Vopak tweaks growth strategy

GOING FOR GAS

FINANCIALS • A RELATIVELY QUIET QUARTER SAW VOPAK REPORT GENERALLY WEAKER FIGURES BUT IT REMAINS UPBEAT ABOUT ITS PROSPECTS

VOPAK HAS REPORTED a 4 per cent drop in revenues and operating profit for the first nine months of 2018 compared to the year-earlier figures, with group EBITDA excluding exceptional items off by 3 per cent at €553.6m. For the third quarter, there was some improvement in profitability, despite a very slight decline in revenues compared to 2017.

Unusually, the company has not commented directly on the third quarter’s results. That is perhaps a reflection of the fact that it is in the process of making changes to its network of bulk liquids and gases terminals around the world, and also the difficult market conditions that obtain at present. For example, overall tank occupancy fell from 90 per cent in the first three quarters of 2017 to 86 per cent this year; Vopak says that reflects market conditions at its oil hub terminals, not least those in Europe and south-east Asia. By contrast, occupancy – and EBITDA – was firmer in its China/North Asia and Americas divisions.

Furthermore, the third quarter saw some exceptional items, including an agreement on a new pension plan in the Netherlands, which resulted in a book gain of €19.1m, and the deconsolidation of its wholly owned terminal in Venezuela, where local financial problems make it impossible to reflect actual operating performance.

Indeed, financial performance overall in 2018 is expected to be influenced by

DESPITE ITS EXPERTISE IN LIQUIDS, MUCH OF currency exchange movements (particularly the US and Singapore dollars), and changes in the structure of the oil market, which have impacted occupancy rates and price levels in hub locations.

On the other hand, Vopak says its efficiency programme, designed to support margin development and reduce its cost base on an ongoing basis, delivered the anticipated €25m saving by mid-2018; this programme is continuing, with a target of achieving €40m of annualised savings by the end of 2019.

ADDING TO CUBES During the quarter some 700,000 m³ of capacity was commissioned at the PT2SB industrial terminal in Malaysia, in which Vopak has a 25 per cent interest. The remaining 1.5m m³ of capacity will be commissioned by the end of third quarter 2019, in line with the original plan. At the end of the third quarter 2018, Vopak’s global capacity stood at 36.7m m³, up from 35.9m m³ a year ago.

As part of its third quarter report, Vopak also announced a further expansion of activities in the LPG sector. A 15,000-m³ LPG import/distribution terminal is to be built in Richards Bay, South Africa, in partnership with its local partner Reatile, for commissioning in mid-2020, subject to final conditions. The site will, Vopak says, “facilitate further imports of a cleaner energy source into South Africa”.

Vopak is also to expand its wholly owned Vlissingen LPG terminal in the Netherlands by 9,200 m³ to serve the local and regional market for LPG and chemical gases. Completion of this work is also due by mid-2020.

In August, Vopak announced it would conduct a strategic review and “test the market” for a potential sale of its terminals in Algeciras, Amsterdam, Hamburg and Tallinn; this review is progressing on schedule, Vopak says. HCB www.vopak.com