Royal Vopak NV · EURONEXT:VPK
Royal Vopak NV — Investor Day (June 2022)
74 slides from Royal Vopak NV's investor day presentation, Jun 8, 2022
Slide 1: Capital Markets Day 2022
Capital Markets Day 2022 8 June 2022 Vopak Capital Markets Day 2022 1
Slide 2: Forward-looking statement
Forward-looking statement Any statement, presentation or other information contained herein that relates to future events, goals or conditions is, or should be considered, a forward-looking statement. Although Vopak believes these forward-looking statements are reasonable, based on the information a
Slide 3: Agenda
Agenda Time (CET) Topic Speaker Dick Richelle - Chairman of the 10:00 – 10:30 Strategic priorities Executive Board and CEO Frits Eulderink - Member of the 10:30 – 10:50 Sustainability and operations Executive Board and COO Financial framework and Michiel Gilsing - Member of the 10:50 – 11:20 perform
Slide 4: Shaping the future - Dick Richelle
Shaping the future Dick Richelle Chairman of the Executive Board and CEO of Royal Vopak
Slide 5: Shaping the future
Shaping the future Leading global platform Unparalleled access to growth opportunities IMPROVE GROW ACCELERATE performance of our our base in industrial towards new energies & portfolio & gas terminals sustainable feedstocks Improve performance of existing portfolio Commitment to ESG >10% EUR 1 bill
Slide 6: In dialogue with all our stakeholders: CEO priorities
In dialogue with all our CEO priorities stakeholders Set strategic priorities Accelerate portfolio transition and create long- term value Improve financial performance of our Customers Shareholders Employees portfolio Improve operating cash return Pursue growth opportunities Disciplined capital allo
Slide 7: Shaping the future
Shaping the future We are… An independent infrastructure provider with an unrivalled network of strategic locations and customers We have… A diversified portfolio which is a critical enabler for product flows today and in the future We serve… Energy and manufacturing markets offering significant gro
Slide 8: Unrivalled network of strategic locations, capabilities and partnerships
Unrivalled network of strategic locations, capabilities and partnerships Network Capabilities Partnerships Strong base in industrial clusters1 Safely and efficiently design, build and Vital infrastructure partner, developer around the globe operate global infrastructure and operator 79 250+ 1,000+ L
Slide 9: We serve multiple end markets through different products and customer offerings
We serve multiple end markets through different products and customer offerings End markets Energy Manufacturing New energies Products Gas & sustainable Oil Chemicals feedstocks Customer offerings Industrial Multifunctional Distribution Vopak Capital Markets Day 2022 9 Gas product segment includes L
Slide 10: Key trends shaping our markets in the coming decades
Key trends shaping our markets in the coming decades +13% 4.5% +10% World population Gas demand projected growth by 2030 CAGR increase by 2030, with the regional shift of gas Global manufacturing demand to Asia expected market growth to continue Sustainability & decarbonization Energy 5x Increasing
Slide 11: Shaping the future: strengthen foundation and accelerate growth
Shaping the future: strengthen foundation and accelerate growth IMPROVE GROW ACCELERATE performance of our our base in industrial towards new energies & portfolio & gas terminals sustainable feedstocks Vopak Capital Markets Day 2022 11
Slide 12: Improve performance of our portfolio
Shaping the future: Improve performance of our portfolio Fit for purpose financial framework • Operating cash return of at least 10% by 2025 • Progressive dividend policy • Actively manage the portfolio Ambitious sustainability roadmap • Strong progress towards sustainability ambitions • Enable our
Slide 13: Grow our base in industrial & gas terminals
Shaping the future: Grow our base in industrial & gas terminals Grow our position as market leader in industrial terminals Grow in gas with potential to complement with low carbon alternatives EUR 1 billion to be invested in gas and industrial terminals as growth capex by 2030 Vopak Capital Markets
Slide 14: Strategically positioned industrial terminals in key seaports and hubs
Strategically positioned industrial terminals in the world’s key seaports and hubs SabTank (Saudi Arabia) Chemtank (Saudi Arabia) Chemiehaven Plaquemine (Netherlands) Caojing St. Charles (USA) (China) (USA) Tarragona (Spain) Haiteng Thai Tank Gulei 18 Corpus Christi (USA) Freeport (USA) Yanbu (Saudi
Slide 15: Grow our base in gas terminals: LNG and LPG
Shaping the future: Grow our base in gas terminals LNG LPG 80% Residential of LNG demand growth will occur in the next 15 Sector accounts for 50% of global demand and years as global LNG peaks close to 2050 is a cleaner alternative Asia 75% will be the largest growth market of LPG demand growth will
Slide 16: Accelerate towards new energies & sustainable feedstocks
Shaping the future: Accelerate towards new energies & sustainable feedstocks CO2 Hydrogen infrastructure Low carbon fuels Long duration and feedstocks energy storage EUR 1 billion to be invested in new energies and sustainable feedstocks as growth capex by 2030 Vopak Capital Markets Day 2022 16
Slide 17: Vopak company profile in 2030
Vopak company profile in 2030 Successful in existing Handling energy and and new value chains materials society needs and partnerships IMPROVE GROW ACCELERATE performance of our our base in industrial towards new energies & portfolio & gas terminals sustainable feedstocks Continuously reducing A glo
Slide 18: Shaping the future - Frits Eulderink
Shaping the future Frits Eulderink Member of the Executive Board and COO of Royal Vopak
Slide 19: COO priorities
COO priorities Improve • Further improve leading safety and service levels • Optimize revenue, occupancy, cost and operating capex • Repurpose and transform assets with the market • Instigate Vopak brand in acquisitions Grow • Leverage global learning curve and local agility in new business opportun
Slide 20: Improve performance of our portfolio
Improve performance of our portfolio We realize that our current performance not only drives our short-term returns but also our success in tomorrow’s vital products We have… • Strong safety and service scores and want to maintain these • Full potential improvement plans in our major operating compa
Slide 21: Optimizing supply chains with real-time insights
We enable our customers to optimize their supply chains by providing real-time insights Cyber security Digital ▪ Replacing and modernizing our ▪ Centralized cyber security Modernization program to protect our systems company-wide IT and OT systems ▪ Developed own software for core ▪ Ability to respo
Slide 22: Advancing our IT landscape
Advancing our IT landscape for increased customer intimacy and efficiency Status In progress • MyService will meet the future demands of our customers MyService and creates a step change in our digital service offering • 70% of selected terminals will be live by mid 2022 Terminal management • Real t
Slide 23: Global engineering allows for efficiency across the network
Global engineering allows for efficiency across the network • One learning curve: in-house department for technical design of growth projects across the globe • Efficiency: repeatable engineering process reduces time spent by 30%, lowers costs by 40% and improves quality compared to external enginee
Slide 24: New energies and sustainable feedstocks focus areas and early projects
Our new energies and sustainable feedstocks focus areas and early projects • ACE: import terminal for green ammonia as a • Xycle: construction of the first plastic recycling hydrogen carrier together with Gasunie and HES plant at the end of 2022 • H-vision: low-carbon hydrogen in Netherlands to • Vl
Slide 25: Our approach to sustainability
Our approach to sustainability We are ambitious and performance driven with a balanced roadmap focusing on care for people, planet and profit Sustainability roadmap ESG ESG Benchmarks benchmarks MSCI Rating: AAA* (scale: CCC to AAA) ISS Rating: (scale: 10 high risk to 1 low risk) Environmental 3 Soc
Slide 26: Strong progress towards sustainability ambitions
Strong progress towards sustainability ambitions Network Environmental Social Governance GHG emissions Safety performance Diversity & inclusion Total GHG emissions 3-year rolling average for total injury rate % of women in senior management positions (scope 1 & 2 in metric tons) (TIR)* and process s
Slide 27: Our contribution to a climate neutral society
Our contribution to a climate neutral society Provide critical • Contribute actively to decarbonize industrial clusters infrastructure for new 1 • Enlarge share of investments in new energies and sustainable feedstocks energies and sustainable • Focus on four areas in new energies and sustainable fe
Slide 28: Vopak's global GHG emissions in perspective
Vopak’s global GHG emissions in perspective ~2x the emissions of Formula 1 as a full event, ~25% of one coal-fired electricity plant and ~0.3% of the Netherlands GHG emissions Formula 1 0.26 ~2x Formula 1 as a full event per annum as a full event In million Storage & metric tons regasification Vopak
Slide 29: Reduce our own environmental and carbon footprint
Reduce our own environmental and carbon footprint Decarbonize our Interim GHG emissions reduction target of Our ambition is to be climate existing and future 30% by 2030 vs. 2021, which requires a neutral by 2050 operations 45-60% reduction of the current asset base GHG emissions in the Renewable el
Slide 30: Decarbonizing our operations - 6 lines of action
Decarbonizing our operations and becoming climate neutral – 6 lines of action Lines of action Examples Insulation of tanks and pipelines in the Netherlands, boiler economizers, variable speed drives for Energy efficiency pumps, data analytics optimizing compressor efficiency Produce renewable Solar
Slide 31: Shaping the future - Michiel Gilsing
Shaping the future Michiel Gilsing Member of the Executive Board and CFO of Royal Vopak
Slide 32: CFO priorities
CFO priorities Continue portfolio transformation • Last 5 years increase in gas and industrial terminals • More long term sustainable cash flow Performance headwinds • Reverse the declining trend of returns of the portfolio • Driven by some existing assets and some growth investments Funding growth
Slide 33: Financial focus areas
Financial focus areas Improve performance of the portfolio Stronger focus on Actively manage our portfolio and Improve operating cash return cash flow generation create headroom to grow Focus on cost efficiency and Disciplined capex approach to Progressive dividend policy reduce overhead costs deliv
Slide 34: Actively managing our portfolio
Actively managing our portfolio Looking back Proportional capital employed per product category • Increased gas and industrial exposure over the last 5 years 10-15% 15-20% 20-25% Gas and new energies 25-30% Industrial 15-20% • Lowered oil exposure with 15% by material divestments 20-25% Chemicals ~2
Slide 35: Impact of market structure is limited and shrinking
Impact of market structure is limited and shrinking Oil and oil products Oil per location type Oil by market structure exposure As part of total proportional revenue Middle distillates Hub Crude 2021: 30-35% Oil Gasoline Distribution 1. Non-exposed: industrial connection or strategic storage in hubs
Slide 36: Growth investment supporting long term profile of cash flow
Growth investment supporting long term profile of cash flow Growth investments Major growth investments EUR million 525 Industrial terminals 500 341 269 • Acquisition of Dow assets in the US Gulf Coast with a capacity of 127 Divestment 737,000 cbm -38 Growth capex • Greenfield terminal in Qinzhou, C
Slide 37: Diversified portfolio
Diversified portfolio Proportional EBITDA by division EUR million CAGR CAGR +4% 1,000 Portfolio has tilted towards the Americas, China & North 11% Asia and LNG, with lower exposure in Europe & Africa 9% 853 • China & North Asia: growth supported by new projects in 14% 13% China & North Asia 7% indus
Slide 38: Joint ventures continue to drive EBITDA and cash flow growth
Joint ventures continue to drive EBITDA and cash flow growth Reported EBITDA Proportional EBITDA EUR million EUR million 830 780 827 981 961 1,000 21% 21% 22% 39% 42% 42% 79% 79% 78% 61% 58% 58% 2019 2020 2021 2025E 2019 2020 2021 2025E Result joint ventures EBITDA subsidiaries EBITDA joint ventures
Slide 39: Improving operating cash return drives value creation
Improving operating cash return drives value creation Operating cash return on a portfolio level % Target of at least 10% 12.8% 11.7% 10.2% operating cash return by 2025 2019 2020 2021 2022E 2023E 2024E 2025E Operating cash return is a better indicator of value creation across the portfolio • Operat
Slide 40: Actively managing our portfolio towards higher operating cash returns
Actively managing our portfolio towards higher operating cash returns Increase portfolio operating cash return Rationalize the portfolio • Portfolio rationalization underpinned by the strategic fit in Vopak portfolio • Potential proceeds to be used to create headroom for growth investments Repurpose
Slide 41: EUR 1 billion in new energies
EUR 1 billion in new energies ~80-90% Allocated towards building new energies infrastructure in existing or new locations with gas-like returns ~10-20% Allocated towards more early-stage and projects such as our investments in Xycle and Hydrogenious Vopak Capital Markets Day 2022 41
Slide 42: Robust balance sheet allows for a progressive dividend policy
Robust balance sheet allows for a progressive dividend policy Senior net debt : reported EBITDA Covenant level of 3.75x Maintain a healthy leverage ratio with a 2.93 range of around 2.5-3.0x senior net debt 2.75 2.58 to reported EBITDA 2019 2020 2021 EPS and dividend EUR per share 2.80 2.37 2.38 2.2
Slide 43: Financial framework
Financial framework Short term outlook EBITDA expected for FY 2022 will be announced with H1 2022 results. One year outlook EBITDA will be given annually going forward Operating capex Operating capex expected for the period 2023-2025 will be announced with FY 2022 results Growth capex expected for F
Slide 44: Disciplined capital allocation priorities
Disciplined capital allocation priorities We focus on a robust balance sheet – Maintain a healthy leverage ratio We return value to shareholders – By a progressive dividend policy Remaining capital is spent on growth investments with attractive operating cash returns Generate total shareholder retur
Slide 45: Shaping the future
Shaping the future Leading global platform Unparalleled access to growth opportunities IMPROVE GROW ACCELERATE performance of our our base in industrial towards new energies & portfolio & gas terminals sustainable feedstocks Improve performance of existing portfolio Commitment to ESG >10% EUR 1 bill
Slide 46: Shaping the future
Shaping the future XY Vopak
Slide 47: Shaping the future - Patrick van der Voort
Shaping the future Patrick van der Voort Division President Europe & Africa
Slide 48: Europe & Africa
Europe & Africa Unrivaled footprint with 16 terminals covering all products from LPG to bio feedstocks Eemshaven Belgium Strategic petroleum storage Chemical distribution & solar park terminals Vopak Energy Terminals Netherlands Transportation fuels and feedstock terminals Terquimsa Industrial and d
Slide 49: Vlaardingen
Vlaardingen Distribution hub for edible oils and biofuels Key markets served Vegoils Edible oils and feedstocks for biofuels Base Oils Automotive and industrial lubricants Oleochemicals Cosmetics and personal care products, lubricants Vopak Rotterdam footprint Biodiesel & Renewables Renewable diesel
Slide 50: Vlaardingen
Vlaardingen The journey towards a diversified portfolio with rejuvenated assets Vlaardingen PMC distribution Vegoils Biodiesel & Renewables Bio feedstock Highly volatile and EU Renewable Energy Directive Shifting demand from crop- seasonal market increasing use of biodiesel blended based to waste-ba
Slide 51: Vlaardingen
Vlaardingen Substantial rejuvenation and investment program delivered by Terminal Master Plan to support our portfolio choice Strategic Plan 2007-2017: Terminal Master Plan 2017: Terminal Master Plan 2020: Terminal Master Plan 2021: Rejuvenating old Growth through strategic Maximize potential Storin
Slide 52: Vlaardingen
Vlaardingen Turnaround program bringing desired results Safety Focus High service High performance Modernize and Continued focus on safety levels culture grow storage Rates shown per 200,000 Net Promoter Score Market positioning has AWH increased bringing capacity succeeded raising Vlaardingen >50 N
Slide 53: Vlaardingen
Vlaardingen This is how we keep winning 1. Service - relationship, expertise, Service will become our differentiating factor versus competition additional business services 2. Jetty & truck capacity - minimal waiting times, fast Debottleneck the sea-jetties and improve service levels turnaround time
Slide 54: Vlissingen
Vlissingen Supplying the European hinterland with LPG and chemical gasses, with potential to be repurposed for the energy transition Key market served LPG Distribution of LPG for household and utilities customers Cracker Feedstocks Diversification of landlocked steam crackers Rotterdam Chemical gass
Slide 55: Vlissingen
Vlissingen Investment in organic growth Excelling in LPG through organic growth Strengthening distribution infrastructure Positioning for new energies Serving the Vlissingen-Gent-Terneuzen industrial cluster Vopak Capital Markets Day 2022 55 CO2 Long duration Hydrogen infrastructure energy storage
Slide 56: Vlissingen
Vlissingen Building on strong foundations Safety culture Customers are High performance Capitalize on Continued focus on fans culture growth safety Increased service Consistent capex 45k cbm additional levels, customers discipline, securing capacity and satisfaction extra revenues improvements in di
Slide 57: Vlissingen
Vlissingen This is how we keep winning Capitalize growth, excel in LPG with state of the art distribution capabilities 1. Service - reliable and excellent service 2. Infrastructure - in full control and Develop projects for decarbonisation of the cluster, piloting flow minimum outages battery and fu
Slide 58: Shaping the future - Kees van Seventer
Shaping the future Kees van Seventer Division President New Energies & LNG
Slide 59: LNG - Continuing accelerating growth
LNG - Continuing accelerating growth Essential for energy security and necessary during the transition EET New Eemshaven terminal 2022 (Netherlands) ETPL HK GATE Reached an TLA agreement for the SPEC new floating LNG terminal in Hong Kong GATE GATE TLA GATE TLA Truck Loading Small Scale ETPL SPEC Ne
Slide 60: Growth Forecast LNG
Growth Forecast LNG LNG market growing from 380 MTPA to 600 MTPA by 2035 Market is geared for substantial growth Priority markets for • LNG peaks by 2050, but regional differences Vopak LNG highlighted • Security of supply in Europe challenges affordability in South-East Asia • New supply accelerate
Slide 61: Combining LNG & New Energy
Combining LNG & New Energy Synergies in business development trajectories & growth potential Unlocking the LNG project execution capabilities to accelerate growth in New Energy projects Similar Competences: Similar JV Partners Similar Locations Capital, Contracts, & Customers High Profile Energy Hub
Slide 62: Shaping the future - Marcel van de Kar
Shaping the future Marcel van de Kar Global Director New Energies
Slide 63: Our new energies and sustainable feedstocks focus areas
Our new energies and sustainable feedstocks focus areas CO2 Low carbon fuels Long duration Hydrogen infrastructure and feedstocks energy storage Vopak Capital Markets Day 2022 63
Slide 64: We invest in all green hydrogen carriers
We invest in all green hydrogen carriers, expecting green ammonia to mature first Market potential Vopak’s existing capabilities and projects 6% CAGR Mature hydrogen carrier ready for large-scale adoption by 2030 6 Locations with ammonia operations in 18% CAGR Vopak’s existing In sustainable ammonia
Slide 65: Vopak Capital Markets Day 2022
Vopak Capital Markets Day 2022 65
Slide 66: CO2 infrastructure is essential for industrial decarbonization
CO2 infrastructure is essential for industrial decarbonization Market potential Vopak’s existing capabilities and projects 22% CAGR In carbon capture and storage capacity to reach climate targets Industrial Negative emissions clusters CO2 infrastructure solutions for Strategically positioned industr
Slide 67: Low carbon fuels and feedstocks are already widely stored across our network
Low carbon fuels and feedstocks are already widely stored across our network Market potential Vopak’s existing capabilities and projects 3-4% CAGR EUR 50m In biofuel and green Existing biofuels methanol demand revenue, and due to customer interest we are expanding our biofuels footprint Vopak’s role
Slide 68: Long duration energy storage has a vital role to play
Long duration energy storage has a vital role to play in a renewable energy system Market potential Vopak’s existing capabilities and projects 40% CAGR Energy storage capacity growth due to increased Elestor uptake of renewable energy Partnering with Elestor in grids on an emerging technology Vopak’
Slide 69: Well positioned for decarbonizing industrial clusters
We are well positioned for decarbonizing industrial clusters through our existing footprint Decarbonizing trends for industry Now – CO2 and blue hydrogen infrastructure and switch to 2030 sustainable feedstocks 2030 – Integration of renewables and green hydrogen, further 2050 electrification of proc
Slide 70: Shaping the future
Shaping the future XY Vopak
Slide 71: Shaping the future
Shaping the future Leading global platform Unparalleled access to growth opportunities IMPROVE GROW ACCELERATE performance of our our base in industrial towards new energies & portfolio & gas terminals sustainable feedstocks Improve performance of existing portfolio Commitment to ESG >10% EUR 1 bill
Slide 72: Shaping the future
Shaping the future XY Vopak
Slide 73: Appendix
Appendix Vopak
Slide 74: Operating cash return reconciliation
Operating cash return reconciliation Proportional operating cash flow reconciliation (2021) Operating cash return3 EUR million % 1,000 EUR 553 million 827 173 Proportional operating cash flow 355 92 553 EUR 5,399 million Average proportional capital employed 10.2% Reported Effects Proportional Propo