Royal Vopak NV · EURONEXT:VPK

Royal Vopak NV — Q2 2019 Earnings Presentation

43 slides from Royal Vopak NV's earnings presentation, Aug 30, 2019

  1. Slide 1: Storing vital products with care

    Storing vital products with care Q2 2019 – Roadshow Presentation Royal Vopak

  2. 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

  3. Slide 3: Key message Capital Markets Day

    Key message Capital Markets Day  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 Q2 2019 Roadshow Presentation 3

  4. Slide 4: 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

  5. Slide 5: Business environment update

    Business environment update Diversified portfolio, well positioned for future opportunities Chemicals Focus on operational delivery Oil products On track for IMO 2020 transition  Growing global demand for  Oil hubs: solid long-term demand chemicals drivers despite short-term weakness  Continued p

  6. Slide 6: Vopak at a glance

    Vopak at a glance At end HY1 2019 Number of terminals Number of countries Storage capacity In million cbm 69 24 36.9 37.9 35.9 Q1 Q1 2018 2019 Market capitalization Number of employees Total injury rate (TIR) In EUR billions In FTE In 200,000 hours worked own personnel and contractors 5.2 5,565 0.43

  7. Slide 7: Robust Vopak strategy

    Robust Vopak strategy Leadership in 5 pillars with clear strategy execution Storing vital products with care Leading asset Service Operational Technology People in leading leadership leadership leadership leadership locations Founder’s mentality Vopak Values Q2 2019 Roadshow Presentation 7

  8. Slide 8: Strategic terminal types

    Strategic terminal types Industrial terminals LNG, LPG and Chemical terminals Oil terminals chemical gases Vopak has more than 40 years of Demand for gas is increasing, driven by The strong growth of global chemicals Oil import, distribution and hub terminals experience with industrial terminals. pe

  9. Slide 9: 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

  10. Slide 10: 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

  11. Slide 11: Value creation - sustainability

    Value creation - sustainability Safety and sustainability developments 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 0.43 0.5 0 2008 2009 2010 2011 2012 2013 2

  12. Slide 12: UN Sustainable Development Goals (SDG)

    UN Sustainable Development Goals (SDG) We embrace the selected SDGs to create a focus on where we can contribute to society Description Ambitions / targets We facilitate the energy transition by creating reliable access to Daily: Reducing our environmental footprint energy and cleaner fuels and by e

  13. Slide 13: Benchmark scores

    Benchmark scores Ratings based on Environmental, Social and Governance MSCI ESG Ratings Dow Jones Sustainability  Rating: AAA (Scale: CCC to AAA)  Rating: 56 (Scale: 0 to 100 / industry average: 38) FTSE4Good ISS  Rating: 3.7 (scale: 0 to 5)  Rating (scale: 10 high risk to 1 low risk)  Governan

  14. Slide 14: Strategy execution well on track

    Strategy execution well on track Strategic direction is set towards growth and productivity improvements  14 expansion projects announced in last years Capture growth  New projects in Canada, Malaysia, Indonesia, Singapore, South Africa, Brazil, Pakistan and the Netherlands Spend EUR 750 million o

  15. Slide 15: Key messages

    Key messages strategic direction HY1 2019 key messages Capture growth  EBITDA of EUR 423 million, including positive IFRS 16 effects, positive currency translation effects and good performance from Spend EUR 750m joint ventures and associates on sustaining and service capex  Earnings Per Share (EP

  16. Slide 16: HY1 2019 vs HY1 2018 EBITDA

    HY1 2019 vs HY1 2018 EBITDA Pro forma EBITDA increased by EUR 27 million, mainly from good contributions from joint ventures 422.6 24.3 5.5 0.9 1.3 398.3 7.8 378.4 370.9 9.5 7.5 5.1 HY1 2018 FX-effect Adjusted Europe & Asia & China & Americas LNG Global pro forma IFRS 16 HY1 2019 HY1 2018 Africa Mid

  17. Slide 17: Q2 2019 vs Q1 2019 EBITDA

    Q2 2019 vs Q1 2019 EBITDA Q2 reflects planned temporary conversion activities related to IMO 2020 214.6 0.2 214.8 10.7 208.0 3.5 0.6 2.7 1.4 0.3 Q1 2019 FX-effect Adjusted Asia & China & LNG Europe & Americas Global Q2 2019 Q1 2019 Middle East North Asia Africa functions, corporate activities and ot

  18. Slide 18: Divisional segmentation

    Divisional segmentation Europe & Africa and Asia & Middle East reflect temporary IMO conversion; Americas and LNG benefit from strong chemical and gas markets Europe & Africa Asia & Middle East Americas 86 85 86 85 85 92 83 82 83 80 90 89 89 89 91 74.5 77.2 70.3 73.6 76.2 66.5 59.6 65.9 77.5 66.9 39

  19. Slide 19: Non-IFRS proportionate information

    Non-IFRS proportionate information Occupancy rate EBITDA Maintenance, Service In percent In EUR million & IT Capex IFRS BASED In EUR million 394 371 398 91 86 85 108 125 99 Non-IFRS proportionate HY1 HY1 HY1 HY1 HY1 Pro forma HY1 HY1 HY1 information provides 2017 2018 2019 2017 2018 HY1 2019 2017 20

  20. Slide 20: Cash flow overview

    Cash flow overview Investment momentum driven by growth project phasing towards 2019 HY1 2019 HY1 2018 In EUR million In EUR million 341 352 313 321 28 31 108 125 205 196 119 29 115 212 5 CFFO Tax & other CFFO Sustaining, FCF Growth Other Free Cash -11 (gross) operating (net) service & IT before inv

  21. Slide 21: Overview financial framework

    Overview financial framework 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

  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 Industrial LNG, LPG & Chemical Oil terminals chemical gases terminals terminals Typical contract 5-20 years 10-20 years 0-5 years 0-5 years duration per product / terminal category Share of 20-25% ~10% 25-30% ~40% proportionate rev

  24. Slide 24: EUR 1 billion growth investments

    EUR 1 billion growth investments Shift towards industrial terminals, chemical and gas terminals Vlissingen Deer Park German LNG 9,200 cbm Vietnam PT2SB RIPET 33,000 cbm Open season completed Botlek 20,000 cbm 1,496,000 cbm* 96,000 cbm* Veracruz ETPL 63,000 cbm PITSB 110,000 cbm Panama 151,000 cbm* S

  25. Slide 25: Project timelines

    Project timelines Q2 2019 Roadshow Presentation 25

  26. Slide 26: Global fuel oil network

    Global fuel oil network Fuel oil capacity conversions for the IMO 2020 bunker fuels will support new market requirements as from Q4 2019 Hamburg Rotterdam Fuel Oil capacity Held for sale Conversion ongoing Estonia 10% ~35% Los Angeles Divested 15% 45% Algeciras Singapore 55% ~65% Panama Held for sal

  27. Slide 27: Investment phasing

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

  28. Slide 28: Maintain a return on capital

    Maintain a return on capital Expected ROCE between 10% and 15% Average capital employed Return on capital employed In EUR billion* In percent 12.6% 12.5% 12.0% 11.6% 10-15% 4.1 4.3 4.2 4.0 2017 2018 Q1 Q2 2020 2021 2017 2018 Q1 2019 Q2 2019 2020 2021 2019 2019  Disciplined capital for sustaining, s

  29. Slide 29: 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 2.1 billion, remaining average maturity ~6 years, average interest 3.3% 2 Growth opportunities Value accretive gr

  30. Slide 30: Capital structure

    Capital structure Financial flexibility to support growth Ordinary shares Private placement Syndicated Revolving program Credit Facility Listed on Euronext EUR 1.5 billion equivalent EUR 1.0 billion Market capitalization: Mainly USD and also JPY, 15 participating banks EUR ~5.2 billion GBP, CAD & EU

  31. Slide 31: 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

  32. Slide 32: Debt repayment schedule

    Debt repayment schedule Debt repayment schedule In EUR million 1,300 RCF flexibility 1,200 RCF drawn 1,100 Other 700 Subordinated loans Asian PP 600 US PP 500 400 300 200 100 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2040 As per 30 June 2019 Q2 2019 Roadshow Presentation 32

  33. Slide 33: Increase in dividend to EUR 1.10 per share

    Increase in dividend to EUR 1.10 per share Continued rising cash dividends Dividend and EPS* Dividend policy: In EUR 2.55 2.56 2.31 2.25 2.27 Annual stable to rising cash dividend in balance with a management view on a payout ratio of 25-75% of net profit and subject to market 1.05 1.05 1.10 1.00 ci

  34. Slide 34: IFRS 16 Leases

    IFRS 16 Leases IFRS 16 Leases Impact Vopak 2019  No commercial impact Key figures In EUR million EBITDA 40 – 50  Accounting change only, no net cash impact Net profit 0 – (10)  No economic impact on the business and IFRS 16 Lease liabilities (jan 1st) ~675 how we manage it reported on Return on C

  35. Slide 35: Appendix

    Storing vital products with care Q2 2019 Roadshow Presentation Appendix

  36. Slide 36: Europe & Africa developments

    Europe & Africa developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 1.3 Total Q2 2019 83 86 85 82 83 155.8 158.2 153.2 153.8 151.9 12.6 million cbm Subsidiaries 11.3 Joint ventures & associates Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2019 2019 2018 2

  37. Slide 37: Asia & Middle East developments

    Asia & Middle East developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q2 2019 92 84.5 3.3 86 85 85 80 76.4 77.2 79.1 76.5 4.2 14.9 million cbm Subsidiaries Joint ventures & associates 7.4 Operatorship Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 20

  38. Slide 38: China & North Asia developments

    China & North Asia developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q2 2019 79 83 79 0.8 73 73 4.2 million cbm 10.5 9.8 8.6 7.9 8.3 Subsidiaries 3.4 Joint ventures & associates Operatorship Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2019 2019 2

  39. Slide 39: Americas developments

    Americas developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q2 2019 90 89 89 89 91 75.6 77.0 0.2 0.5 4.1 million cbm 71.5 70.3 71.1 Subsidiaries 3.4 Joint ventures & associates Operatorship Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2019 2019 201

  40. Slide 40: 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 40.3 37.7 36.6 19.8 25.0 26.9 16.0 0.9 10.7 0.7 7.7 6.6 0.6 0.6 0.6 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2019 2019 2018 2018 2018 2019

  41. Slide 41: Key developments

    Key developments Occupancy rate* EBITDA development** In percent In EUR million 88 92 93 90 86 763 812 822 763 734 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Cash flow from operating activities (gross) Dividend In EUR million In EUR per ordinary share 867 1.05 1.05 1.10 787 783 1.00 714 687 0

  42. Slide 42: Occupancy rate developments

    Occupancy rate developments Occupancy rate of 85% (HY1 2019) explained by high out-of-service capacity for temporary planned IMO 2020 conversion Occupancy rate* In percent FY 86% HY1 85% 90-95% 85-90% 87 85 86 85 86 84 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 2018 201

  43. Slide 43: EBITDA to Net profit overview

    EBITDA to Net profit overview Increase in Earning per Share 2018 2017 In EUR million* In EUR million* EBITDA 734.3 763.2 Depreciation and amortization 271.0 272.8 EBIT 463.3 490.4 Net finance costs 82.4 98.5 Income tax 55.4 64.7 Non-controlling interests 36.0 39.8 Net profit to holders 289.5 287.4 o

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