Royal Vopak Nv · EURONEXT:VPK
Royal Vopak Nv — Q3 2018 Earnings Presentation
57 slides from Royal Vopak Nv's earnings presentation, Nov 5, 2018
Slide 1: Q3 2018 – Roadshow presentation
Q3 2018 – Roadshow presentation Royal Vopak
Slide 2: Forward-looking statement
Forward-looking statement This presentation contains ‘forward-looking statements’, based on currently available plans and forecasts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
Slide 3: Introduction
The world’s leading independent tank storage company building on an Introduction Slide impressive history of more than 400 years Title
Slide 4: Vopak at a glance
Vopak at a glance Number of terminals* Number of countries* Market capitalization* FY2017 Revenues** In EUR billion In EUR million 67 25 5.1 1,306 Compared -3% to 2016 Storage capacity* Number of employees FY2017 EBITDA*** FY2017 Net profit**** In million cbm In FTE (HY1 2018) In EUR million In EUR
Slide 5: Strategic terminal types
Strategic terminal types Industrial terminals Gas terminals Distribution terminals Hub terminals Vopak has more than 40 years of experience in Demand for gas is increasing, driven by Capacity for refining and petrochemical Hub terminals are strategically located along industrial terminalling and is
Slide 6: Well-balanced global portfolio
Well-balanced global portfolio Oil Chemical Industrial Vegoils Gas products products terminals & biofuels products Typical contract 0-5 years 0-5 years 5-20 years 0-3 years 10-20 years duration per product / terminal category Share of 40-45% ~25% 20-25% 5-7.5% 3-5% 2017 EBITDA* Europe & Africa Asia
Slide 7: Key developments
Key developments Occupancy rate* EBITDA development** In percent In EUR million 88 88 92 93 90 763 812 822 763 753 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Cash flow from operating activities (gross) Dividend In EUR million In EUR per ordinary share 787 867 783 1.00 1.05 1.05 713 714 0.90 0
Slide 8: Occupancy rate developments
Occupancy rate developments Occupancy rate of 86% (YTD Q3 2018) explained by lower rented capacity at the oil hub terminals caused by a less favorable oil market structure. Other product-market segments showed stable demand for storage services Occupancy rate* In percent FY 90% YTD Q3 86% 90-95% 85-
Slide 9: Demand drivers
As the world population is growing and becoming more affluent, demand for vital Demand Slide products like energy, chemicals and food are increasing drivers Title
Slide 10: Growth in all three end markets
Growth in all three end markets Global Trends Urbanization Disruptive Changing Geopolitical developments Sustainability & technologies demographics & Trade Climate End Markets Energy Manufacturing Food & Agriculture Industrial terminals Distribution Terminals Gas terminals Hub Terminals Distribution
Slide 11: Oil demand continues to grow
Oil demand continues to grow Energy demand outlook Oil demand per region Oil demand per sector • Highest absolute mtoe growth in gas and 20 mb/d (excl bunker demand) mb/d 120 120 relative for renewables no further 16 100 100 growth in coal 80 80 12 • Main oil demand 60 60 growth is in Asia 8 40 40 P
Slide 12: Expanding storage capacity in oil hubs
Expanding storage capacity in oil hubs Growing competitive pressure at oil hub locations ARA region Vopak 7.2 mln cbm • Hubs are key for logistic, blending, regional distribution Singapore Straits Vopak 3.6 mln cbm and trading activities • Demand for storage in hubs depend on: Fujairah Vopak 2.6 mln
Slide 13: Solid growth in structural deficit markets
Solid growth in structural deficit markets Vopak’s fuel import-distribution network • Economic growth drives CPP demand in emerging markets and can lead to growing imports • Refinery closures are a driver for imports in more mature markets • Vopak can leverage on existing presence in specific distri
Slide 14: Increasing chemical trade flows
Increasing chemical trade flows Regional imbalances of chemicals will continue to increase FSU North America Greater Europe 3.9 22.5 0.8 0.9 -8.5 -13.6 2.2 3.0 10.9 Middle East -7.9 -1.4 65.6 7.4 -16.5 -10.5 2016 2025 North East Asia 5.1 11.5 2.3 -24.1 3.0 0.8 47.3 28.1 2016 2025 2016 2025 18.2 -23.
Slide 15: Reshaping of the LNG market
Reshaping of the LNG market A new wave of LNG supply is expected, initially predominately coming from the US and Australia Norway ~1% FSU ~9% North America ~20% Middle East North Africa ~18% ~7% West Africa South America ~3% ~7% SE Asia LNG exported in 2016 ~14% LNG exported in 2025 East LNG exporte
Slide 16: Vopak's vital role in the LNG value chain
Vopak’s vital role in the LNG value chain Vopak continues to look for opportunities to strengthen its presence as a service provider in the LNG infrastructure market Vopak’s focus is on LNG import infrastructure LNG supply FSRU supplier Jetty infra Onshore tanks Pipeline Power plant 3 2 1 2 1 • Onsh
Slide 17: Strategy execution
Our success depends on our ability Strategy to show leadership in five key areas execution Q3 2018 - Roadshow presentation 17
Slide 18: Strategic priorities 2017-2019
Strategic priorities 2017-2019 Disciplined growth and productivity improvement Vopak is well-positioned to take several investment decisions in the 2017-2019 period Growth to capture growth Vopak aims to spend a maximum of approximately EUR 750 million on sustaining and Capex service improvement cap
Slide 19: Storage capacity developments
Storage capacity developments In million cbm between 2013 – 2017 35.9 33.8 34.3 34.7 Joint venture partnerships 30.5 2.3 2.8 3.8 2.2 1.6 Access to new markets and networks 9.9 11.9 12.2 12.5 8.1 Compliance with local jurisdictions Future options and growth opportunities 20.8 21.7 20.1 19.7 19.6 Comp
Slide 20: Growth projects under development
Growth projects under development Vopak’s Capacity Country Terminal ownership Products (cbm) 2013 2014 2015 2016 2017 2018 2019 2020 Growth projects per 5 November 2018 Existing terminals United States Deer Park 100% Chemicals 138,000 Malaysia Pengerang Independent 44.1% Oil products 430,000 Termina
Slide 21: Portfolio developments
Portfolio developments Focus on 4 strategic terminal types Vlissingen German LNG 9,000 cbm RIPET Open season completed Botlek Deer Park 96,000 cbm EETPL 63,000 cbm 138,000 cbm PT2SB 151,000 cbm Sebarok Panama Richards Bay 1,496,000 cbm 67,000 cbm PITSB 360,000 cbm 15,000 cbm Merak Lesedi 430,000 cbm
Slide 22: Safety performance
Safety performance Process safety and occupational health and safety is our top priority Total Injury Rate (TIR) Process Safety Events Rate (PSER) Total injuries per 200,000 hours worked Tier 1 and Tier 2 incidents per 200,000 hours worked by own employees and contractors by own employees and contra
Slide 23: Capital management
Disciplined capital allocation, maintaining a balanced risk-return Capital profile, and consistent dividend policy management Q3 2018 - Roadshow presentation 23
Slide 24: Priorities for cash
Priorities for cash 1 Debt servicing EUR 1.6 billion, remaining maturity ~7 years, average interest 3.8% 2 Dividend EUR 1.0 billion paid to shareholders in the last 10 years 3 Disciplined growth Network expands from 36.7 to 39.2 million cbm in 2019* 4 Capital optimization Create further flexibility
Slide 25: Cash flow overview 2017
Cash flow overview 2017 Solid operational cash flow result in healthy free cash flow generation 714 669 45 239 46 348 127 CFFO Tax & other CFFO Sustaining, service Growth Other Free Cash (gross) operating items (net) improvement & IT investments CFFI Flow before investments financing Figures in EUR
Slide 26: Investment phasing
Investment phasing Investments 2008-2019 Investments 2017-2019 Increase in growth In EUR million In EUR million investments 2,012 1,899 New 1,729 projects* ~EUR 175 million of projects with capacity expansion announced in 2018: Growth 900 investments** • Indonesia – Jakarta • Singapore – Sebarok • N
Slide 27: Financial flexibility
Financial flexibility The solid operational cash flow generation, strong balance sheet and sufficient financial flexibility, provides an excellent platform to continue our capital disciplined growth journey Equity and net liabilities Senior net debt* : EBITDA ratio In percent Equity Net liabilities
Slide 28: Capital structure
Capital structure Financial flexibility to support growth Ordinary shares Private placement Syndicated Revolving Equity(-like) program Credit Facility Listed on Euronext USD: 1.6 billion EUR 1.0 billion Subordinated loans: Market capitalization: JPY: 20 billion 15 participating banks USD 104 million
Slide 29: Debt repayment schedule
Debt repayment schedule Debt repayment schedule In EUR million 1,300 RCF flexibility 1,200 RCF drawn Other Subordinated loans 400 Asian PP US PP 300 200 100 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2040 As per 5 November 2018 Q3 2018 - Roadshow presentation 29
Slide 30: Net finance costs
Net finance costs Net finance costs 2017 Net interest bearing debt and interest rate In EUR million In EUR million 4.5% 4.4% 4.2% 4.1% 4.0% Interest and 12.6 dividend income Finance costs -111.1 2,266 2,296 1,825 1,804 1,534 Net finance costs 98.5 2013 2014 2015 2016 2017 Average interest rate (afte
Slide 31: Dividend
Dividend Barring exceptional circumstances, the intention is to pay an annual cash dividend of 25-50% of the net profit Dividend and EPS* Total dividend In EUR In million EUR 2.45 2.55 2.56 2.31 2.25 1.00 1.05 1.05 0.90 0.90 128 134 134 115 115 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Ear
Slide 32: Business performance
Long-term value creation, robust cash Business Slide flow generation and margin management performance Title
Slide 33: Key messages YTD Q3 2018
Key messages YTD Q3 2018 strategic direction YTD Q3 2018 Performance 2017-2019 Capture ‘Vopak delivers solid performance and commissioned first phase of growth new industrial terminal in Pengerang, Malaysia’ YTD Q3 EBITDA of EUR 554 million, adjusted for adverse currency translation Spend EUR 750m
Slide 34: Execution of strategy on track
Execution of strategy on track Strategic direction is set towards growth and productivity improvement Capture growth in the 2017-2019 period New projects in Malaysia, Indonesia, Singapore, South Africa, Canada, Brazil Spend maximum EUR 750 million on Sustaining and service improvement capex
Slide 35: Product-market update
Product-market update Diversified portfolio across different product-market segments Oil products Oil hubs: solid long-term demand Vegoils Strong biofuels market despite drivers despite short-term weakness & biofuels volatility due to anticipated Fuel oil: unsettled market changes in governmen
Slide 36: Fuel Oil and bunkering network
Fuel Oil and bunkering network Terminals will be fully ready to support new market requirements in 2020 Hamburg Conversion: Rotterdam Rail infrastructure Rotterdam Conversion Estonia Fujairah Hamburg Los Angeles Strategic review Algeciras Expansion: Singapore Panama Singapore Expansion Fujai
Slide 37: Cash flow overview
Cash flow overview Investment momentum (CFFI) towards 2019 YTD Q3 2018 497 38 458 180 278 206 28 100 CFFO Tax & other CFFO Sustaining, FCF before Growth Other Free Cash (gross) operating items (net) service & IT growth investments CFFI Flow investments before financing Figures in EUR million Q3 2018
Slide 38: YTD Q3 2018 vs YTD Q3 2017 EBITDA
YTD Q3 2018 vs YTD Q3 2017 EBITDA Adjusted for adverse currency translation effects EBITDA was EUR 3 million higher than prior year 570.5 20.2 553.6 550.3 16.7 2.4 14.5 6.6 0.0 10.1 YTD Q3 2017 FX-effect Adjusted Asia & Europe & LNG Americas China & Global YTD Q3 2018 YTD Q3 2017 Middle East Africa
Slide 39: Q3 2018 vs Q2 2018 EBITDA
Q3 2018 vs Q2 2018 EBITDA Q3 2018 performance normalized; Q2 2018 included a EUR 10 million positive one-off item in Asia & Middle East and EUR 6 million one-off costs items 182.7 180.7 179.9 0.8 8.0 5.7 2.5 1.8 2.8 1.6 Q2 2018 FX-effect Adjusted Asia & LNG Americas China & Europe & Global Q3 2018 Q
Slide 40: Q3 2018 exceptional items
Q3 2018 exceptional items IAS 19 Defined contribution plan Deconsolidation Venezuela In July, Vopak formalized the agreement regarding a Vopak will continue to operate the company in line new pension plan that qualifies as a defined with Vopak standards contribution plan under IAS 19 The incom
Slide 41: Growth projects
Growth projects PT2SB starts operations LPG & chemical gases Industrial terminal PT2SB in Pengerang, Malaysia, Vopak and its partner Reatile intend to invest in a commissioned first phase with initial 700,000 cbm of new LPG import and distribution terminal with an capacity initial capacity of 15
Slide 42: 2018 events: IFRS Leases impact
2018 events IFRS 16 Leases Impact for Vopak Applicable as from 1 January 2019 No changes in economics, only changes in accounting Vopak has a portfolio of long-term land leases and leases of other non-current assets Effects on Vopak’s key metrics* Annual Report 2017: Metric Effect Performa
Slide 43: Development key figures
Development key figures Solid financial performance in Q3 2018, although with lower occupancy Occupancy rate* EBITDA** In percent In EUR million 176 193 190 181 183 89 89 87 85 86 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 2018 2018 2017 2017 2018 2018 2018 ROCE** Net profit*** In percent In EUR m
Slide 44: Divisional segmentation
Divisional segmentation Europe & Africa and Asia & Middle East oil hub weakness, Americas, China & North Asia and LNG benefit from strong chemical and gas markets Europe & Africa Asia & Middle East Americas 90 90 86 83 86 90 88 89 86 85 90 90 88 89 89 80.8 85.1 80.8 74.5 77.2 66.3 66.5 65.2 64.0 59.
Slide 45: Non-IFRS proportionate information
Non-IFRS proportionate information Non-IFRS proportionate information provides transparency in Vopak’s underlying performance and free cash flow generating capacity EBITDA Occupancy rate Capacity In EUR million In percent In CBM million IFRS BASED 571 554 35.9 36.7 90 86 YTD Q3 YTD Q3 YTD Q3 YTD Q3
Slide 46: Looking ahead
Looking ahead • The financial performance in 2018 is expected to be influenced by currency exchange movements of primarily the USD and the SGD, and changes in the oil market structure, impacting occupancy rates and price levels in the hub locations • Given the 3.2 million cbm expansion program to be
Slide 47: Appendix
Appendix Relevant other information Q3 2018 - Roadshow presentation 47
Slide 48: Europe & Africa developments
Europe & Africa developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 90 90 86 83 86 157.7 165.8 158.9 153.2 155.8 2.3 Total Q3 2018 13.7 million cbm 11.4 Subsidiaries Joint ventures & associates Operatorship Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 201
Slide 49: Asia & Middle East developments
Asia & Middle East developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 90 88 89 86 85 79.7 81.8 80.2 76.4 77.2 Total Q3 2018 3.3 4.2 14.1 million cbm Subsidiaries 6.6 Joint ventures & associates Operatorship Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 20
Slide 50: China & North Asia developments
China & North Asia developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 77 79 73 8.4 8.6 7.9 0.7 Total Q3 2018 69 70 7.4 7.2 4.2 million cbm 3.5 Subsidiaries Joint ventures & associates Operatorship Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 2018 2018 20
Slide 51: Americas developments
Americas developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 88 89 90 90 89 66.8 69.3 68.4 71.5 70.3 0.1 0.5 Total Q3 2018 3.9 million cbm 3.3 Subsidiaries Joint ventures & associates Operatorship Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 2018 2018 201
Slide 52: JVs & associates developments
JVs & associates developments Net result JVs & associates* Europe & Africa* Asia & Middle East* In million cbm In EUR million In EUR million 26.1 25.4 25.0 26.9 14.1 23.8 12.4 9.6 7.7 6.6 0.9 0.5 0.6 0.2 -0.1 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2017 2017 2018 2018 2018 2017 2017 2018 2018 2
Slide 53: Business model
Business model • Blending • Heating / cooling • Additional handling services related to loading / unloading • Excess throughput fees • Services • Administrative support Monthly invoicing in arrears • Fixed rental fees for rented capacity (per cbm) • Fixed number of throughputs per year Share of reve
Slide 54: Contract durations
Contract durations A well-balanced global portfolio supported by a diversified customer base with different underlying demand drivers Contract position FY2015 Contract position FY2016 Contract position FY2017 In percent of revenues In percent of revenues In percent of revenues 24% 23% 21% 45% 44% 48
Slide 55: Margin developments
Margin developments Maintaining solid margins further supported by the efficiency program to reduce Vopak’s future cost base EBIT(DA) margin* In percent 50% 51% EBITDA margin 49% 50% 49% EBIT margin 33% 32% 32% 32% 31% 2013 2014 2015 2016 2017 *EBIT(DA) margins excluding exceptional items and exclud
Slide 56: EBITDA to Net profit overview
EBITDA to Net profit overview YTD Q3 2018 YTD Q3 2017 EBITDA 553.6 570.5 Depreciation and amortization 200.9 203.1 EBIT 352.7 367.4 Net finance costs 57.8 75.5 Income tax 56.9 50.7 Non-controlling interests 27.3 30.0 Net profit to holders 211.2 210.7 of ordinary shares EPS 1.65 EPS 1.66 Figures in E
Slide 57: Q3 2018 – Roadshow presentation
Q3 2018 – Roadshow presentation Royal Vopak