Royal Vopak Nv · EURONEXT:VPK
Royal Vopak Nv — Q4 2017 Earnings Presentation
67 slides from Royal Vopak Nv's earnings presentation, 2018
Slide 1: Storing vital products with care
Storing vital products with care Q4 2017 – 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 4.7 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 Blaauwhoudenveem’ 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 Q4 2017 – Roadshow presentation 6
Slide 7: 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 8: Occupancy rate developments
Occupancy rate developments Occupancy rate* In percent Full year 93% Full year 90% 90-95% 85-90% 94 94 93 92 91 90 89 89 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 The difference between the 2017 occupancy rate of 90% and the high 2016 occupancy rat
Slide 9: Strategic terminal types
Strategic terminal types Q4 2017 – Roadshow presentation 9
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% 20-25% 20-25% 5-7.5% 3-5% 2016 EBITDA* Netherlands EMEA As
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 Q4 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 Q4 2017 – 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 Q4 2017 – 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 3.1 million cbm under development German LNG RIPET 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 106,000 cbm
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 Q4 2017 – 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: Investment phasing
Investment phasing Investments 2008-2019 Investments 2017-2019 Expansion capex In EUR million In EUR million increase 2,012 1,899 ~EUR 175 million additional 1,729 New expansion capex compared projects* to FY 2016 outlook: Expansion 725 • Brazil – Alemoa capex** • Canada – RIPET • Malaysia – PITSB O
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 1,100 RCF flexibility US PP 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 Q4 2017 – 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: 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 49: 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 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: Product-market update
Product-market update Diversified portfolio across different product-market segments Oil products Fuel oil: uncertain short-term outlook Vegoils US and EU policy changes in Oil hubs: Soft short-term markets & biofuels the biofuels markets creates with solid long-term underlying volatility dema
Slide 52: EBITDA development 2017
EBITDA development 2017 822.3 6.2 10.7 11.5 800.1 15.9 36.1 17.0 0.2 763.2 6.1 EMEA Americas LNG 2016 2017 Asia 2016 Divestments FX-effect Pro forma Others Netherlands EBITDA -excluding exceptional items- decreased 7%, adjusted for the divestments and FX-effects, the pro forma EBITDA decreased by 4%
Slide 53: Key figures developments
Key figures developments Terminal network Occupancy rate* Revenues* In million cbm In percent In EUR million Subsidiaries +1.2 -3pp Joint Ventures & Associates -3% Operatorship 88 88 92 93 90 1,295 1,323 1,386 1,347 1,306 33.8 34.3 34.7 35.9 30.5 20.1 19.7 19.6 20.8 21.7 9.9 11.9 12.2 12.5 8.1 1.6 2
Slide 54: Q4 vs Q3 EBITDA
Q4 vs Q3 EBITDA 192.7 14.2 180.8 3.0 0.3 0.6 1.9 2.5 4.4 176.4 EMEA Americas LNG Q3 2017 Q4 2017 Adjusted Q3 2017 Asia FX-effect Others Netherlands Q4 results stronger than expected Figures in EUR million, excluding exceptional items Q4 2017 – Roadshow presentation 54 including net result from joint
Slide 55: Quarterly segmented EBITDA
Quarterly segmented EBITDA Vopak Group Netherlands EMEA In EUR million In EUR million In EUR million 92 91 90 89 89 94 92 90 90 96 93 91 92 91 89 197.6 203.1 191.0 192.7 176.4 67.8 63.1 59.3 63.7 63.3 29.6 27.6 27.4 23.7 27.4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2016
Slide 56: Netherlands developments
Netherlands developments Occupancy rate* Revenues* In percent In EUR million 87 94 95 90 487.9 496.4 471.6 83 442.5 442.1 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capacity EBITDA** EBIT** In million cbm In EUR million In EUR million 9.5 9.9 9.9 10.0 10.0 278.5 286.5 181.2 180.8 242.
Slide 57: EMEA developments
EMEA developments Occupancy rate* Revenues* In percent In EUR million 88 93 96 92 248.2 257.6 251.5 84 189.9 176.3 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capacity EBITDA** EBIT** In million cbm In EUR million In EUR million 9.6 9.7 135.6 128.1 91.0 8.6 8.5 8.7 118.3 121.1 81.6 80.
Slide 58: Asia developments
Asia developments Occupancy rate* Revenues* In percent In EUR million 94 95 89 91 88 358.8 370.1 379.4 385.2 370.1 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capacity EBITDA** EBIT** In million cbm In EUR million In EUR million 11.6 11.5 12.5 282.5 291.2 288.9 296.7 274.1 227.5 235.3
Slide 59: Americas developments
Americas developments Occupancy rate* Revenues* In percent In EUR million 90 90 90 91 89 266.7 273.8 286.0 239.6 246.6 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capacity EBITDA** EBIT** In million cbm In EUR million In EUR million 3.6 3.9 3.9 122.6 120.5 129.9 80.6 83.4 3.4 76.2 3.2
Slide 60: JV & Associates developments
JV & Associates developments Net result JVs and associates* Netherlands* EMEA* In EUR million In EUR million In EUR million 123.8 2.4 2.5 2.5 35.9 38.2 105.3 104.3 111.3 87.5 1.9 1.8 30.1 17.9 21.1 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Asia* Americas* LNG* In EUR
Slide 61: 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 62: 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 63: Looking ahead and other topics
Outlook, strategic priorities Looking ahead 2017-2019 and other topics and other topics
Slide 64: 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 • The current 3.1 million cbm expansion progr
Slide 65: 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 66: Other topics
Other topics Effective tax rate 2017 EBITDA* transactional currencies In percent In percent 20.9 18.1 17.6 16.5 19% USD SGD EUR 18% Other 2014 2015 2016 2017 37% 26% *EBITDA including net result from joint ventures and associates, excluding exceptional items; Q4 2017 – Roadshow presentation 66
Slide 67: 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 Q4 2017 – Roadshow presentation Royal Vopak