Royal Vopak Nv · EURONEXT:VPK

Royal Vopak Nv — Investor Day (November 2018)

74 slides from Royal Vopak Nv's investor day presentation, Nov 27, 2018

  1. Slide 1: Storing vital products with care

    Storing vital products with care Royal Vopak Houston 27 November 2018 Capital Markets CMD presentations Day 2018

  2. Slide 2: Agenda

    Agenda Welcome 1. Performance delivery and Eelco Hoekstra 08.30 – 09.00 am managing value 2. Clear and robust financial Gerard Paulides 09.00 – 09.30 am framework Q&A 09.30 – 10.15 am Refreshment break 3. Americas - Dynamic markets Boudewijn Siemons 10.30 – 11.00 am with opportunities Q&A 11.00 – 11

  3. Slide 3: 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

  4. Slide 4: Performance delivery and managing value

    Storing vital products with care Performance delivery and managing value Eelco Hoekstra – Chairman of the Executive Board & CEO

  5. Slide 5: Key messages

    Key messages  Confidence in short-term performance delivery and managing long-term value  Global well-diversified portfolio  Strong competitive position  Clear and robust financial framework  Strategy execution 2017-2019 is well on track Vopak - 2018 Capital Market Day 5

  6. Slide 6: External developments 2017-2019

    External developments 2017-2019 Structural business drivers influenced by two global trends Storage  Structural demand drivers for Energy  Facilitate the introduction of demand storage of vital products, driven by transition lighter, cleaner fuels drivers growth in population and global  Pursue p

  7. Slide 7: Robust Vopak strategy

    Robust Vopak strategy Leadership in 5 pillars with clear strategy execution towards 2019 Storing vital products with care Leading asset Service Operational Technology People in leading leadership leadership leadership leadership locations Founder’s mentality Vopak Values Vopak - 2018 Capital Market

  8. Slide 8: Value creation - sustainability

    Value creation - sustainability Safety and sustainability developments in 2017-2019 Safety Sustainability  Leading safety performance in storage industry  UN Sustainability Development Goals (SDGs) Personnel Safety (TIR) Total injuries per 200,000 hours worked 1.5 1.0 0.5 0.36  Task-force on Clim

  9. Slide 9: Value creation

    Value creation Performance delivery and managing value  Delivering performance of our  Managing value through digital existing portfolio through focus on opportunities, growth execution, new commercial efforts and cost business development and portfolio management management  Service leadership S

  10. Slide 10: Value creation

    Value creation Performance delivery and managing value  Delivering performance of our  Managing value through digital existing portfolio through focus on opportunities, growth execution, new commercial efforts and cost business development and portfolio management management  Service leadership S

  11. Slide 11: Delivering performance in current business environment

    Delivering performance in current business environment Diversified portfolio across different product-market segments Oil products Prepare for the uptick Chemicals Focus on operational delivery  Oil hubs: solid long-term demand  Strong underlying demand for drivers despite short-term weakness chem

  12. Slide 12: Focus on commercial efforts and cost management

    Focus on commercial efforts and cost management Short-term performance in line with 2017 despite lower occupancy rate Commercial  Marketing of available oil efforts capacity YTD Q3 2018 EBITDA was higher than prior  IMO2020 preparedness, year, adjusted for adverse currency translation signing and

  13. Slide 13: Value creation

    Value creation Performance delivery and managing value  Delivering performance of our  Managing value through digital existing portfolio through focus on opportunities, growth execution, new commercial efforts and cost business development and portfolio management management  Service leadership S

  14. Slide 14: Digital transformation

    Digital transformation Improve safety performance, better service for our customers and more efficient use of our assets resulting in lower costs  Centralized cyber security Digital  Replacing and modernizing our Cyber security program to protect our systems Modernization company-wide IT and OT sy

  15. Slide 15: Significant projects announced since 2017

    Significant projects announced since 2017 Delivery of growth projects in line with 2017-2019 strategic direction RIPET Botlek Vlissingen Durban Jakarta Merak 96,000 cbm 63,000 cbm 9,200 cbm 130,000 cbm 100,000 cbm 50,000 cbm 2017 2018 Alemoa Sebarok Richards Bay Lesedi PITSB EETPL 106,000 cbm 67,000

  16. Slide 16: Portfolio transformation

    Portfolio transformation Shift towards gases and industrial terminals and focus on the ‘East of Suez’ Proportionate revenue per product ~10% ~10% 2014-2016 Reshaping the portfolio ~15% 10-15% 20-25% 25-30% LNG, LPG & Chemical Period  Divestment of 19 terminals Gases 35-40% 25-30% Industrial termina

  17. Slide 17: Focused growth agenda

    Focused growth agenda Global market leader with strong presence in all terminal types LNG, LPG & Chemical Industrial terminals Chemical terminals Oil terminals gases terminals 2m 15-20 30-40% 12-15m Vopak gas storage capacity for Vopak terminals with industrial Chemical market share in ports Vopak o

  18. Slide 18: Strategy execution 2017-2019 well on track

    Strategy execution 2017-2019 well on track Strategic direction is set towards growth and productivity improvements Spend EUR 750 million on sustaining and  Sustaining and service improvement capex budget service improvement capex include investments in our fuel oil network  New projects in Canada,

  19. Slide 19: Key messages

    Key messages  Confidence in short-term performance delivery and managing long-term value  Global well-diversified portfolio  Strong competitive position  Clear and robust financial framework  Strategy execution 2017-2019 is well on track Vopak - 2018 Capital Market Day 19

  20. Slide 20: Clear and robust financial framework

    Storing vital products with care PT2SB - Pengerang, Malaysia Clear and robust financial framework Gerard Paulides – Member of the Executive Board & CFO

  21. Slide 21: Key messages

    Key messages Performance delivery and managing value  Clear financial framework to support strategy  Balanced portfolio management with focus on strong operational cash flow generation with a disciplined capital investment approach  Aimed towards a strong investment case • Return on capital emplo

  22. Slide 22: Financial framework

    Financial framework Focus on cash flow generation to create shareholder value Cash Flow From Operations (CFFO) Consolidated terminals: EBITDA -/- tax + asset disposals Joint ventures: dividends received + shareholder loans repaid Cash Flow From Investments (CFFI) Consolidated terminals: sustaining +

  23. Slide 23: Well-balanced global portfolio

    Well-balanced global portfolio Strong resilient cash flow generation Oil Chemical Industrial LNG, LPG & products products terminals Chemical Gases Typical contract 0-5 years 0-5 years 5-20 years 10-20 years duration per product / terminal category Share of 40-45% 25-30% 20-25% ~10% proportionate rev

  24. Slide 24: Significant capacity to be delivered in 2019

    Significant capacity to be delivered in 2019 EUR 950 million investments in 2017-2019 to further grow operational cash flow generation Vlissingen German LNG 9,200 cbm RIPET Deer Park* Botlek Open season completed 96,000 cbm EETPL PT2SB* 138,000 cbm 63,000 cbm Panama* 151,000 cbm 1,496,000 cbm Sebaro

  25. Slide 25: Capacity commissioning developments

    Capacity commissioning developments Expansion program with high commercial coverage to be delivered in 2019 Vopak’s Capacity Country Terminal ownership Products (cbm) 2013 2014 2015 2016 2017 2018 2019 2020 Existing terminals United States Deer Park 100% Chemicals 138,000 Malaysia Pengerang Independ

  26. Slide 26: Balanced portfolio approach

    Balanced portfolio approach Growth opportunities, New Business Development and value creating M&A Investments Assets with material Portfolio management Growth assets FCF and significant •1 Strategic fit investments •2 Do-ability Assets with •3 Valuation Assets with base FCF & Future options material

  27. Slide 27: Significant projects in LNG and LPG

    Significant projects in LNG and LPG Delivery of LNG and LPG growth projects in line with strategy Tianjin Lingang Gate Vlissingen Gate Vlissingen EETPL 240,000 cbm Break bulk 9,200 cbm 540,000 cbm 36,800 cbm 151,000 cbm 2011 2012 2013 2014 2015 2016 2017 2018 Altamira Banyan Richards Bay Gate RIPET

  28. Slide 28: Leading operator of industrial terminals

    Leading operator of industrial terminals Capture industrial opportunities Industrial terminals Haiteng PT2SB Chemtank 896,000 cbm 1,496,000 cbm 549,000 cbm 2014 2015 2016 2017 2018 2019 Vopak has more than 40 years of experience in industrial terminalling and is the leading independent operator of i

  29. Slide 29: Global fuel oil network

    Global fuel oil network EUR 40 million investments to be fully ready to support new market requirements in 2020 Hamburg Rotterdam Strategic review Fuel Oil capacity Conversion Estonia 10% ~35% Los Angeles Strategic review 15% 45% Algeciras Singapore 60% ~65% Panama Strategic review 45% MGO Expansion

  30. Slide 30: Cash flow from investments

    Cash flow from investments Balanced approach for growth, sustaining, service improvement and IT investments Investments 2008-2019 Investments 2017-2019 Investments In EUR million In EUR million  Growth investments with clear 2,012 New return criteria based on future 1,899 1,729 projects* cash flow

  31. Slide 31: Maintain a return on capital

    Maintain a return on capital Expected ROCE between 10% and 15% Capital employed Return on capital employed In EUR billion In percent 12.0% 12.3% 11.8% 11.5% 10-15% 4.1 4.0 4.0 4.0 2017 Q1 Q2 Q3 2019 2020 2021 2017 Q1 Q2 Q3 2019 2020 2021 2018 2018 2018 2018 2018 2018  Disciplined capital for sustai

  32. Slide 32: Priorities for cash

    Priorities for cash Balanced approach between allocating capital to growth opportunities, an efficient and robust capital structure and distributions to shareholders 1 Debt servicing EUR 1.6 billion, remaining maturity ~7 years, average interest 3.8% 2 Growth opportunities Value accretive growth Sha

  33. Slide 33: Robust balance sheet

    Robust balance sheet Target leverage of 2.5 to 3.0 times net debt to EBITDA Net debt to EBITDA ratio Net debt to EBITDA ratio scenarios 3.75 2.0-2.5 2.5-3.0 3.0-3.5 2.5-3.0 2.83 2.73 Strategic considerations 2.04 2.02 1.99 2.18 2.22  Timing of growth opportunities 2014 2015 2016 2017 Q1 Q2 Q3 Targe

  34. Slide 34: Funding secured

    Funding secured Balanced maturity profile to realize strategic objectives Debt repayment schedule In EUR million Outstanding debt 1,300 (EUR 1.7 billion) RCF flexibility (900m) 1,200 100m RCF drawn 75m Other 90m Subordinated loans 400 150m Asian PP 1.3bn US PP 300 200 100 0 2018 2019 2020 2021 2022

  35. Slide 35: Shareholder distribution

    Shareholder distribution Updated dividend policy Dividend and EPS Dividend policy: In EUR 2.73 2.45 2.55 2.56  Annual stable to rising cash dividend in 2.31 2.25 2.08 2.16 1.92 balance with a management view on a payout 1.62 ratio of 25-75% of net profit and subject to 1.00 1.05 1.05 market circums

  36. Slide 36: Key messages

    Key messages Performance delivery and managing value  Clear financial framework to support strategy  Balanced portfolio management with focus on strong operational cash flow generation with a disciplined capital investment approach  Aimed towards a strong investment case • Return on capital emplo

  37. Slide 37: IFRS 16 Leases

    IFRS 16 Leases No changes in economics, only changes in accounting (reporting) IFRS 16 Leases Indicative impact Vopak1  No changes in economics and cash flows only in Key figures accounting (reporting) EBITDA 40 – 50  IFRS implementation is substantially completed Net profit 0 – (10) and Vopak is

  38. Slide 38: IFRS 16 Leases

    IFRS 16 Leases No changes in economics, only changes in accounting (reporting) Current situation 2019 (IFRS 16)1 Finance Operating All Indicative Important sensitivities and assumptions Balance sheet Leases Leases Leases impact2 Total assets 750 – 800  Impact is based on the lease contract portfoli

  39. Slide 39: Questions & Answers

    Storing vital products with care Performance delivery and managing value The world’s Presented by: leading independent tank Eelco Hoekstra storage company building on an Questions & Slide Clear and robust impressive financial history of moreframework Presented by: Gerard Paulides than 400 years Titl

  40. Slide 40: Americas - Dynamic markets with opportunities

    Storing vital products with care Bahia Las Minas - Panama Americas - Dynamic markets with opportunities Boudewijn Siemons – Division President Vopak Americas

  41. Slide 41: Key messages

    Key messages  Dynamic markets in the Americas: the shale revolution in North America and deregulating fuel import markets in Latin America  Vopak Americas has a strong performance in the (industrial) chemical markets  Growth projects in the Americas are fully aligned with Vopak’s strategy  Vopak

  42. Slide 42: Vopak Americas at a glance

    Vopak Americas at a glance Continued strong performance in (industrial) chemical markets 18 Terminals (3.9 million cbm) Total Injury Rate (TIR) EBITDA* Number of injuries per 200,000 hours In EUR million worked (own personnel) 130 123 121 105 0.42 0.39 0.36 95 0.26 0.18 2013 2014 2015 2016 2017 2013

  43. Slide 43: Market dynamics in the Americas

    Market dynamics in the Americas Shale revolution in North America and deregulating markets in Latin America North America NGL Exports Gas and NGL Ethane Crackers production Shale Revolution Petrochemicals Latin America US largest producer Structurally deficit petrochemicals and fuel markets Crude Cr

  44. Slide 44: The shale revolution

    The shale revolution The rise in US oil and gas production strengthened its oil and gas industry Oil and gas production in the World Energy Outlook New Policies Scenario Oil and gas basins Prospective shale development Source: IEA – World Energy Outlook 2018 Vopak - 2018 Capital Market Day 45

  45. Slide 45: Natural gas as a cheap feedstock

    Natural gas as a cheap feedstock Nine new world-scale ethylene crackers are currently under development Badlands NGL North Dakota PTT Global Chemical Belmont County, OH Appalachian Shale Parkersburg, WV Shell Monaca, PA Indorama Lake Charles, LA Sasol Lake Charles, LA Shin-Etsu Plaquemine, LA Axiall

  46. Slide 46: LPG surplus in North America

    LPG surplus in North America US Gulf Coast continues to be the most important area for LPG exports LPG imbalances LPG export from North America Million MT +6 50 +39.9 40 30 2015 20 2020 2025 -8.1 10 2030 2035 0 Canada United States In Million MT Vopak - 2018 Capital Market Day 47

  47. Slide 47: Growth projects in the Americas

    Growth projects in the Americas Expansion and conversion projects in line with Vopak strategy  RIPET: First propane export facility in Western Deer Park Canada RIPET 138,000 cbm  Deer Park: Growth of the chemical footprint in 96,000 cbm Houston Veracruz  Veracruz: Tank conversion to capture the C

  48. Slide 48: Canada - RIPET

    Canada - RIPET First propane export facility in Western Canada  Propane export terminal designed to ship 1.2 million tonnes of propane per annum  Opens up market access for Western Canadian propane producers to Asia, a premium market for propane  Prince Rupert is North America’s deepest natural p

  49. Slide 49: Panama - Bunker hub

    Panama - Bunker hub Strategic location along major shipping routes  Operatorship of Chevron’s storage capacity (509k cbm) and new independent storage capacity (360k cbm) with jetty infrastructure  Strategically located at the crossroads of international trade and transportation routes  Serving in

  50. Slide 50: US - Deer Park

    US - Deer Park Growth of the chemical footprint in Houston  Expansion of our chemical position in a global hub location  Brownfield expansion project within the existing terminal boundaries  Capacity is fully rented out with long-term contract coverage  Continuous focus on data of the operations

  51. Slide 51: Brazil - Alemoa

    Brazil - Alemoa Growing ethanol exports and facilitating fuel imports  Brownfield expansion to serve the ethanol export market and the fuels import market  The Alemoa terminal is recognized for its consistency in services and logistics solutions  The investment is supported by multi-year customer

  52. Slide 52: Mexico - Veracruz

    Mexico - Veracruz Tank conversion to capture the opening fuels market  Mexico is a large fuel deficit market and is expected to continue to grow  The Veracruz area is the key location to development fuel distribution to the regional market  Vopak Mexico obtained the first regulatory authorization

  53. Slide 53: Growth opportunities

    Growth opportunities Vopak Americas is well positioned to capture further growth  Brownfield expansions at existing locations  Industrial terminal opportunities resulting from new petrochemical complexes in North America  Export opportunities in the US Gulf Coast arising from the abundance of oil

  54. Slide 54: Key messages

    Key messages  Dynamic markets in the Americas: the shale revolution in North America and deregulating fuel import markets in Latin America  Vopak Americas has a strong performance in the (industrial) chemical markets  Growth projects in the Americas are fully aligned with Vopak’s strategy  Vopak

  55. Slide 55: Questions & Answers

    Storing vital products with care The world’s leading independent tank Americas - Dynamic markets with opportunities storage company building on an Questions & Slide Presented by: Boudewijn Siemons impressive history of more than 400 years Title Answers

  56. Slide 56: Deer Park - Major U.S. Chemicals Hub

    Storing vital products with care Deer Park – Houston, United States Deer Park - Major U.S. Chemicals Hub Chris Robblee – Managing Director U.S. Southern Region

  57. Slide 57: Key Messages

    Key Messages  Vopak terminal Deer Park is perfectly located in the Port of Houston to serve the growing US chemicals market  Outstanding front line execution coupled with a major focus on safety continues to push Vopak’s competitive position  Expansion investments have been made and additional op

  58. Slide 58: Global petrochemical growth to Gulf Coast

    Global petrochemical growth to Gulf Coast Petrochemical growth 2011-2020 2011-2020 2000-2010 Projection 2000-2010 Projection  US Gulf Coast - the locus of global petrochemical growth 37.5m 27.9m Metric Tons Metric Tons  Natural gas feedstock has shifted from the Middle East to the US Gulf Coast 

  59. Slide 59: Growing export market

    Growing export market Houston leading commodities exports (2017) 77.3m Metric Tons  Almost 13 million metric tons of liquid chemicals are exported from the Port of Houston every year and this is an ongoing, permanent shift 12.8m Metric Tons upwards  2013-2023 additional output from 6.7m over 300 p

  60. Slide 60: USGC project announcements

    USGC project announcements 2012 Current Source: Houston-Galveston Area Council Vopak - 2018 Capital Market Day 62 Source: Lee Nichols, Hydrocarbon Processing Magazine, Energy Construction Form 3/16

  61. Slide 61: Deer Park's Prime Location

    Houston metropolitan area comprises one ofThe theworld’s areas largestleading storage in the petrochemical company independent world,building manufacturing primarilyondue tank an to Deer Park’s Slide excellent impressive access history provided of more bythan the Port 400 of years Prime Location Tit

  62. Slide 62: Port of Houston

    Port of Houston United States’ largest petrochemical complex 1st 1st ranked US port ranked US port $265 billion for international in foreign annual economic commerce and waterborne impact in Texas tonnage ($620 billion nationwide) 6th in the world (247 million tons) Vopak - 2018 Capital Market Day 6

  63. Slide 63: Port of Houston primarily liquid bulk

    Port of Houston primarily liquid bulk Greater Houston Port Complex Cargo Sectors 2017 6% 5%  More than 8,200 ships and 215,000 barges visit the Port of Houston 10% annually  Approximately 100 steamship lines provide service between Houston and Liquid Bulk 16% more than 1,000 global ports 63% Conta

  64. Slide 64: Major Players in the Area

    Major Players in the Area Vopak - 2018 Capital Market Day 66

  65. Slide 65: Vopak Terminal Deer Park

    The world’s leading independent tank Storing vital products with care storage company building on an Vopak Terminal Slide since 1976 impressive history of more than 400 years Title Park Deer

  66. Slide 66: Terminal Deer Park safety statistics

    Terminal Deer Park safety statistics Total 0.5 injury rate 0.4 0.3 Total injuries per 200,000 hours worked 0.2 by own employees and 0.1 contractors 0 2013 2014 2015 2016 2017 2018 Total process 0.4 Event Rate 0.3 Tier 1 and Tier 2 0.2 incidents per 200,000 hours worked by own 0.1 employees and contr

  67. Slide 67: Vopak Terminal Deer Park

    Vopak Terminal Deer Park The Deer Park side in numbers 22 1.1 Loading Bays Million cbm 242 550 Tanks Rail Spots 8 5 Barge Docks Ship Docks Vopak - 2018 Capital Market Day 69

  68. Slide 68: Deer Park annual activity

    Deer Park annual activity Pipelines Ships Barges Railcars Trucks 13 lines 720 1,225 11,525 25,900 5 customers Vopak - 2018 Capital Market Day 70

  69. Slide 69: Continuously improving performance

    Continuously improving performance Reducing turnaround times strengthen our competitive position 50 40 42.5 Time in hours 30 30.5 20 23.5 10 13.5 11.5 7.3 6.2 6.8 0 2015 2016 2017 2018 Average Vessel Wait Time Average Vessel Idle Time Vopak - 2018 Capital Market Day 71

  70. Slide 70: Current Expansion

    Current Expansion 138,000 cbm expansion to be finished in Q4 2018 Capacity: 138,000 cbm Tanks 10 x 13,800 cbm tanks Vopak - 2018 Capital Market Day 72

  71. Slide 71: Deer Park East Land

    Deer Park East Land Land available for extra expansion projects Deer Park Land available for additional storage capacity, 1 ship dock and 1 barge dock Vopak - 2018 Capital Market Day 73

  72. Slide 72: Key Messages

    Key Messages  Vopak terminal Deer Park is perfectly located in the Port of Houston to serve the growing US chemicals market  Outstanding front line execution coupled with a major focus on safety continues to push Vopak’s competitive position  Expansion investments have been made and additional op

  73. Slide 73: Questions & Answers

    Deer Park - Major U.S. Chemicals Hub Questions & Presented by: Chris Robblee Answers

  74. Slide 74: Capital Markets Day 2018

    For more information please contact: Upcoming events: Investor Relations contact: Publication of 2018 annual results Laurens de Graaf, Head of Investor Relations 13 February 2019 Telephone: +31 (0)10 400 2776 e-mail: investor.relations@vopak.com Publication of 2019 first-quarter interim update Media

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