Royal Vopak NV · EURONEXT:VPK
Royal Vopak NV — Q3 2020 Earnings Presentation
57 slides from Royal Vopak NV's earnings presentation, Nov 6, 2020
Slide 1: Storing vital products with care
Storing vital products with care Q3 2020 – 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: Full year 2019 key messages
Full year 2019 key messages Strong EBITDA and significant increase in earnings per share Execution of our strategy with portfolio transformation and growing new digital capabilities Continued growth investments for 2020 and EUR 100 million share buyback program Portfolio well-positioned for
Slide 4: Well-diversified portfolio
Well-diversified portfolio Irreplaceable and unique global asset footprint serving all liquid product value chains Proportional revenue per product World’s leading independent tank storage company ~10% ~10% 10-15% ~15% 20-25% Gas 23 countries, 66 terminals, 300+ jetties 25-30% 35-40% 25-30% Indu
Slide 5: External developments
External developments 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 potential i
Slide 6: Business environment update
Business environment update Long-term sustainable portfolio, well positioned for opportunities Chemicals Stable storage, reduced throughput Oil products Benefit from contango continues Different demand patterns for Oil hubs: contango impact oil markets durable and non-durable products slowed dow
Slide 7: Vopak at a glance
Vopak at a glance At year-end 2019 Number of terminals Number of countries Storage capacity* In million cbm 66 23 34.0 37.0 34.4 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 6.2 5,559 0.34 0,3
Slide 8: Robust Vopak strategy
Robust Vopak strategy Leadership in 5 pillars with clear strategy execution Q3 2020 Roadshow Presentation 8
Slide 9: Strategic terminal types
Strategic terminal types Industrial terminals Gas terminals Chemical terminals Oil terminals As petrochemical clusters are becoming Vopak is expanding its gas storage – in Demand for chemicals storage is growing. Oil import, distribution and hub terminals larger and more complex, logistics response
Slide 10: Portfolio transformation
Portfolio transformation Shift towards industrial terminals, chemicals and gas terminals Key projects 2019 Proportionate revenue per product ~10% ~10% 10-15% Gas • SPEC LNG - Colombia ~15% 20-25% 25-30% Gas • ETPL LNG - Pakistan Industrial terminals 35-40% • RIPET LPG - Canada 25-30% 25-30% Chemical
Slide 11: 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
Slide 12: 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 1.0 0.5 0.34 0.0 2010 2011 2012 2013 2014 2015 201
Slide 13: UN Sustainable Development Goals (SDGs)
UN Sustainable Development Goals (SDGs) 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 • Reducing our environmental footprint (daily) energy and cleaner fuels and
Slide 14: 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
Slide 15: 2017-2019 strategy delivered
2017-2019 strategy delivered Transformative portfolio changes and digital strategy is being rolled out EUR 1 billion growth investment program in line with Capture growth long-term market developments Spend EUR 750 million on sustaining and Sustaining and service improvement capex programs servi
Slide 16: YTD Q3 2020 key messages
YTD Q3 2020 key messages Continued good financial performance and improved occupancy rates Cost efficiency measures are progressing well and tracking below our revised target of EUR 600 million for the year Executing of our strategy with Dow acquisition in industrial terminals Continued grow
Slide 17: Q3 2020 COVID-19 update
Q3 2020 COVID-19 update We are in control and our governance structures are functioning well We will manage this crisis to the best of our ability to ensure we protect our people and support society by storing vital products with care All terminals are operational to serve our customers. If an
Slide 18: YTD Q3 2020 vs YTD Q3 2019 EBITDA
YTD Q3 2020 vs YTD Q3 2019 EBITDA EBITDA - post divestments - increased by EUR 32 million reflecting resilient business performance including currency headwinds of EUR 11 million 625.0 4.8 2.6 0.0 602.7 54.2 5.7 17.6 570.8 23.7 11.1 YTD Q3 Divested Adjusted FX-effect Americas Europe & Asia & LNG Chi
Slide 19: Divisional performance
Divisional performance Europe & Africa reflect strong oil storage and lower out-of-service; Americas and Asia & Middle East temporary lower chemical throughput; China strong demand Americas Asia & Middle East China & North Asia 92 93 94 87 87 87 80 84 90 88 82 73 74 71 64 43.2 47.6 48.7 44.9 70.8 85
Slide 20: Q3 2020 vs Q2 2020 EBITDA
Q3 2020 vs Q2 2020 EBITDA Resilient business performance despite EUR 6 million negative FX effects and cost phasing 0.8 1.0 1.2 202.4 4.6 8.4 200.1 6.0 0.7 196.4 Q2 2020 FX-effect Adjusted Europe & LNG China & Americas Asia & Global Q3 2020 Q2 2020 Africa North Asia Middle East functions, corporate
Slide 21: Occupancy rate developments
Occupancy rate developments Occupancy rate continued to trend up following support from oil storage demand Out-of-service capacity reduced, though work restrictions continued in Singapore Subsidiary occupancy rate and out-of-service capacity In percent 90-95% 85-90% 91 88 86 84 82 84 84 2011 2012 20
Slide 22: Cash flow overview
Cash flow overview Continued investments in growth; cash momentum supported by divestment proceeds and capital repayment YTD Q3 2020 YTD Q3 2019 In EUR million In EUR million 553 427 524 537 488 565 29 203 168 49 381 321 206 318 282 39 257 86 CFFO Tax & other CFFO Sustaining, FCF Divestments Growth
Slide 23: Q3 Portfolio highlights
Q3 Portfolio highlights Established leading position in industrial terminal delivery Dow industrial terminals transaction Industrial terminal delivery Vopak & BlackRock joint venture to acquire three Target 1-3 new industrial terminal opportunities in ’19-’20 industrial terminals (852,000 cbm) f
Slide 24: Portfolio developments
Portfolio developments Growth program of 2.4 million cbm in 2020-2022 Dow transaction Botlek 852,000 cbm Vlissingen Qinzhou Corpus Christi Deer Park 63,000 cbm Caojing 9,200 cbm 290,000 cbm 130,000 cbm 33,000 cbm German LNG 65,000 cbm Antwerp Altamira Vopak Moda Open season completed Vietnam PITSB 5
Slide 25: Project timelines
Project timelines Vopak’s Capacity Country Terminal ownership Products (cbm) 2018 2019 2020 2021 2022 2023 Growth projects Existing terminals Indonesia Jakarta 49% Oil products 100,000 Indonesia Merak 95% Chemicals 20,000 Mexico Veracruz 100% Oil products 79,000 Netherlands Rotterdam - Botlek 100% C
Slide 26: Non-IFRS proportional information
Non-IFRS proportional information Proportional consolidated information provides transparency considering increase joint venture contribution relative to subsidiaries EBITDA Occupancy rate Q3 2020 occupancy per division In EUR million In percent – subsidiaries only In percent – subsidiaries only IFR
Slide 27: 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
Slide 28: 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 +
Slide 29: Well-balanced global portfolio
Well-balanced global portfolio Strong resilient cash flow generation Industrial Gas Chemical Oil terminals terminals terminals terminals Typical contract 5-20 years 5-20 years 0-5 years 0-5 years duration per product / terminal category Share of 25-30% 10-15% 25-30% 35-40% proportionate revenues 201
Slide 30: Investment phasing
Investment phasing Balanced approach for growth, sustaining, service improvement and IT investments Investments Investments In EUR million For 2020, growth investment could amount to EUR 500-600 million New projects* In the period 2020-2022, Vopak may invest EUR 750-850 million in sustaining and
Slide 31: 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 HY1 2020 average interest 3.1% 2 Growth opportunities Value accretive growth Shareholder dividend 3 Annual stable to
Slide 32: Capital disciplined growth
Capital disciplined growth Value creation from attractive growth projects – investments of EUR 500-600 million for 2020 – and shareholder distributions Priorities for cash Growth investment multiples Senior net debt : EBITDA Invested capital / normalized projected EBITDA* ratio scenarios Debt servic
Slide 33: Robust balance sheet
Robust balance sheet The balance sheet flexibility further strengthened with USD 500 million equivalent US Private Placement Notes Program Senior net debt : EBITDA ratio Debt repayment schedule for debt covenant In EUR million Maximum ratio under private placements programs Including new 2020 US PP
Slide 34: Increase in dividend to EUR 1.15 per share
Increase in dividend to EUR 1.15 per share Continued rising cash dividends Dividend and EPS* Dividend policy: In EUR 2.80 2.55 2.56 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 1.10 1.15 1.00 1.05 1.
Slide 35: Looking ahead
Looking ahead We aim to grow EBITDA over time with new contributions from growth projects and replace the EBITDA from recent 2019 and 2020 divested terminals, subject to market conditions and currency exchange movements. Cost management continues in 2020 and Vopak’s cost base is currently tracki
Slide 36: Appendix
Storing vital products with care Q3 2020 Roadshow Presentation Appendix
Slide 37: Americas developments
Americas developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q3 2020 92 90 93 94 84.0 88 81.8 79.5 0.2 0.5 4.5 million cbm 79.3 78.3 Subsidiaries 3.8 Joint ventures & associates Operatorships Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2019 2019 2020 2020 2020 20
Slide 38: Asia & Middle East developments
Asia & Middle East developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q3 2020 87 87 87 73.4 74.9 73.0 3.3 82 70.6 70.3 4.2 15.4 million cbm 71 Subsidiaries Joint ventures & associates 7.9 Operatorships Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2019 2019 2020 2
Slide 39: China & North Asia developments
China & North Asia developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million Total Q3 2020 80 84 73 74 0.8 2.8 million cbm 64 9.7 9.8 10.4 10.6 8.9 2.0 Subsidiaries Joint ventures & associates Operatorships Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2019 2019 2020 2020 2020
Slide 40: Europe & Africa developments
Europe & Africa developments Storage capacity Occupancy rate* Revenues* In million cbm In percent In EUR million 1.3 Total Q3 2020 88 91 152.7 84 84 83 131.9 136.2 10.6 million cbm 126.8 128.1 Subsidiaries 9.3 Joint ventures & associates Operatorships Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2019 2019 2020 202
Slide 41: JVs & associates developments
JVs & associates developments Net result JVs and associates* Americas* Asia & Middle East* In EUR million In EUR million In EUR million 53.4 50.9 46.2 45.9 43.4 24.8 24.8 24.1 22.5 20.6 2.9 3.1 3.0 2.4 2.1 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2019 2019 2020 2020 2020 2019 2019 2020 2020 2020
Slide 42: Product market updates
Storing vital products with care Q3 2020 Roadshow Presentation Product market updates
Slide 43: Gas markets
Gas markets Key messages Resilient storage and handling demand for LNG and LPG despite COVID-19 Vopak’s global gas network is underpinned by long-term take-or-pay contracts Vopak has a unique portfolio of LNG and gas storage infrastructure combined with a proven track-record of safe, sustainab
Slide 44: Gas markets developments
Gas markets developments Resilient storage demand in LNG and LPG despite COVID-19 HY1 2020 – LNG developments HY1 2020 – LPG developments LNG demand reduced and oversupply deepens Residential LPG demand surged amid lockdowns as lockdowns caused a reduction in industrial and power consumption, th
Slide 45: Vopak's global gas footprint
Vopak’s global gas footprint LNG and chemical gases revenues underpinned by long-term take-or-pay contracts RIPET Gate terminal Vlissingen Tianjin Lingang Ulsan Sabtank (Jubail) Lanshan Altamira LNG Caojing Panama Haiteng Engro Vopak Thai Tank ETPL SPEC Kertih Banyan 18 terminals PT2SB 12 countries
Slide 46: Growth developments in gas are on track
Growth developments in gas are on track Focus on growth in LNG regasification, LPG import/export and industrial use of LPG and chemical gases German LNG Permitting Vlissingen continues and Vopak Sucheng LNG EPC tender Constructing Jetty construction Vopak Moda 9,200 cbm LPG & completed Constructing
Slide 47: Gas markets outlook
Gas markets outlook Strong global gas market fundamentals supported by short-term resilience in infrastructure demand LNG market outlook LPG market outlook In a supply driven market with a low LNG price, LPG production growth is linked to oil demand access to regasification terminals is key and
Slide 48: Industrial terminals and chemical products
Industrial terminals and chemical products Key messages Chemical capacity build up, combined with Covid-19 demand destruction and low oil prices impacted chemical industry margins and trade flows End market demand for chemicals varies widely between durable and consumable goods mainly affected b
Slide 49: Well supplied chemical markets
Well supplied chemical markets COVID-19 demand destruction led to further length in chemical markets Global base chemicals cash earnings Global base chemical capacity growth by market In US$ billion In million ton 250 200 40 150 30 Demand growth Paraxylene 100 20 Benzene Chlorine Methanol 50 10 Prop
Slide 50: End markets developments
End markets developments Changing consumer behavior: more consumables, less durable goods Durable goods Consumable goods End markets Construction Automotive Textiles Electronics Agriculture Packaging Consumer Home & Healthcare products personal care Size of end markets HY1 2020 demand trend Typical
Slide 51: Vopak's global chemicals footprint
Vopak’s global chemicals footprint Balanced portfolio with stable demand for storage but lower activity in HY1 Occupancy rate and throughput 95% 85% 80 100 94 Proportional revenues chemicals and industrial terminals by terminal type by region HY1 HY2 HY1 HY2 HY1 HY2 HY1 2017 2018 2019 2020 15-20% 15
Slide 52: Outlook chemical markets and Vopak performance
Outlook chemical markets and Vopak performance Outlook chemical markets Outlook Vopak performance Chemical demand seem to have bottomed in Q2 Demand for storage is expected to remain stable in the short-term Short-term, chemical industry margins are expected to remain depressed as markets are
Slide 53: Oil markets
Oil markets Key messages 2020: an unprecedented year for oil markets with high volatility in price, supply and demand Vopak oil terminals in the hubs Rotterdam, Fujairah and Singapore Straits are logistic, trading and refining centers with sustainable storage demand that was boosted by a positiv
Slide 54: Oil price and market structure 2020
Oil price and market structure 2020 An unprecedented year in terms of events and volatility 70 Brent spot price (US$/bbl) 2020 started with OPEC+ and geopolitics 60 as key drivers for oil price 50 COVID-19 added a new factor 5 40 Events 3 11. KSA announcement (March 8) 30 1 22. COVID-19 declar
Slide 55: Oil storage: global capacity & Vopak network
Oil storage: global capacity & Vopak network Market leader in oil hubs and presence in key distribution markets ARA region Global crude storage capacity* Hub size: 22–23m cbm** 27% Vopak 6.0 m cbm 800-900m cbm 15-20% Vopak largest player main competitors: Koole, VTTI, Oiltanking 20-25% Fujairah 55-6
Slide 56: Crude supply/demand outlook
Crude supply/demand outlook Oil market fundamentals look positive post COVID-19 Global oil supply and demand balance mb/d mb/d 105 10.0 Biggest drop in oil demand ever seen Massive stock building as a result 95 5.0 Supply response will catch up with 85 0.0 demand Stock draws expected to star
Slide 57: Oil product demand outlook
Oil product demand outlook Volatility expected in the period 2021-2022 - drives demand for tank storage Main uncertainty on product demand is COVID-19 Impact COVID-19 differs per product group: Year-on-year oil demand change per product in 2020 mb/d • Middle distillate demand is most impacted, 5