agreements covering 22 vessels. This refinancing simplifies our capital structure, enhances our operational flexibility and supports our long-term ambition to generate sustainable value for our shareholders. Our net loan-to-value ratio ended the year at 29.4%, underscoring our continued commitment to maintaining a conservative leverage profile.

Taken together, these results confirm that TORM continues to combine strong earnings, robust cash generation and prudent financial management, allowing us to invest in our fleet, reinforce our balance sheet and consistently return value to shareholders.

As we enter 2026, geopolitical pressures not only persisted, but intensified. The escalating conflict in the Middle East and the recent disruption to traffic through the Strait of Hormuz have contributed to one of the most volatile and unpredictable market environments in recent years.

Geopolitical tensions, supply disruptions and rapidly shifting trade flows are reshaping tanker movements almost daily. While this brings uncertainty, it also creates meaningful commercial opportunities for TORM. Today's disruptions, longer voyage distances, large-scale rerouting of cargoes and sudden regional supply gaps mean the entire product tanker industry is operating in a highly dislocated market. In such conditions, operators with strong operational capabilities, commercial reach and fleet flexibility will be best placed to benefit.

For some, this environment will translate into very strong earnings. For TORM, our scale, chartering platform and trading agility position us exceptionally well to capture emerging opportunities. Despite the unpredictability, the combination of longer sailing distances, shifting cargo patterns and widespread market inefficiencies creates a landscape where TORM is well positioned to continue performing strongly.

Before closing, I should also make reference to an important development in our ownership structure. Last year, Oaktree reduced part of its long-held shareholding in TORM through a transaction with Hafnia. We appreciate Oaktree's many years of support and the role they have played in TORM's transformation into the company we are today. This change in ownership reinforces rather than alters our strategic direction. It's a reminder that the best way for TORM to maximize value for every shareholder, long-standing or new, is to continue doing what we do best: running a highly efficient, agile and commercially disciplined product tanker platform.

Our job now is to keep demonstrating through performance, good governance and capital allocation that TORM creates more value as a strong, focused stand-alone company. You should expect us to continue sharpening our competitiveness, deepening our commercial capabilities and strengthening our financial profile, all with a clear ambition of ensuring that the market fully recognizes the value that TORM can create on its own.

Thank you for your continued trust and support.

With that, I would now like to start the formal proceedings of this Annual General Meeting. The notice of the Annual General Meeting, together with the explanatory notes, was issued on the 5th of March, 2026. Accordingly, the requisite Notice of Meeting has been given. I therefore propose that the Notice of Meeting be taken as read. Thank you.

To reflect the views of TORM shareholders more accurately, voting today will be done by way of a poll on each of the resolutions put to the meeting. I'm appointing Nick Lindsay, the Company Secretary, to act as scrutineer. I hereby confirm that as Chair of the AGM, I will vote all proxies received as per the proxy instructions and that in addition, I will vote in favor of all resolutions for the proxies where I have discretion to do so.

I would also like to ask Chris Everard, General Manager of TORM, to confirm that as corporate representative of OCM Njord Holdings, he will be voting in favor of all the resolutions to the extent that he is permitted to do so.

I confirm.

Thank you. There are 3 options for each resolution: to vote for the proposed resolution, to vote against the proposed resolution or to withhold a vote. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against the resolution.

The slides that will appear on the screen set out the votes representing all of the proxies received and the vote of OCM Njord Holdings, also known as Oaktree. We will now proceed to vote on the resolutions, which I will formally propose to the meeting. The full text of each of the resolutions is set out in the Notice of Meeting, a copy of which you will have received.

Resolutions 1 to 12 are proposed as ordinary resolutions. And for each of these resolutions to be passed, more than half of the votes cast, excluding in relation to Resolutions 11 and 12, the number of shares which are subject of the relevant buyback contract, must be in favor of the resolution. Resolution 13 is proposed as a special resolution. For that resolution to be passed, at least 3/4 of the votes cast must be in favor of the resolution. I will introduce each resolution briefly before proposing it.

The first resolution is to receive and adopt the annual report and accounts for the year ended 31st December 2025. I now propose that the annual report and accounts for the year ended 31st December 2025 be received and adopted. I confirm that as set out in the summary, this resolution has been passed.

The next resolution is to seek approval of the directors' remuneration report. I now propose that the directors' remuneration report as set out in the annual report and accounts for the financial year ended 31st December 2025 be approved. I confirm that as set out in the summary, this resolution has been passed.

The next resolution is to seek approval of the directors' remuneration policy. I now propose that the directors' remuneration policy as set out in the annual report and accounts for the year ended 31st December 2025 be approved. I confirm that as set out in the summary, this resolution has been passed.

Resolution 4, the Board of Directors recommends that Ernst & Young LLP be reappointed as the auditor of the company until the conclusion of TORM's next Annual General Meeting and that the directors be authorized to fix their remuneration. Resolution 4 deals with their appointment and Resolution 5 deals with their remuneration. I now propose that Ernst & Young be reappointed as auditors. I confirm that as set out in the summary, this resolution has been passed.

Resolution 5, I propose that directors be authorized to fix the auditor's remuneration. I confirm that as set out in the summary, this resolution has been passed.

Resolution 6 to 10 concern the reelection of the directors, myself, Simon Mackenzie Smith, Christopher Boehringer, Göran Trapp, Annette Malm Justad and Jacob Meldgaard. In accordance with our articles, each director retires at this Annual General Meeting and being eligible, submits themselves for reelection. The Board of Directors recommends that each of the directors be reelected as a Director of the company.

As this next resolution relates to my reelection, I will now hand over the Chair to Chris Everard.

I now propose that Simon Mackenzie Smith be reelected as a Director and Chairman. And I confirm that as set out in the summary, this resolution has been passed.

I will now hand the Chair back to Simon.

Thank you. I now propose that Chris Boehringer be reelected as a Director. I confirm that as set out in the summary, this resolution has been passed.

I now propose that Göran Trapp be reelected as a Director. I confirm that as set out in the summary, this resolution has been passed.

I now propose that Annette Malm Justad be reelected as a Director. I confirm that as set out in the summary, this resolution has been passed.

And I now propose that Jacob Meldgaard be reelected as a Director. I confirm that as set out in the summary, this resolution has been passed.

Resolutions 11 and 12 relate to the company's authority to buy back its own A-shares through off-market share buyback contracts. These resolutions ask shareholders to approve 2 separate types of buyback arrangements, Buyback Contracts A and Buyback Contracts B. Together, they provide the company with flexibility to repurchase shares within defined limits and pricing parameters, helping support our capital allocation strategy.

I will now introduce each resolution in turn.

Resolution 11 seeks shareholder approval for the company to enter into a series of off-market buyback contracts referred to as Buyback Contracts A. This authority would allow the company to repurchase up to 10 million A-shares within the defined pricing limits linked to trading on NASDAQ Copenhagen and NASDAQ New York, less any A-shares purchased or committed to be purchased pursuant to Buyback Contracts B. The authority will run until the conclusion of the 2027 AGM.

We have received some questions on resolutions 11 and 12, and those questions and our answers to them are as follows. Question 1 refers to the intended scale of Buyback Contract B purchases from Oaktree. A, has the Board received any indication from Oaktree as to the number of A-shares it intends to sell pursuant to Buyback Contract B? And if so, what is the anticipated range? B, what governance controls or internal limits, if any, has the Board established to ensure that purchases under Contract B do not disproportionately facilitate an exit by a single shareholder at the expense of remaining shareholders? And C, will the Board commit to provide timely disclosure to all shareholders of the quantum and pricing of any purchases made under Contract B as they occur?

Our responses are as follows. As stated in the AGM notice, the directors regard the ability to repurchase shares in suitable circumstances to be an important part of the financial management of the company. In common with other listed companies, the purpose of the proposed share buyback resolutions is, therefore, to provide appropriate flexibility for potential future share buybacks in a manner which reflects the company's share structure.

As clearly stated in the AGM notice, this would only be where the directors consider it to be in the best interest of the company and its shareholders as a whole to do so. There have therefore been no discussions on the details of any actual purchases under Buyback Contracts A or B. However, as stated in the AGM notice, the price for any buybacks under Buyback Contract B will be set by the price achieved in the same trading period and therefore, always dependent on buybacks being made in that trading period under Buyback Contract A. If any such purchases were to be made, the company confirms that disclosure will be made in accordance with all applicable legislation.

Question 2 refers to the share price and NAV thresholds for value-accretive buybacks, as follows. At what discount to the Board's assessment of net asset value per share does the Board consider buybacks to be clearly value accretive? And has the Board established any formal price discipline, guidelines or threshold to govern execution?

Next, how does the Board intend to balance buyback activity against alternative uses of capital, including vessel acquisitions, debt reduction and direct cash distributions to shareholders in the event that the company's distributable reserves are constrained?

And will the Board provide shareholders with the key assumptions and NAV reference points that underpin its view that proposed buybacks are in the best interest of the company?

Our response as follows. As already noted, the purpose of the share buyback resolutions is to provide flexibility for potential future buybacks where the directors consider at that time, it will be in the best interest of the company and shareholders as a whole to do so. The matters reflected in these questions will be considered by the Board as appropriate if and when the Board is considering whether to launch a share buyback program pursuant to these resolutions.

You should also see the response to question 3 below. The question 3 refers to the capital return framework, buybacks versus pro rata dividend distributions. What is the Board's framework for determining whether available distributable reserves are deployed via buybacks or via dividend distributions? And what criteria must be met for each mechanism to be preferred?

Next, given that Buyback Contract B facilitates the exit of a specific identifiable shareholder, Oaktree, rather than a pro rata reduction in share capital benefiting all shareholders equally, how does the Board satisfy itself that the use of corporate funds in this manner is consistent with its fiduciary duties to all shareholders?

And finally, has the Board considered the possibility that a larger regular dividend might be a more equitable and transparent mechanism for returning capital at this point in the market cycle.

Our response is, as set out in the Annual Report 2025, the Board's capital return framework is based on a quarterly assessment of earnings, cash generation, capital commitments, balance sheet strength and liquidity with cash dividends remaining the primary default mechanism for returning capital to shareholders. As already noted, share buybacks would only be implemented where the directors consider it will be in the best interest of the company and its shareholders as a whole.

On 25th of March, TORM distributed a Q4 interim dividend, representing an accelerated return of capital that might otherwise have been proposed following the AGM, in line with the company's normal practice. The Board reiterates that dividends remain a core element of TORM's capital return policy and will continue to be considered on a quarterly basis in light of market conditions and financial performance.

The use of separate Buyback Contracts A and B simply reflects the company's listings and registered shareholding structure with any potential buybacks under Buyback Contract B being at the price achieved in the same trading period and therefore, always dependent on buybacks being made in that trading period under Buyback Contract A.

I propose the authority to make limited market purchases of the company's A-shares pursuant to Buyback Contracts A be approved. I confirm as set out in the summary, this resolution has been passed.

Resolution 12 asks shareholders to approve a second form of off-market buyback arrangement known as Buyback Contracts B. This authority covers up to 7.5 million A-shares, again, subject to minimum and maximum pricing limits that mirror those under Contract A, less any A-shares exceeding 2.5 million A-shares purchased or committed to be purchased pursuant to Buyback Contracts A. This authority will also run until the conclusion of the 2027 AGM.

As already noted in respect of Resolution 11, we have had some questions on resolutions 11 and 12, and those questions and answers to them were already provided for Resolution 11. I propose that the authority to make limited market purchases of the company's A-shares pursuant to Buyback Contracts B be approved. I confirm that as set out in the summary, this resolution has been passed.

We now move to the special resolution, which is #13. It proposes that the effect -- with effect from the conclusion of this meeting, the draft Articles of Association presented to shareholders be adopted as the company's new Articles of Association in substitution for and to the exclusion of the existing articles.

I now propose that the updated Articles of Association be approved. I confirm that as set out in the summary, this resolution has been passed.

That concludes the formal business of this meeting.

Final results of the meeting will be announced to the market through our regulatory information service and posted on our website as soon as practical.

Thank you.

Hello, and welcome to the TORM Full Year 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Jacob Meldgaard, CEO. You may begin.

Thank you, and welcome to everyone joining us here today. This morning, we released our annual report for 2025, and we are satisfied with the results, which, once again, reflect our strong execution across the business. However, before I now turn to the results, I want to spend a little time talking about TORM and the foundation that enables these results and consistently differentiates TORM in the market. I want to talk about the key pillars of our business that have placed us in a strong position to date and that we believe will continue to do so in the future.

We are immensely proud of what we have achieved here at TORM. Our ownership model and culture provides us with a clarity of purpose that streamlines our actions across the business. We are focused each and every day on staying one step ahead of other fleets to make the most of every opportunity. We believe our ability to deliver on this ambition for our shareholders is a distinct competitive advantage.

Underpinning our strategic focus is the platform you will know as One TORM. We believe this is a point of difference that sets us apart. The model was originally built around a spot-oriented strategy to unite the business and accelerate decision-making and response time. It enables us to use real-time data and insights to share our deep expertise at the core of the business at a moment's notice. We are not complacent. Since its inception, we have continuously refined this model using the latest technology, advanced analytics and proprietary data at our disposal to ensure we remain as alert and responsive as we possibly can be. In short, we can identify and capture attractive trading opportunities even in the most challenging markets, and perhaps I should say, especially in challenging markets, exactly the type of markets which now characterize the shipping industry even as we see comparatively fewer headwinds here into 2026.

For our shareholders, this approach offers a very clear advantage. We believe an industry benchmark for unrivaled consistency, strategic optionality and financial discipline that you can see once again in our numbers. And here, please turn to Slide #4.

In here and on the next 2 slides, we show the key figures for the quarter and the full year. As always, I'll start with the quarterly numbers to give you a clear picture of how the business is developing. In Q4, TCE came in at USD 251 million, slightly above Q3, supported by firm freight rates throughout the quarter. This strong performance resulted in a net profit of USD 87 million, which enables us to declare a dividend of $0.70 per share, once again demonstrating our higher earnings translate directly into higher shareholder returns.

During the quarter, we were active in the S&P market. We added 2 2016-built LR2s and 6 MR vessels built between 2014 and '18, while divesting 1 older 2008-built LR2. Several of the vessels were delivered before year-end, bringing our fleet to 93 vessels. And after completing the remaining deliveries at the start of 2026, our fleet comprises 95 vessels.

Importantly, our investments were exceptionally well timed. Based on current broker valuations, the vessels we acquired have already been appreciated by a double-digit U.S. dollar amount. This reflects not only the quality of the assets and our disciplined approach to capital allocation, but also a market that continuously turned more positive, supporting higher asset values across the product tanker space.

Now turning to Slide 5, we show the full year numbers. These are strong results. A year ago, our TCE guidance was USD 650 million to USD 950 million, and we closed the year towards the high end with USD 910 million. While not matching the all-time high in 2024, it remains a very satisfactory outcome.

Freight rates strengthened from the first to the second half of the year and ended at attractive levels. In this environment, TORM achieved fleet-wide rates of USD 28,703 per day, which we are very pleased with and which again demonstrates our ability to outperform the broader market.

Net profit for the year totaled USD 286 million, of which USD 212 million is being returned to shareholders.

With that overview in place, let us take a step back and look at the broader market dynamics that shape the environment we operate in. And here, please turn to the next slide to Slide 7. And after a softer, but still historically strong 2025, product tanker freight rates have now returned to the average levels that were seen in the 2022 to 2024 market. Underlying demand for product tankers has remained steady, and the recent uplift in rates has been driven primarily by developments elsewhere in the tanker complex.

The crude market has moved into territory that, while not unprecedented, is extremely rare. VLCC spot rates have surged to the USD 200,000 per day range, a unique and record-breaking level, and with charterers reportedly fixing 1-year deals above USD 110,000 per day. This strength is spilling over into the rest of the market, first into Suezmax and Aframax and then further into clean product tankers. If this momentum continues, we are potentially looking at a very interesting rate environment.

At the same time, sanctions in the dirty Aframax segment have tightened vessel availability, triggering a large shift of LR2s from clean to dirty trade. This reduction in clean LR2 supply has further supported product tanker earnings.

After several years of partial decoupling between segments, the product tanker market is once again being carried by the broader strength in crude. VLCCs, as mentioned in particular, continue to benefit from increased OPEC production, renewed stock building demand from China, heightened geopolitical tensions involving Venezuela and Iran and further consolidation in the segment. All these factors together have created one of the strongest cross-segment market backdrops we have seen in years.

Please turn to Slide 8. And here, let's have a look at the product tanker demand side. Seaborne volumes of clean petroleum products have been trending upwards in recent months. However, the overall impact of the Red Sea rerouting has been largely neutral due to lower trade volumes and a partial return to Red Sea transits. Trade volumes from the Middle East and Asia to Europe have started the year at 30% below pre-disruption levels, which is largely a result of lower flows from India amid introduction of an EU ban on imports of oil products derived from Russian crude. At the same time, an increasing number of vessels have resumed transiting the Red Sea with an, on average, 40% of the clean petroleum product volumes on the Middle East, Asia to Europe route traveling via the Red Sea in 2025. This is up from under 10% in 2024.

As a result, we see limited downside risk from a potential full normalization of the Red Sea transit as much of this effect has already been unwound and instead, a likely rebound in clean petroleum trade volumes after the normalization of the transit would increase ton-miles. This is reinforced by the closure of 5% of the refining capacity in Northwest Europe last year, which is driving higher import needs for middle distillates.

Additional support comes from sustained strength in crude tanker rates, which limits the crude tanker cannibalization and also from rising clean product ton-miles driven by refinery closures on the U.S. West Coast.

Kindly turn to Slide 9. Let's turn to now the supply dynamics. Newbuilding deliveries have increased here in 2025, but this has not translated into effective growth in the fleet trading clean products. In fact, since the start of 2024, nominal product tanker fleet capacity is up by 8%, yet the capacity actually trading clean today is 1% lower than it was at the beginning of 2024. This disconnect is primarily due to sanctions in the Aframax segment, which had incentivized a significant shift of LR2 vessels into duty trades. To illustrate this point, compared to the start of 2025, currently, there are 20 fewer LR2 vessels transporting clean petroleum products and, at the same time, 65 newbuildings have been delivered to the LR2 fleet during the same period. The scale of the sanctions is notable. 1 in 4 vessels in the combined Aframax LR2 segment is currently under U.S., EU or U.K. sanctions. This comes on top of the fact that the order book is already balanced by the high share of overage vessels in this segment.

Next slide, please, Slide 10. And here, let me just elaborate a little on vessel sanctions. So most sanctioned vessels were added to the list last year. So in 2025 alone, more than 200 Aframax and LR2 vessels were sanctioned. This is 3.5x the number of newbuilding deliveries in the segment in 2025, and it is equivalent to almost the entire combined newbuilding program for a 3-year period from 2025 to 2027. With 60% of these now sanctioned vessels being older than 20 years, their likelihood of returning to the mainstream market even if sanctions were lifted appears to be limited.

And now turn to Slide 11, please. Geopolitical developments continue to be a major driver of market dynamics. And in fact, the list of different geopolitical drivers has only gotten longer in the past 4 years. The growing number of policy interventions and geopolitical flash points increases uncertainty and associated inefficiencies. Beyond the policies directly affecting product tankers, developments in the crude tanker market such as a potential tightening of sanctions against Iran, rising OPEC production are also indirectly supportive for product tanker demand.

We sincerely hope for a ceasefire between Ukraine and Russia. However, we see the likelihood of trade returning to pre-war levels as very low or nonexistent in the foreseeable future given the EU's clear determination to tighten sanctions. The EU ban on Russian crude oil and oil products has been by far the most significant sanction against Russia in terms of ton-miles. And the new 20th sanction package the EU is working on is potentially adding a full maritime services ban to it, pausing an even larger share of Russian oil flows into the shadow fleet. This would likely further increase the inefficiencies of the fleet trading Russian oil.

Please turn to the next slide, Slide 12. And in summary, the key geopolitical forces continue to shape this year's market. While a potential normalization of Red Sea transit is unlikely to weigh on the market, the EU's ban on Russian oil will continue to underpin longer trading distances. On the demand side, ongoing shifts in global refining capacity continue to support ton-mile expansion. On the tonnage supply side, the increase in newbuilding deliveries will be balanced by a growing pool of scrapping candidates and reduced participation from sanctioned vessels, factors that will influence overall tonnage availability and market equilibrium. Against this backdrop, I'm confident that TORM is well positioned to navigate an environment marked by uncertainty and supported by our solid capital structure, strong operational leverage and our fully integrated platform.

So with that, I'll now hand it over to you, Kim, who will take us through the numbers.

Thank you, Jacob. Now please turn to Slide 14, and let me walk you through some of the drivers behind our performance this quarter and for the full year. Starting with the market backdrop. The product tanker market stayed strong throughout the fourth quarter, and that supported another solid result for us. For Q4, we delivered TCE of USD 251 million, which translated into EBITDA of USD 156 million and net profit of USD 87 million. Across the fleet, our average TCE came in at USD 30,658 per day. Breaking that down, our LR2 earned above USD 35,000, LR1s were above $31,000 and MRs were just under USD 29,000 per day.

For the long-range vessels, these numbers were actually a bit better than we indicated in our Q3 coverage, reflecting continued strong markets, helped in part by very firm crude tanker rates.

For the full year, we delivered TCE of USD 910 million, EBITDA of USD 571 million and net profit of USD 286 million. These are solid numbers. As expected, earnings moderated from the exceptional levels of last year, but they remain robust and importantly, very much in line with the guidance we shared in November.

And turning to shareholder returns. With a strong Q4, earnings per share reached $0.88, and the Board has declared a dividend of $0.70 per share, bringing total dividends for the year to USD 2.12 per share. We continue to believe that our capital return framework strikes the right balance, clear, disciplined and supported by robust cash earnings generation.

And with that overview in place, let us move to Slide 15, where we break down the earnings in more details and talk through the underlying drivers. Slide 15 shows our quarterly revenue progression since Q4 2024. With this quarter's results, we see a meaningful uptick building on the positive trajectory in freight rates and earnings we delivered over recent quarters. It's a clear indication of the favorable market environment we are operating in. For the quarter, we delivered TCE of USD 251 million and EBITDA of USD 156 million, making our strongest quarterly performance this year. The underlying uplift is driven by firm freight rates supported by solid fundamentals and a positive spillover from the crude tanker segment, as mentioned.

Given our operational leverage, we were well positioned to benefit from what we already see as very attractive freight rates.

Please turn to Slide 16. Here, we show the quarterly development in net profit and the key share-related metrics. For the fourth quarter, earnings per share came in at $0.88. Our approach to shareholder returns remain clear, disciplined and consistent. We continue to distribute excess liquidity on a quarterly basis while maintaining a prudent financial buffer to safeguard the balance sheet. For Q4, this has resulted in a declared dividend of $0.70 per share, corresponding to a payout ratio of 82%. This is fully aligned with our free cash flow and debt -- after debt repayments and reflects both the strength of our earnings and our ongoing commitment to responsible capital allocation.

And now please turn to Slide 17. As shown on this slide, broker valuations for our fleet stood at USD 3.2 billion at year-end. This reflects a continued positive sentiment in the market and results in an NAV increase to USD 2.6 billion. Importantly to note, average broker valuations for the fleet increased by 4.2% during the quarter, driven primarily by higher valuations for our LR2 vessels, which saw the strongest appreciation. This uplift further underscores the improving market backdrop and the quality of our asset base.

In the recent quarter -- or sorry, in the central chart, you can see our net interest-bearing debt, which now stands at USD 848 million, corresponding to 29.4% in net LTV. The increase reflects the vessels acquired during the quarter, which naturally required incremental funding. Importantly, even with this investment-driven uptick, our leverage ratio remains within the range that we have maintained over recent quarters, typically between 25% to 30%, underscoring the strength of our conservative capital structure.

This stable leverage -- sorry, this stable level continues to provide us with ample financial flexibility to pursue value-accretive opportunities while safeguarding balance sheet resilience across market cycles.

On the right, you can see our debt maturity profile. We have USD 135 million in borrowings maturing over the next 12 months, excluding lease terminations that have already been refinanced. Beyond that, only modest amounts fall due in the following years. Overall, our solid balance sheet gives us sustainable financial flexibility to navigate current market conditions with confidence and to pursue value-creating opportunities as they emerge.

Now please turn to Slide 18. This time, we have added a new slide to show what is actually -- what it actually means for the value creation when we consistently achieve rates above the market average. The MR segment is our largest exposure and a segment where competitors also have meaningful scale, making it the most representative benchmark for the product tanker market. We could, of course, perform a similar comparison for LR2 vessels. However, the benchmarking becomes less robust as many of our peers operate only a relative small LR2 fleet, limiting the comparability and statistical relevance for such an analysis. That said, based on the data available, a comparable calculation for the LR2 segment would probably show the same picture.

As shown on Slide 24 in the appendix, we compare the rates we achieved with those of our peer group. Quarter after quarter and year after year, we have consistently delivered rates well above the peer average and in most quarters, even market-leading. This performance is a direct outcome of the One TORM that Jacob discussed and which continues to differentiate us in the market. But on this slide, when we take the analysis a step further by quantifying what that actually means, then, holding everything else equal, we calculate the premium TCE by taking our spot TCE relative to the peer average, multiplying it by our operating base and comparing that figure directly with our dividend in each quarter from 2022 to 2025. This provides a clear transparent view of the tangible financial value created by outperforming the market.

Two examples illustrate the impact. In 2022, we returned USD 381 million in dividends. Our premium TCE was USD 38 million, around 10% of the total dividends paid. And in 2025, based on the first 3 quarters, the premium reached USD 49 million compared to our full year dividend of $212 million, that represents 23% of the total. So the message is clear. Our strong rates have a material and measurable impact on our dividends returned to our shareholders.

Across that period, which includes different market conditions, we have returned USD 1.6 billion in cash dividends. And our analysis show that premium earnings from the MR fleet accounted for roughly 15% of the total dividends paid over the past 4 years.

And now please turn to Slide 20 for the outlook. We're stepping into 2026 from a clear position of strength and solid momentum across our business. In Q1, we have already secured 70% of our earnings days at an attractive average TCE of USD 34,926 per day. This strong coverage provides a robust foundation for the year and reflects the positive traction we are seeing across all vessel segments. With the coverage already locked in and the encouraging market outlook ahead, we expect TCE earnings of USD 850 million to USD 1.25 billion and EBITDA of USD 500 million to USD 900 million. Both ranges are based on our midpoint internal forecast, after which we apply a defined range to reflect the uncertainty associated with the full year outlook and the potential volatility in the market conditions as the year progresses. And we are entering the year with confidence and real momentum behind us.

And with this, I will conclude my remarks and hand it back to the operator.

[Operator Instructions] Your first question comes from Frode Morkedal with Clarksons Securities.

First question I have is on the EBITDA guidance or the revenue guidance. If you could, I'm curious about what type of spot rate assumption you made there? Of course, I understand there's a lot of moving parts in this type of guidance, but let's say, LR2, MR rates in the high end, what are -- what's the implied rate, if you can share that?

Frode, I can tell you about our methodology that we use when calculating our guidance for the year. So we take the coverage, the fixed days we have already made for Q1, and then we apply the unfixed days for the rest of the year with the forward curve that we see in the market for the remainder of that period. And then you get to a midpoint. And from that midpoint of TCE, you then deduct our normal cost and get to an EBITDA. And depending on where the freight rates are, we stress that with an interval. And as they are higher right now, you will see, compared to last year, that the interval is slightly higher than we had a year ago. That is due to both what I just said, the higher rates, freight rates, but also more earning days, of course. So that's the methodology behind. So we are basically building it on what we have achieved already and then the markets.

Right. So is it just FFA market or time charter rates that you're looking at or...

It's forward freight rates.

And can you just say like the midpoint, is that -- roughly is that curve today when you made the guidance?

It's around $30,400 across the fleet.

Right. Okay. That's a good reference point. So yes, but just I wanted to discuss how you see the strength in the crude market impacting the products? Clearly, you talked about the switching. I'm curious to know if you think there's more to go there? I have noticed that crude Aframaxes are still trading with quite a significant differential to LR2 spot rates. So yes, curious to hear your views.

Yes. Obviously, time will tell. But I think clearly, the strength that we are seeing across the crude segments is first and foremost, having a direct one-to-one impact on the behavior of the LR2 fleet and LR2 owners. So the incentive currently to switch from being participating as an LR2 in the CPP market and potentially moving into the crude market is a little depend on whether you are in the Western hemisphere or the Eastern hemisphere. But just as an example, as you point to in the Western hemisphere, there's a clear financial incentive to switch over.

I think we will see more of that as we showed in the graph. There is basically fewer vessels that are available due to the sanctions regime imposed, especially by the U.K. and EU, but also by OFAC. So that means that the compliant requirements for our customers, whether it's in CPP or in dirty trade, is serviced by fewer vessels, fewer assets. And that is pushing rates higher as we speak. We see term rates rising, and they are not to the extreme volatility that we see in the VLCC segment, but still significantly higher for a 1-year charter today than what it was at the beginning of the year. And I think this trend, let's see how it plays out, but I think it is here to stay. So we're quite optimistic in the earning power in the segments, to be honest.

I agree. I guess the acquisition you made, I think it was 8 ships, right, in Q4. That was a pretty good timing. I think we discussed it last time, but maybe you could just discuss how you thought about the investment case at the time. Clearly, it's been a -- was a good idea to buy these ships. And secondly, what's your view now at this point in time of further opportunities to acquire ships?

Yes. So I think it's like this, that we did -- when we had the conversation, I think also on this call in Q4, I think we illustrated that we are looking at it quite methodically and just saying what is the sweet spot in terms of our expectation of the free cash flow that we can generate from an asset and where is the asset [indiscernible]. And what we identified was these pockets of that we could buy some LR2s and we did some here actually towards sort of mid-December bought a couple of ships. And clearly, today, the price of these assets and one of them is actually only delivering tomorrow is already up by 20%. So if you isolate it out and just say, yes, that's good timing. But the backdrop of that is, of course, also that now when we had to sort of do our own thinking around potential other acquisitions, clearly, with assets rising like this, it gets harder to make the next acquisition.

So I think we were fortunate about the timing on these 8 ships. We actually had hoped, to be very honest, to have upped the end a little on that in terms of number of assets, but they were simply not available at that point in time at attractive prices. So I think we just had to regroup a little. Asset prices are moving quite fast, and we just have to regroup and make sure we still follow our methodology and not get carried away. But I'm optimistic that we can maybe identify a few, let's say, some other deals that sort of fits the bill on our return requirements.

Frode, may I just -- I need to answer your question. You started a bit more precise than what we did, just so it's clear how we do it on the guidance. I just didn't have them in my head, but I have the numbers here. So if you take Q1, we had covered 8,177 days with $34,208. Then we take the uncovered days, that's 25,691 at $30,371. And then you do the math from there. Then you come to a total number of days, operating days and average TCE. And then you get to a TCE and you stress that.

Right. That's good. So on the stress test, do you have like a percentage plus/minus or...

That's -- we derived it a few years ago, but the way we use it is plus/minus TCE, and it depends on how much the stress depends on what the actual TCE level is. The lower it is, the lower the stress is, the higher it is, the higher the stress is. So it depends on where you are on the actual TCE levels.

Your next question comes from [ Clement Mullins ] with Value Investors Edge.

I wanted to start by following up on Frode's question on Afras and LR2s. Could you talk a bit about the portion of your LR2 fleet that traded dirty throughout the quarter? And secondly, on the LR1 side, have you seen an increase in the proportion of vessels trading dirty over the past few months?

Yes. Thanks for those very precise ones. So I'll start from the back end of this. So we have not really seen that the dirty market has affected the LR1s in our fleet and in our case. And when we look at our vessels and on the spot, we basically have 10% to 20% of our LR2s trading spot dirty. And then we've got another 10% that is on term charter dirty.

That's helpful. And you continue to outperform peers on the MR side with your chartering team doing an excellent job. Could you talk a bit about what portion of your administrative expenses is attributable to the chartering team versus kind of the corporate side? Any color you could provide would be really helpful.

Yes. So we actually don't account like that. We -- as I tried to illustrate also in the beginning, on the One TORM platform, we believe that it's not actually the chartering team that is the secret sauce. It is actually the power of -- that you have in an organization ranging from the employees who bought a ship to the people doing the accounting and operations, technical. And of course, also, as you point to, the chartering team, but their success is not an isolated thing that has to do with their ability, it's the whole structure. So we don't -- I don't have an answer. I don't know the number. It's not the way we think about...

There are no further questions at this time. I'll turn the call to Jacob Meldgaard for closing remarks.

Yes. Thank you very much, everyone, for listening in on the annual report 2021 for -- 2025, obviously, for TORM. Thank you very much for listening in, and have a great day.

This concludes today's conference call. Thank you for joining. You may now disconnect.

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM Third Quarter 2025 Results Conference Call. [Operator Instructions]

Thank you. I would like to turn the call over to Jacob Meldgaard, CEO. Please go ahead.

Yes. Thank you, and also welcome to everyone joining us here today from me. This morning, we released our interim results for the third quarter of 2025, delivering another strong set of numbers that underscore TORM's ability to generate market-leading performance.

In Q3, we continued to operate in a relatively stable market environment despite ongoing geopolitical tensions. Freight rates firmed compared to the first half of the year, driving a TCE of USD 236 million, above the levels achieved in the previous quarters. This, in turn, resulted in a net profit of USD 78 million, enabling us to declare a dividend of USD 0.62 per share, clearly reflecting how stronger earnings translate into higher shareholder returns.

Also, we advanced our fleet optimization strategy with the acquisition of 5 vessels: 4 2014-built MRs and 1 2010-built LR2, while divesting a 2007-built MR. We also agreed a 3-year time charter for the 2009-built MR vessel, TORM Lilly, to a European refiner at a daily rate of USD 22,234, thus above the prevailing market rate for such vintage. These transactions support our ongoing focus on maintaining a modern, high-quality and commercially attractive fleet.

Looking ahead, while the macro environment remains dynamic and shaped by geopolitical uncertainty, market sentiment is broadly positive. We entered the final months of the year with solid momentum, supported by firm rates across all vessel segments and good visibility on our upcoming fixtures. Based on this and the coverage we have already secured, we further increased the midpoint of our guidance and narrowed the range to reflect a high level of transparency on earnings with relatively few uncovered days for the remainder of 2025. As always, we remain disciplined and agile in our execution.

And with that, let's turn to the key market drivers and how we are positioned for the quarters ahead. Here, please turn to Slide 5. And let's start with a snapshot of the market landscape. Product tanker rates have remained both stable and attractive across the board. While recent figures reflect the onset of refinery maintenance season in the Atlantic and the Middle East, benchmark earnings for our MR and LR2 vessels continue to show resilience. This overall rate stability is supported by consistent demand and limited growth in the CPP trading fleet.

Let's turn to Slide 6. As we've noted for some time, the low levels of East to West trade volumes observed earlier this year were unsustainable. Indeed, in the third quarter, trade volumes increased significantly, driven by higher middle distillate flows from East to West, supported by transatlantic movements. This lifted ton-miles well above the levels seen before the Red Sea disruption, while crude cannibalization stabilized at historically normal levels. At the start of the fourth quarter, trade flows have eased slightly as refineries in the West and the Middle East undergo seasonal maintenance. However, as maintenance concludes, trade flows are expected to resume, further supported by refinery closures in the West, which increase the need to source products from alternative locations.

Please turn to Slide 7 to elaborate on that. And since the start of this year, 2 refineries in Northwest Europe have closed with 2 more scheduled to shut by end year. Together, these closures represent 6% of the region's refining capacity, reducing local product supply and increasing reliance on imported middle distillates in an already tight market. If this supply were fully replaced by imports from the Middle East Gulf, an additional 15 to 24 LR2 equivalents per year would be required, depending on whether vessels transit the Red Sea or sail around the Cape of Good Hope. To put this in perspective, this represents 6% to 10% of the current CPP trading LR2 fleet. Beyond Europe, 2 refineries on the U.S. West Coast, representing 11% of the region's capacity, are expected to close within the next 6 months. This will likely drive increased demand for gasoline and jet fuel imports, translating into a need for more than 25 MR equivalents on a round-trip basis if sourced from Asia.

And here, I kindly ask you to turn to Slide 8. Geopolitical developments continue to be a key market driver. Since our last quarterly call, several new measures have emerged. While the duration of these measures remain uncertain, inefficiencies caused by the Red Sea disruption and sanctions on Russia continue to support the tanker market. Earlier this year, OPEC+ began unwinding production cuts, but the impact on crude tanker rates only became apparent at the end of the third quarter. We expect the positive effect of strong VLCC rates on product tankers to become more visible once the refinery maintenance season concludes.

Sanctions against Russia have intensified in recent months. The EU import ban on third-country petroleum products derived from Russian crude, effective January next year, is not expected to significantly affect product tanker ton-miles as alternative sources are available at similar distances or could slightly increase demand if imports are sourced from further away. Meanwhile, intensified drone attacks on Russian refineries have reduced Russian clean petroleum product flows, boosting flows from the U.S. Gulf. Recent OPEC sanctions on Rosneft and Lukoil may further lower Russian crude export. While the direct loss of Russian barrels is limited to the sanctioned fleet, replacement barrels from other regions would provide additional demand support for the conventional crude tanker fleet in an already strong rate environment, indirectly benefiting the product tanker market.

Regarding U.S.-China reciprocal port fees, these are now off the table for another 12 months. While such measures could have added inefficiencies to the broader tanker market, TORM would have seen limited impact due to exemptions and the flexibility of our fleet. Finally, IMO's postponement of the Net-Zero Framework in October does not affect the market today, but signals that oil will continue to play a role in the maritime industry for the foreseeable future.

Please turn to Slide 9. Let me turn to the tonnage supply side. This year's higher nominal fleet growth has been largely absorbed by a significant shift of LR2s into dirty trades as OFAC sanctions continue to limit the productivity of sanctioned Aframaxes. Over the past year, nearly 50 newbuild LR2s have joined the fleet, yet the number of LR2s trading clean has declined by around 10 vessels. As a result, total clean product tanker capacity has fallen by roughly 1% despite a 5% increase in the nominal product tanker fleet.

Looking ahead, the relatively high order book for the next 2 to 3 years should be viewed in the context of an aging fleet. The average age is now at a 2-decade high, and the share of vessels approaching scrapping age is almost equivalent to the current order book. Furthermore, a significant portion of the older fleet remains under sanctions, which is expected to accelerate exits from the market. This is particularly evident in the combined LR2 Aframax segment, where 1 in 4 vessels globally is under OPEC, EU or U.K. sanctions.

Kindly turn to Slide 10. To summarize, the key factors shaping the market this year are expected to continue into next year, including ongoing geopolitical uncertainty, the Red Sea disruption and sanctions on Russia. In addition, higher crude output from OPEC is indirectly supporting the product tanker market. On the demand side, oil consumption remains solid, and structural changes in the global refinery landscape continue to support ton-mile growth. On the supply side, a wave of newbuild deliveries will be offset by an increasing number of scrapping candidates and reduced trading activity among sanctioned vessels, factors that will influence overall tonnage availability and market balance. I'm confident that TORM is well positioned to navigate this environment of elevated uncertainty, supported by our strong capital structure, operational leverage and fully integrated platform.

And with that, I will now hand it over to Kim, who will walk us through the financials.

Thank you, Jacob. And please turn to Slide 12 for an overview of the financials. In the third quarter, we generated TCE revenues of USD 236 million, resulting in an EBITDA of USD 152 million and a net profit of USD 78 million. On a fleet-wide basis, we achieved TCE rates of USD 31,012 per day. And breaking it down by vessel class, LR2s earned well above $38,000, LR1s around $29,500 and MRs exceeded USD 28,000 per day. Compared to previous quarters, freight rates have strengthened, supported by solid market fundamentals. Once again, the rates we secured reflect our continued outperformance relative to the broader market.

And now, move to Slide 13, please. This slide shows our quarterly revenue progression since Q3 2024. With this quarter's results, we see meaningful uptick, adding to the stable freight rates and earnings of prior quarters. This further highlights the favorable market conditions we are operating in. We delivered a satisfactory result with TCE of $236 million and an EBITDA of USD 152 million, USD 25 million higher than previous quarter. This improvement reflects a USD 4,340 per day increase in fleet-wide TCE rates. Given our current operational leverage, we are well positioned to benefit from the already very attractive freight rates.

Please turn to Slide 14. Here, we present the quarterly development in net profit and key share-related metrics, which closely track the trend in EBITDA. So, for the third quarter, earnings per share came in at USD 0.79. Our approach to shareholder returns remain clear and consistent. We continue to distribute excess liquidity on a quarterly basis, while maintaining a prudent financial buffer to protect our balance sheet. For Q3, this has resulted in a declared dividend of USD 0.62 per share, representing a payout ratio of 78%. This aligns with our free cash flow after debt repayments and reflect both our strong earnings and our ongoing commitments to responsible capital allocation.

Please turn to Slide 15. As shown here, broker valuation for our fleet stood at USD 2.9 billion at quarter-end. This reflects generally stable vessel values with a slightly positive sentiment, amongst other factors, resulting in a NAV increase of approximately USD 100 million to USD 2.4 billion. In the central chart, you will see our net interest-bearing debt now stands at USD 690 million, corresponding to around 24%, roughly the same level as the last -- at the same time last year, underscoring the strength of our conservative capital structure. On the right, our debt maturity profile shows that only USD 122 million in borrowings will mature over the next 12 months and that we will have no significant maturities until 2029. This provides us with ample financial runway and stability. As we mentioned in August, we have secured an attractive refinancing package to replace 2 syndicated loan facilities and our lease agreements. To date, TORM has repurchased 13 out of 22 leaseback vessels, and 2 additional purchase options have been exercised with 1 vessel expected in Q4 2025 and the other in Q1 2026. The remaining vessels are scheduled for repurchase during 2026. Altogether, our strong financial position gives us the flexibility to navigate current market conditions and pursue value-creating opportunities.

And now, please turn to Slide 16 for the outlook. Our strong performance in the first 3 quarters provides a solid foundation for the remaining part of the year. As of 31st October, we have secured 55% of our Q4 earnings days at an average of TCE $30,156 per day. For the full year 2025, 89% of our earning days are fixed at an average TCE of USD 28,281 per day. These levels provide solid earnings visibility and reflects continued market strength across our business segments. While geopolitical volatility remains a factor, market sentiment is firm. On this basis, we are confident in increasing the midpoint of our TCE guidance by USD 25 million to USD 900 million, while further narrowing our full year guidance. Thus, we now expect TCE earnings of between USD 875 million to USD 925 million compared to our previous range of USD 800 million to USD 950 million. Similarly, we increased the midpoint and narrowed our EBITDA guidance to USD 540 million to USD 590 million compared to the prior range of USD 475 million to USD 625 million. This revision reflects both our secured coverage and current market expectation, while acknowledging the potential for continued fluctuations.

And with that, I will conclude my remarks and hand it back to the operator.

[Operator Instructions] Your first question comes from the line of Frode Morkedal with Clarksons.

Yes. I just read trade wins where you talked about 2009-built MR charter out for 3 years at $22,000 per day, which is like a fantastic rate, given the age, right? Basically, 3.5x EBITDA, as I see it. So the question is really how do you manage to pull that off and how repeatable is it to charter out for such long duration for that type of age?

Yes. Well, thank you for noticing. I did also mention it in the remarks here. I think there are 2 things. One is being able to be able to charter out ships that are, in this case, more than 15 years of age, and then, how many opportunities are there. We take it the first point first, and I think the point about having an integrated platform, really our customers, I would argue, is not really age-focused in their dealings with us because we have a platform where all our assets are living up to the same standards. If you come to human behavior, safety, et cetera, it's exactly the same people on board a vessel that is, let's say, straight out of the yard or one that is built in 2009. And also on efficiency, all the things that we do to make it a TORM vessel when we own and control it is the same across the fleet. So I think my point being, I don't see this as unique because our customers will look at TORM delivering the same type of service for any of our vessels.

Then to your question, how many are there, we are -- I mean, this is a European refinery [ A1 ]. Will there be more? Time will tell. We are in negotiations on several of our ships on longer duration. And clearly, with the market that we are experiencing right now, it is so that we are in more frequent dialogue with customers around longer-term deals than what we were 6 months ago. But it is quite a game of that we're only going to do this if it makes financial sense. We don't need to take the cover because of, obviously, the financial strength on the balance sheet that Kim, I think, went through in detail.

Interesting. I mean, yes, for sure. I mean, 30% cash return on such a deal certainly means ship value should increase, right? Which brings me to the next question really is about -- you also announced the 4 MRs, so you're buying ships -- and 1 LR2, I guess. You also sold older ships. Just like broadly speaking, how is your thought process when you made those decisions? Are you looking at some type of return hurdle, cash breakeven or maybe the time charter opportunities? Yes.

Yes, good question. I think the answer is all of the above. So we don't only look at one metric, but of course, it needs to qualify for the -- our internal hurdle for what we deem to be a proper IRR and also return on invested capital, given that we are in volatile markets and we are spot operation. Of course, it needs to pass on that parameter when we look at asset acquisitions. But I think, again, I'll make the same point here. So probably, I'm a little repetitive. But I think we are also -- we have the benefit of that when we make investment analysis, we are not sticky on vessel age or the vessel segment. What we are really sticking on is that it meets the return requirements, the hurdles that we have set for ourselves because we are in a business that is volatile. So of course, we need to have a decent return in order for us to utilize our capital against the asset. But the luxury we have because of the platform that I also described about the charter opportunities is so that I feel very comfortable that our organization can generate maximum value out of whether it's an MR built in -- 5 years of age or 10 or 15, or whether it's one of the other segments. And that, of course, offers me more investment opportunities to study and look at IRRs and ultimately return on invested capital from not only one angle and not only one particular type of ship because we really had the ability with our integrated platform to accommodate all of this. So obviously, coming to your point, the 4 -- actually 5 vessels we've acquired, they, in our opinion, all of them individually meet the return hurdles that we have, whereas if we looked at the one that we sold, that was an asset where we could see that it was -- actually, the NPV of that sale was better than maintaining it in our fleet and operating it. It was not that we could not do it, but we had an offer that was better than what our business plan would dictate that you could get.

Interesting. Can you remind us, I guess, on how the One TORM platform actually works [ as part of ] this? I guess, [indiscernible] intelligence, I don't know, cargo opportunities, positioning, essentially why that translates into the higher TCE than arguably peers are getting?

Yes, very happy to. So basically, I think you should look a little away from the fact that we are chartering the ships and start by looking at the ships themselves where we have an integrated platform where we hire all of our seafarers. So we can dictate which seafarers are on what ships at what time. We can, of course, dictate the quality, but also the focus area and incentivize these to work for the same thing as I just described, i.e., the return on invested capital at the end because they are not motivated by a particular ownership structure inside of a ship management company. They are all integrated. So I think it starts on both the ships and it also starts with all the technicalities that we can apply on the ships. If we take over a ship, we will probably add 20 different investments that is physically changing the ships from what they are today into the type of vessels with the fuel efficiency that we would like to have. And then, it's sort of the broader picture of that we see, of course, ultimately that it is the dialogue with the customers that dictates the price. But before you get to that, there's a whole company that is working towards enabling the chartering team to get the best rates. And I think in that sense, it is different than the business models that we see in other companies where you are more of a steel owner, but where you outsource control of various functions. We actually have everything in-house. And the discipline we can create by that is that we actually have common KPIs. Everybody in the organization is driven by the same KPIs. I think that is the secret sauce in this. And then, underneath the hood, there's, of course, many other things you also point to. You need to be in the right markets at the right time. You need to be really clever about how you position your fleet and think forward. And of course, we use tools in order to inform us about what do we believe is the best position that you can come in to maximize earning over a longer period. And I'm happy that you -- I think we really recognize that the value of the platform is that we are delivering TCE earnings ultimately that exceeds our peers.

[Operator Instructions] And your next question comes from the line of Omar Nokta with Jefferies.

Good update. Obviously, very strong figures. I just had a couple of questions. Maybe just in terms of capital deployment, you bought the 4 MRs, the LR2. Those ships are somewhat older, but it looks like perhaps maybe they're in that sweet spot of return on investment. But I just want to get a sense from you, is this -- does this mark maybe a difference in how you're going to start deploying capital? Do you think going younger makes sense? Or is this the right age profile where we are in the cycle, and I guess, maybe where TORM is in its life cycle? Is this the right age to be going after at this point?

Yes. I think coming back to the right age is the age where you get the highest return on invested capital. We are not concerned about the age of these assets. Then we would obviously not have looked that way. So yes, I think it's absolutely the right thing. Could it be that we could supplement with younger tonnage? Yes. When and if the price curve gives us the opportunity to buy the right type of assets that are younger, we will absolutely look that way also, Omar. But for now, I feel very comfortable with the choices that we have made, and then we are very open for business on any potential addition to our fleet.

Okay. Very good. And then, second question I have is on the dividend. It looks like you bumped the payout ratio from, say, 70% up to 78%. I know it's not a meaningful change, but it's noticeable. Anything you're willing to share in terms of how you think about dividends going forward from here? Do you want to keep it in that 70% to 78% range? Do you think it's more on the higher end going forward? Anything you're willing to share?

Yes. Thank you for that question, Omar. We were asked the same question last time, you remember that? And if we'll go [indiscernible], and I think we were supposed to say, yes, we'll get there. [ Lovely ], we are there already this quarter. That's not how we have designed our distribution policy. It's not designed to hit a PE or payout ratio. It's designed to distribute free liquidity we generate throughout the quarter. But of course, it is correlated to our cash flow breakeven levels. And as they go down -- and I'm just taking the net working capital impact out of the equation. But all that being equal, of course, as our cash flow breakeven decreases, the ability to pay out more, of course, increases likewise. So hopefully, we will look into some coming quarters where we can keep it at this level. Also, I think I alluded to last time potentially higher, but let's just call it these levels is very satisfactory. But it's not an aim we have on a payout ratio. It is the free liquidity we're generating that we are -- that is the outset of when we propose dividends to our Board and then they decide from that.

Okay. That's helpful. And then, last question, just in terms of the reported interest expense was a bit higher than the prior few quarters. I'm just wondering, is that an accounting treatment? Is that timing of a coupon payment?

No, it's the refinancing. So it's the account treatment of the refinance and the upfront -- or the fees that are generated there. So you're just [indiscernible].

Yes. Okay. So it smooths out kind of back to a more normalized level in 4Q?

Definitely, we can have a talk about that, Omar, if you want some more details on that, but that's the accounting effect.

[Operator Instructions] And at this time, there are no further questions. I will now turn the call back over to Jacob for closing remarks.

Yes. Thank you, everyone, for listening to the Q3 2025 report from TORM. Have a great day.

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