Royal Vopak Nv · EURONEXT:VPK
Royal Vopak Nv — Q1 2018 Earnings Presentation
71 slides from Royal Vopak Nv's earnings presentation, April 2018
Slide 1: Storing vital products with care
Storing vital products with care Q1 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 Introduction an impressive history of more than 400 years
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 66 25 5.3 1,306 -3% Compared to 2016 Storage capacity* Number of employees FY2017 EBITDA*** FY2017 Net profit**** In million cbm Per year-end 2017 (in FTE) In EUR millio
Slide 5: Four centuries of history
Four centuries of history 1967 1616 Merger of Pakhuismeesteren ‘De Blaauwhoedenveem’ was founded and Blaauwhoed (much later known as ‘Blaauwhoed’) into Pakhoed 1818 Establishment of Pakhuismeesteren van de Thee in Amsterdam and Rotterdam 1999 1839 Merger of Pakhoed and Founding of the Van Ommeren in
Slide 6: Who we are
Who we are We ensure safe, efficient and clean storage of products that are needed to meet the basic needs of people. This is what our stakeholders value us for. We store vital products with care Vopak’s role in the different supply chains Q1 2018 – Roadshow presentation 6
Slide 7: Strategic terminal types
Strategic terminal types Q1 2018 – Roadshow presentation 7
Slide 8: Business model
Business model Blending Heating / cooling Additional handling services related to loading / unloading Excess throughput fees Administrative support Services Monthly invoicing in arrears Fixed rental fees for rented capacity (per cbm) Share of revenues Fixed number of throughputs per year Vopak does
Slide 9: Occupancy rate developments
Occupancy rate developments Occupancy rate* In percent Full year 90% 90-95% 85-90% 91 90 89 89 87 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Q1 2017 2018 Occupancy rate of 87% explained by lower rented capacity at the oil hub terminals caused by a less favorable oil market st
Slide 10: 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 11: Key developments
Key developments Occupancy rate* EBITDA development** In percent In EUR million 95 94 93 93 91 88 88 92 93 90 768 763 812 822 763 753 598 636 513 429 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cash flow from operating activities (gross) Divide
Slide 12: Business Challenges
Business Challenges Strategic Operational Competitive environment Safety and sustainability Service Shifting energy landscape and product flows Cost competitiveness Compliance Financial Geopolitical and environmental issues Cash flow generation Trade policies Capital management and legislation Q1 20
Slide 13: Discussions with investors
Discussions with investors Economic & market dynamics Projects Geographical differences and Projects under construction and variations per product-market group business development pipeline Strategic considerations for Supply and demand commodities disciplined capital allocation Governance N
Slide 14: Why invest in Vopak
Why invest in Vopak Independent global storage and service provider active in all continents and all product groups Market leader in safety and service standards with a strong focus on sustainability Strategic locations with land available in emerging markets New projects under construction and a fu
Slide 15: Demand drivers
As the world population is growing and becoming more affluent, Demand demand for vital products like energy, chemicals and food are drivers increasing
Slide 16: Growth in all three end markets
Growth in all three end markets Trends Urbanization Disruptive Changing Geopolitical Sustainability technologies demographics developments & Trade & Climate End Markets Energy Manufacturing Food & Agriculture Hub Terminals Distribution Terminals Hub Gas Terminals Industrial Hub Terminals Terminals S
Slide 17: Oil demand continues to grow
Oil demand continues to grow Energy demand outlook Oil demand per region Oil demand per sector • Highest absolute mtoe mb/d (excl bunker demand) mb/d 20 120 120 growth in gas and relative for renewables 100 100 16 no further growth in 80 80 coal 12 • Main oil demand 60 60 8 growth is in Asia 40 40 P
Slide 18: Expanding storage capacity in oil hubs
Expanding storage capacity in oil hubs Vopak’s oil hubs are faced with growing competitive pressure • Hubs are key for logistic, ARA region Vopak 7.2 mln cbm blending, regional distribution and trading activities Singapore Straits Vopak 3.6 mln cbm • Demand for storage in hubs depend on: • IMO 2020
Slide 19: 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 20: 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 7.4 -16.5 -10.5 65.6 2016 2025 North East 11.5 Asia 5.1 2.3 -24.1 3.0 0.8 2016 2025 2016 2025 47.3 28.1 -23.6 18.
Slide 21: Developments of industrial complexes
Developments of industrial complexes New complexes are expected to arise in feedstock advantaged regions (US & ME) or close to growing end markets (Asia) For illustrative purposes Locations with feedstock advantage Locations close to end markets Q1 2018 – Roadshow presentation 21
Slide 22: Increasing need for LPG infrastructure
Increasing need for LPG infrastructure 2015: global LPG trade 84 mln tons 2030: Global LPG trade 110 mln tons • Growing imbalances will result in increasing trade flows • The strong increase in global LPG trade will result in the need for more infrastructure in demand regions, as well as supply regi
Slide 23: 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 ~7% SE Asia ~3% ~14% East Africa LNG exported in 2016 Existing LNG flow ~7% LNG
Slide 24: LNG infrastructure demand
LNG infrastructure demand An increasing demand for dedicated and fit-to-market infrastructure solutions Mature markets Drivers Various hinterland markets Hub terminal LNG trading E.g. Gate Break bulk distribution Transport / bunkering Growth markets Single-customer terminal Drivers E.g. Altamira LNG
Slide 25: 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 3 2 1 2 1• Onshore terminal infrastructure • Continued strategy pursuing greenfields, acquisitions and further development of current
Slide 26: Strategy execution
Our success depends on our ability Strategy to show leadership in five key areas execution
Slide 27: Leadership in five areas
Leadership in five areas Q1 2018 – Roadshow presentation 27
Slide 28: Leading assets in leading locations
Leading assets in leading locations Hamburg Talinn Amsterdam Rotterdam Antwerp Yangpu Ningbo Haiteng Lanshan Tianjin Zhangjiagang Tarragona Karachi Barcelona Kandla Algeciras Rayong Quebec Ho Chi Mihn City Hamilton Kertih Montreal Pengerang Long Beach Singapore Los Angeles Jakarta Houston Merak Sava
Slide 29: Storage capacity developments
Storage capacity developments In million cbm between 2003 – 2017 33.8 34.3 34.7 35.9 Subsidiaries 28.8 29.9 30.5 27.1 28.3 27.8 Joint ventures 21.2 21.8 20.1 19.7 19.6 and associates 19.9 20.2 20.4 21.7 17.5 18.1 18.3 19.7 20.3 20.8 Operatorship 15.1 15.1 15.5 15.8 16.7 11.9 12.2 12.5 8.2 8.7 9.0 8.
Slide 30: Growth projects under development
Growth projects under development Storage capacity developments In million cbm 2016 34.7 Greenfield 1.2 2017 35.9 Brownfield 1.0 +3.1 Greenfield 2.1 2019 39.0 Note: ‘storage capacity’ is defined as the total available storage capacity (jointly) operated by Vopak at the end of the reporting period, b
Slide 31: Growth projects under development
Growth projects under development Momentum towards 2019 Botlek German LNG RIPET 63,000 cbm Open season Deer Park PT2SB 96,000 cbm 138,000 cbm Jubail 1,496,000 cbm 93,000 cbm Sebarok PITSB Panama 67,000 cbm 430,000 cbm 360,000 cbm Lesedi Jakarta Alemoa 100,000 cbm Durban Industrial 100,000 cbm 106,00
Slide 32: Operational leadership
Operational leadership The right people, high quality assets and robust repeatable processes 1. Safety Maximizing operational safety Minimizing environmental impact 2. Service Maximizing operational productivity Reducing the cost of our customers value chain 3. Efficiency Active monitoring
Slide 33: Safety performance
Safety performance Process safety and occupational health and safety is our top priority Total Injury Rate (TIR) Lost Time Injury Rate (LTIR) Total injuries per 200,000 hours worked by Total injuries leading to lost time per 200,000 hours own employees and contractors worked by own employees and con
Slide 34: Service leadership
Service leadership Based on a thorough understanding of specific customer needs combined with our in-depth knowledge of markets, products and operational expertise Global customers Local customers Active at multiple Vopak Active at one Vopak location locations around the world Can be largest c
Slide 35: 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 36: Technology leadership
Technology leadership Eliminating human error, further improving our safety performance and increasing the productivity of our terminals Vopak will accelerate investments to experiment with new technologies and, if attractive, scale these • Scaling within the network capabilities to our network Pilo
Slide 37: People leadership
People leadership We aim to inspire and challenge our people without losing sight of our strong competences and core values Q1 2018 – Roadshow presentation 37
Slide 38: Capital management
Disciplined capital allocation, maintaining a balanced risk-return Capital profile, and consistent dividend policy management
Slide 39: Priorities for cash
Priorities for cash 1 Debt servicing EUR 1.6 billion, remaining maturity ~8 years, average interest 4.4% 2 Dividend EUR 1.0 billion paid to shareholders in the last 10 years 3 Disciplined growth Network expanded from 21.8 (2007) to 35.9 million cbm* 4 Capital optimization Create further flexibility
Slide 40: Cash flow overview 2017
Cash Flow from Figures in EUR million Operations (gross) 714 Income tax and other non-gross 45 cash flow items Cash Flow from 669 Operations (net) Cash Flow from Investment 242 (excl growth & divestments) Cash flow overview 2017 Growth 127 Investments Solid operational cash flow result in healthy fr
Slide 41: Phasing of Cash Flow for investments
Phasing of Cash Flow for investments Investments 2008-2019 Investments 2017-2019 Increase in growth In EUR million In EUR million investments 2,012 1,899 ~EUR 175 million additional 1,729 New investments in growth projects* compared to FY 2016 outlook: Expansion 725 • Brazil – Alemoa capex** • Canad
Slide 42: 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 Maximum ratio under oth
Slide 43: Capital structure
Capital structure Financial flexibility to support growth Syndicated Ordinary shares Private placement Equity(-like) Revolving 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 105 million
Slide 44: Debt repayment schedule
Debt repayment schedule Debt repayment schedule In EUR million RCF flexibility US PP 1,100 RCF drawn Asian PP 1,000 Other Subordinated loans 400 300 200 100 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2040 Q1 2018 – Roadshow presentation 44
Slide 45: Net finance costs
Net finance costs Net finance costs 2017 Net finance costs 2016 In EUR million In EUR million Interest and dividend income 12.6 11.4 Finance costs -111.1 -118.6 Net finance costs -98.5 -107.2 Net interest bearing debt Average interest rate (after hedging) In EUR million In percent 2,266 2,296 5.4% 5
Slide 46: Continued cash dividend
Continued cash dividend Dividend and EPS* In EUR BARRING EXCEPTIONAL CIRCUMSTANCES, THE INTENTION IS 1.00 1.05 1.05 0.70 0.80 0.88 0.90 0.90 TO PAY AN ANNUAL 0.55 0.63 CASH DIVIDEND OF 25-50% OF THE NET 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PROFIT* Total dividend In million EUR 102 112 1
Slide 47: Business performance
Long-term value creation, robust Business cash flow generation and margin management performance
Slide 48: Progress on strategic direction
Progress on strategic direction The strategic direction is set towards disciplined growth and productivity improvement Capture growth in the 2017-2019 period New projects in South Africa, Canada, . Brazil, Malaysia Spend maximum EUR 750 million on sustaining EUR 212 million sustaining and serv
Slide 49: Key messages Q1 2018
Key messages Q1 2018 strategic direction Q1 2018 Performance 2017-2019 Capture EBITDA of EUR 190 million, adjusted for currency translation growth effects of EUR 13 million, EBITDA was comparable to last year Spend maximum Occupancy rate of 87% explained by lower rented capacity at EUR 750m on t
Slide 50: Well-balanced global portfolio
Well-balanced global portfolio Oil Chemical Industrial Vegoils Gas products products terminals & biofuels products Typical contract duration per product & terminal category 0-5 years 0-5 years 5-20 years 0-3 years 10-20 years Share of 2014 EBITDA* ~50% ~20% 15 - 20% 7.5 - 10% 2.5 - 5% Share of 2015
Slide 51: Fuel Oil and bunkering network
Fuel Oil and bunkering network Converting capacity to the desired flexibility and cubic meters to profitably serve the bunker market may be at capex levels less than EUR 40 million Rotterdam Estonia Hamburg Los Angeles Algeciras Fujairah Panama Singapore Fuel oil hub terminal Fuel oil bunker termina
Slide 52: Development key figures
Development key figures Solid financial performance in Q1 2018, although with lower occupancy Occupancy rate* Revenues* In percent In EUR million 342 328 312 325 316 91 90 89 89 87 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018 2017 2017 2017 2017 2018 EBITDA** Net profit*** In EUR million I
Slide 53: Q1 2018 vs Q1 2017 EBITDA
Q1 2018 vs Q1 2017 EBITDA Adjusted for currency translation effects of EUR 13 million, EBITDA was comparable to Q1 of last year 203.1 1.1 12.6 191.6 3.9 190.2 7.5 2.2 0.1 0.7 0.8 Q1 2017 Pre- FX-effect Adjusted Asia & Europe & LNG Americas China & Others Q1 2018 operating Q1 2017 Middle East Africa
Slide 54: Q1 2018 vs Q4 2017 EBITDA
Q1 2018 vs Q4 2017 EBITDA Oil weakness continued with impact on the oil hub locations, good performance in the Americas and China & North Asia 0.9 192.7 2.2 191.4 4.1 3.8 190.2 4.4 3.1 1.9 1.7 Q4 2017 Pre- FX-effect Adjusted Europe & Asia & LNG Americas China & Others Q1 2018 operating Q4 2017 Afric
Slide 55: Cash flow overview
Cash flow overview CFFI momentum towards 2019 Full year 2017 Q1 2018 714 669 45 242 49 348 127 144 4 140 38 68 65 31 CFFO Tax & CFFO CFFI Investments Divestment Free Cash CFFO Tax & CFFO CFFI Investments Disposals, Free Cash (gross) non-gross (net) (excl growth, in growth Proceeds Flow (gross) non-g
Slide 56: Q1 2018 events
Q1 2018 events IAS 19 Defined contribution plan Growth projects Early 2018, Vopak reached agreement Vopak will expand its wholly-owned regarding a new pension plan, aimed to Botlek terminal, located in the Port of qualify as a defined contribution plan under Rotterdam, the Netherlands IAS 19, fo
Slide 57: EBITDA to Net profit overview
EBITDA to Net profit overview Q1 2018 Q4 2017 Q1 2017 EBITDA 190.2 192.7 203.1 Depreciation and amortization 67.3 69.7 67.7 EBIT 122.9 123.0 135.4 Net finance costs 21.2 23.0 25.8 Income tax 18.8 14.0 21.6 Non-controlling interests 9.9 9.8 11.5 Net profit to holders of ordinary shares 73.0 76.2 76.5
Slide 58: Divisional segmentation
Divisional segmentation Europe & Africa stable, Asia & ME market weakness / FX, Americas also FX Europe & Africa Asia & Middle East China & North Asia 92 90 90 90 94 91 90 88 89 86 77 72 70 69 70 81.9 85.1 76.6 71.7 78.8 80.8 80.8 65.2 66.3 64.0 7.4 8.9 6.5 4.5 4.8 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q
Slide 59: Europe & Africa developments
Europe & Africa developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q1 2018 92 90 90 90 86 163.8 160.6 157.7 165.8 158.9 2.3 13.7 million cbm Subsidiaries 11.4 Joint ventures & associates Operatorship Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 201
Slide 60: Asia & Middle East developments
Asia & Middle East developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q1 2018 94 91 90 88 89 91.6 86.8 3.3 13.4 million cbm 79.7 81.8 80.2 4.2 Subsidiaries 5.9 Joint ventures & associates Operatorship Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 20
Slide 61: China & North Asia developments
China & North Asia developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q1 2018 72 77 0.7 70 69 70 4.1 million cbm 7.9 7.7 7.4 8.4 7.2 Subsidiaries 3.4 Joint ventures & associates Operatorship Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018 20
Slide 62: Americas developments
Americas developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 0.1 0.5 Total Q1 2018 90 89 88 89 90 78.1 71.8 66.8 69.3 68.4 3.9 million cbm Subsidiaries 3.3 Joint ventures & associates Operatorship Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018 201
Slide 63: JVs & associates developments
JVs & associates developments Net result JVs and associates* Europe & Africa* Asia & Middle East* In EUR million In EUR million In EUR million 30.7 30.7 26.1 23.8 25.4 15.7 14.9 14.1 12.4 9.6 1.0 0.5 0.0 0.2 -0.1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018 2017 2017 2017 20
Slide 64: Margin developments
Margin developments Maintaining solid margins further supported by the efficiency program to reduce Vopak’s future cost base with EUR 25 million well under way EBIT(DA) margin* In percent 60 EBITDA margin 50 EBIT margin 40 30 20 10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *EBIT(DA) margins
Slide 65: Non-IFRS proportionate information
Non-IFRS proportionate information Occupancy rate EBITDA* In percent In EUR million IFRS BASED 753 763 812 822 763 88 88 92 93 90 Non-IFRS proportionate information 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 provides transparency in Vopak’s Occupancy rate EBITDA* underlying performance and PR
Slide 66: Long-term value creation
Long-term value creation Key elements supporting our business model Focus on Strong capital risk-return structure with Stable margins and healthy Diversified and take-or-pay cash flow leverage portfolio contracts with Selective generation of terminals at sound durations capital key locations Discipl
Slide 67: Looking ahead and other topics
Outlook, strategic priorities Looking ahead 2017-2019 and other topics and other topics
Slide 68: Looking ahead
Looking ahead • Financial performance in 2018 is expected to be influenced by currency exchange movements of primarily the USD and SGD, and the currently less favorable oil market structure, impacting occupancy rates and price levels in the hub locations • Given the current 3.1 million cbm expansion
Slide 69: Strategic priorities 2017-2019
Strategic priorities 2017-2019 Disciplined growth and productivity improvement Vopak is well-positioned to take several investment decisions in the Growth 2017-2019 period to capture growth Vopak aims to spend a maximum of approximately EUR 750 million on Capex sustaining and service improvement cap
Slide 70: Other topics
Other topics Effective tax rate 2017 EBITDA* transactional currencies In percent In percent 19% USD 20.9 SGD 18.1 17.6 16.5 EUR 18% Other 37% 2014 2015 2016 2017 26% *EBITDA including net result from joint ventures and associates, excluding exceptional items; Q1 2018 – Roadshow presentation 70
Slide 71: Storing vital products with care
Storing vital products with care chemicals to paint on your walls gas to cook insulate your your dinner house cosmetics polymers in your clothes chemicals in your mobile edible oils in your food Q1 2018 – Roadshow presentation Royal Vopak