Royal Vopak Nv · EURONEXT:VPK
Royal Vopak Nv — Q3 2017 Earnings Presentation
68 slides from Royal Vopak Nv's earnings presentation, November 2017
Slide 1: Royal Vopak Q3 2017 Roadshow Presentation
Storing vital products with care• Royal Vopak Q3 2017 Roadshow Presentation
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 Introduction • on an impressive history of more than 400 years
Slide 4: Vopak at a glance
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Vopak at a glance Number of terminals* Number of countries* Market capitalization* FY2016 Revenues** In EUR billion In EUR million 66 25 4.4 1,347 Compared to 2015 -3% Storage capacity
Slide 5: Four centuries of history
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Four centuries of history 1616 ‘De Blaauwhoudenveem’ was founded 1967 (much later known as ‘Blaauwhoed’) Merger of Pakhuismeesteren and Blaauwhoed into 1818 Pakhoed Establishment of Pa
Slide 6: Who we are
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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 product
Slide 7: Business model
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Business model Blending Heating / cooling Additional handling services related to loading / unloading Excess throughput fees Administrative support Monthly invoicing in arrears Service
Slide 8: Occupancy rate developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Occupancy rate developments Occupancy rate is supported by sound business drivers in all the product-market segments throughout our network Occupancy rate* In percent YTD Q3 94% YTD Q3
Slide 9: Strategic terminal types
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Strategic terminal types Industrial terminals Gas terminals Distribution terminals Hub terminals Industrial terminals Terminals facilitating Import and distribution Major hubs, in the
Slide 10: Global presence
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Global presence Per Q3 2017 ARA region* Houston Fujairah Singapore Strait Number of Number of Storage terminals countries capacity *Amsterdam-Rotterdam-Antwerp = Hub location = Vopak t
Slide 11: Diversified product-market mix
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Diversified product-market mix Vopak Q3 2017 Roadshow Presentation 11
Slide 12: Well-balanced global portfolio
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Well-balanced global portfolio Oil Chemical Industrial Vegoils Gas products products terminals & biofuels products Typical contract duration 0-5 years 0-5 years 5-20 years 0-3 years 10
Slide 13: Key developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Key developments Occupancy rate* EBITDA development** In percent In EUR million 94 96 95 94 93 93 91 92 93 812 822 88 88 768 753 763 598 636 513 429 370 314 2006 2007 2008 2009 2010 20
Slide 14: Business challenges
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Business challenges Strategic Operational Competitive environment Safety and sustainability Service Shifting energy landscape and product flows Cost competitiveness Compliance Financia
Slide 15: Discussions with investors
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Discussions with investors Economic & market dynamics Projects Geographical differences and Projects under construction and variations per product-market group business development
Slide 16: Why invest in Vopak
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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
Slide 17: 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 18: Megatrends
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Megatrends Influencing global demand and supply Industrialization and urbanization Changing Disruptive in emerging economies demographics technologies Geopolitical developments Sustain
Slide 19: Impact on end markets
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Impact on end markets Energy, Manufacturing and Food & Agriculture Trends ENERGY MANUFACTURING FOOD & AGRICULTURE End Power generation sector to be Demand growth in the Growth dr
Slide 20: Imbalances of petroleum products
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Imbalances of petroleum products Growing need for efficient hub functions and import/distribution type facilities FSU Greater Europe North America Middle East 2016 2026 2016 2026 2016
Slide 21: Chemicals outlook
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Chemicals outlook Increasing global demand for plastics Ethylene Capacity Growth 250 World consumption in mln tons 200 Other 150 Europe 100 Asia & Pacific Middle East 50 North America
Slide 22: Rebalancing of the LNG market
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Rebalancing of the LNG market A new wave of supply expected, predominately coming from the US and Australia Norway ~4% Russia ~7% North America Qatar ~23% North Africa ~14% ~5% West Af
Slide 23: Vopak's LNG strategy
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Vopak’s LNG strategy LNG is received, stored, reloaded or regasified Mature markets Drivers Inland gas markets LNG trading Hub terminal Break-bulk distribution Transport / bunkering Si
Slide 24: Strategy execution
Our success depends on our ability to show leadership in five Strategy key areas execution •
Slide 25: Leadership in five areas
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Leadership in five areas Storing vital products with care• Leading Operational Service Technology People assets in leadership leadership leadership leadership leading locations Founder
Slide 26: Leading assets in leading locations
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Leading assets in leading locations 66 terminals in 25 countries* Hamburg Talinn Amsterdam Rotterdam Antwerp Yangpu Ningbo Haiteng Lanshan Tianjin Zhangjiagang Tarragona Karachi Barcel
Slide 27: Storage capacity developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Storage capacity developments In million cbm between 2003 – Q3 2017 +16.0 33.8 34.3 34.7 35.9 29.9 30.5 Subsidiaries 27.1 28.3 28.8 27.8 Joint ventures 21.2 21.8 20.1 19.7 19.7 19.9 20
Slide 28: Return requirements for investments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Return requirements for investments Footprint in Optimization growth emerging markets opportunities 1 2 First-mover Option advantage value Contribution from key accounts 6 3 Mitigating
Slide 29: New projects under construction
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics New projects under construction 3.2 million cbm currently under construction The timely completion of the current projects under construction, of which, most are backed by commercial s
Slide 30: Operational leadership
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Operational leadership The right people, high quality assets and robust repeatable processes 1. Safety Maximizing operational safety Minimizing environmental impact 2. Service Ma
Slide 31: Safety performance
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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
Slide 32: Service leadership
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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 A
Slide 33: Contract durations
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Contract durations A well-balanced global portfolio supported by a diversified customer base with different underlying demand drivers Contract position FY2014 Contract position FY2015
Slide 34: Technology leadership
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Technology leadership Eliminating human error, further improving our safety performance and increasing the productivity of our terminals Vopak will accelerate investments to experiment
Slide 35: People leadership
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics People leadership We aim to inspire and challenge our people without losing sight of our strong competences and core values Team spirit Integrity Care for Safety, Health and Commitment
Slide 36: Capital management
Disciplined capital allocation, maintaining a balanced risk-return Capital profile, and consistent dividend policy management •
Slide 37: Priorities for cash
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Priorities for cash 1 Debt servicing EUR 1.8 billion, remaining maturity ~7 years, average interest 4.1% 2 Dividend EUR 0.9 billion paid to shareholders in the last 12 years 3 Discipli
Slide 38: Capital commitments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Capital commitments Total investments 2005-2019 Expansion capex** In EUR million In EUR million; 100% = EUR ~2,500 million Remaining 2,012 Forecasted capex ~700 Vopak share 1,899 1,729
Slide 39: Financial flexibility
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Financial flexibility Supporting Vopak’s long-term capital disciplined growth strategy “The solid operational cash flow generation, strong balance sheet and sufficient financial flexib
Slide 40: Capital structure
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Capital structure Financial flexibility to support growth Syndicated Ordinary shares Private placement Equity(-like) Revolving program Credit Facility Listed on Euronext USD: 1.7 billi
Slide 41: Debt repayment schedule
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Debt repayment schedule Debt repayment schedule In EUR million; before early repayment of USPP 2007 loans (maturity dates 2019 & 2022) 1,100 RCF flexibility US PP 1,050 RCF drawn Asian
Slide 42: Net finance costs
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Net finance costs Net finance costs HY 2017 Net finance costs HY 2016 In EUR million In EUR million Interest and dividend income 6.5 6.0 Finance costs -58.8 -61.9 Net finance costs -52
Slide 43: Solid financial position
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Solid financial position Maintaining a consistent solvency while growing our global network Total equity and net liabilities Net liabilities* Equity 60% 51% 50% 49% 50% 64% 40% 36% FY
Slide 44: Stable dividend growth
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Stable dividend growth Increase dividend with 5% to EUR 1.05 per share Dividend and EPS* 2003-2016 In EUR 3.0 2.56 EPS BARRING 2.5 EXCEPTIONAL 2.0 CIRCUMSTANCES, 1.5 +5% THE INTENTION
Slide 45: Business performance
Long-term value creation, robust cash flow generation and margin Business management performance •
Slide 46: Long-term value creation
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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
Slide 47: Robust business results
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Robust business results Capital disciplined, step-by-step EBITDA growth EBITDA and Net result joint ventures and associates In EUR million 2005 - 2007 2008 - 2010 2011 - 2013 2014 - 20
Slide 48: YTD Q3 2017 key figures
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTDQ3 2017 key figures Terminal network Occupancy rate* Occupancy rate of 90% is supported by sound In million cbm In percent business drivers in all the product-market segments +4%
Slide 49: YTD Q3 Developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 Developments Terminal network Occupancy rate* Revenues* In million cbm In percent In EUR million Subsidiaries +1.3 -4pp Joint Ventures & Associates -3% Operatorship 88 89 92 94
Slide 50: Well-balanced global portfolio
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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
Slide 51: YTD Q3 EBITDA analysis
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 2017 EBITDA analysis EBITDA -excluding exceptional items- decreased 9%, adjusted for the divestments early 2016, the pro forma EBITDA decreased by 7% 624.7 3.5 12.0 611.4 10.5 2
Slide 52: YTD Q3 Segmented EBITDA
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 Segmented EBITDA Netherlands EMEA Netherlands • Fuel Oil Market In EUR million In EUR million • Chemical capacity out of service 94 95 • Cleaning and innovation costs 87 90 92 9
Slide 53: Further aligning the global network
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Further aligning the global network Vopak Terminal Eemshaven Divestments and change of ownership Change in ownership in Vopak Terminal US: Galena Park and Eemshaven, Vopak will retai
Slide 54: YTD Q3 Netherlands developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 Netherlands developments Occupancy rate* Revenues* In percent In EUR million 94 95 90 360.5 373.8 351.0 83 87 328.4 332.7 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Stora
Slide 55: YTD Q3 EMEA developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 EMEA developments Occupancy rate* Revenues* In percent In EUR million 89 92 95 92 182.7 191.1 191.3 83 144.0 131.1 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capa
Slide 56: YTD Q3 Asia developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 Asia developments Occupancy rate* Revenues* In percent In EUR million 95 95 88 92 89 270.6 273.4 284.8 288.9 281.1 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage capa
Slide 57: YTD Q3 Americas developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 Americas developments Occupancy rate* Revenues* In percent In EUR million 90 90 90 91 89 200.6 216.7 181.9 183.0 198.2 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Storage
Slide 58: YTD Q3 JVs & associates developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics YTD Q3 JVs & associates developments Net result JVs and associates* Netherlands* EMEA* In EUR million In EUR million In EUR million 94.6 87.5 2.0 2.0 28.3 28.7 81.7 77.4 1.8 24.2 1.6 1
Slide 59: HY 2017 return indicators
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics HY 2017 return indicators Focus on cash flow and capital disciplined growth NON-IFRS IFRS BASED PROPORTIONAL ROE* ROCE** CFROGA*** (after interest, after tax) (before interest, before
Slide 60: Margin developments
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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 perc
Slide 61: Non-IFRS proportionate information
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Non-IFRS proportionate information HY 2017 key figures IFRS BASED NON-IFRS PROPORTIONAL Occupancy rate Occupancy rate In percent In percent 88 94 91 90 94 91 2015 2016 2017 2014 2015 2
Slide 62: Non-IFRS proportionate Free Cash Flow
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Non-IFRS proportionate Free Cash Flow Proportionate Free Cash Flow -excluding expansion capex- is in line with previous year HY1 HY1 Proportionate consolidated 2017 2016 EBITDA 440.9 4
Slide 63: Looking ahead and other topics
Outlook 2017, strategic priorities 2017-2019 and other topics Looking ahead and other topics •
Slide 64: Key messages Q3 2017
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Key messages Q3 2017 Taking into account the current market dynamics, missing contributions from the OUTLOOK divested terminals early 2016 and additional costs related to investments
Slide 65: Looking ahead
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Looking ahead Continue long-term growth journey “Vopak will continue its disciplined long-term growth journey, while maintaining on average a Cash Flow Return On Gross Assets (CFROGA)
Slide 66: Strategic priorities 2017-2019
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics 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 g
Slide 67: Other topics
Demand Strategy Capital Business Looking ahead Introduction drivers execution management performance & other topics Other topics Effective tax rate* 2017 HY1 EBITDA* transactional currencies In percent In percent 22% 21.0 21.2 16.5 16.4 USD SGD EUR 18% Other 34% HY1 2014 HY1 2015 HY1 2016 HY1 2017 2
Slide 68: Storing vital products with care
Storing vital products with care• Royal Vopak Q3 2017 Roadshow Presentation