[ID] => 11340
[post_author] => 34
[post_date] => 2019-08-05 11:20:39
[post_date_gmt] => 2019-08-05 10:20:39
[post_content] => Royal Vopak has reported improved results for the second quarter and first half of 2019. The company has this year adopted the IFRS 16 accounting principles but, on a pro-forma basis, revenue for the first half was 2 per cent ahead of last year at €641.4m and group EBITDA, excluding exceptional items, rose by 14 per cent to €398.3m. The main exceptional item booked in the second quarter was a gain of €16.4m from the sale of its 50 per cent shareholding in the Vopak EOS terminal in Estonia in April this year.
Global storage capacity at the end of the second quarter stood at 36.9m m³, up from 36.0m m³ a year earlier after a number of additions and divestments. Average occupancy slipped though, from 86 per cent in first half 2018 to 85 per cent for the same period this year and 84 per cent for the second quarter. Vopak says this drop relates primarily to temporary closures to prepare tanks for the new ‘IMO 2020’ rules on the sulphur content of marine fuels, which take effect on 1 January 2020, as well as continued weakness in some of its oil hub terminals.
“The first half of 2019 was important as we have taken further steps in the delivery of our strategy and the alignment of our portfolio based on long-term market developments,” says CEO Eelco Hoekstra. “We have taken significant new capacity into operations to meet new customer demand. Together with our partners we fully commissioned the industrial terminal PT2SB in Malaysia and celebrated the opening of the LPG export terminal RIPET in Canada. In addition, we expanded our share in the LNG import terminal in Pakistan.”
CAPACITY TO COME
As well as selling off its interest in Vopak EOS, Vopak has agreed the sale of three other European sites: Algeciras, Amsterdam and Hamburg. First State Investments is to pay some €723m for the three terminals, which is expected to deliver an exceptional pre-tax gain of around €200m in the second half of 2019. “The divestment of some of our European assets will, after completion, shift our portfolio further towards industrial, chemical and gas terminals,” Hoekstra explains. “We aim to grow our portfolio in line with market developments and expect our growth investment momentum in 2019 to continue in 2020.”
At the start of 2018, Vopak had 3.2m m³ of new capacity lined up for commissioning by the end of 2019. As of mid-2019, 2.1m m³ of that had been delivered, meaning there is more to come in the second half. A new joint-venture terminal in South Africa is due to be commissioned before the end of the year, along with expansions at the new Panama site and at existing terminals in Malaysia, Brazil, Singapore, Indonesia and Mexico.
In addition, the company has announced two further expansions:
- The Deer Park chemical terminal in Houston will be expanded by 33,000 m³, with the new tankage expected to be commissioned in second quarter 2021; and
- A 105,000-m³ expansion for the storage of clean petroleum products and aviation fuel is planned for the Sydney terminal in Australia, with completion also scheduled for second quarter 2021.
Vopak’s commercial and financial performance is dependent to a large extent on global economic and market developments. In its half-year report, the company notes that geopolitical tensions are now “impacting business optimism”, although it says that the service sector has been resilient and consumer spending is still solid.
Furthermore, cheap shale-based ethane feedstocks are prompting further investment in petrochemical facilities in the US and, although economic activity is “gradually decelerating” in Asia, it remains robust, with China, India and Vietnam still managing to generate annual growth of 6 to 7 per cent. Trade tensions and lower chemical prices have led to changes in trade flows, which has had a positive impact of Vopak’s chemical hub in Singapore.
In the oil market, trade tensions and sanctions have affected the supply side but Vopak’s main fear is that geopolitical factors could impact economic growth and further slow growth in oil demand, which has already been affected by environmental considerations. On the other hand, the biofuels and vegoils markets continue to be strong in many areas of the world.
The opening of the Ridley Island LPG export terminal in British Columbia, Canada earlier this year signals Vopak’s interest in the LPG sector and the company notes that global LPG supply is continuing to grow; US exports were 20 per cent higher in the first half of 2019 compared to the same period last year, despite China’s imposition of a 25 per cent tariff on US LPG in August 2018. US product is moving to other markets, including India, while China is sourcing more product from the Middle East.
REGION BY REGION
Those market factors have been reflected in the first-half results for Vopak’s various divisions. In Europe and Africa, for instance, revenues were down 2 per cent year-on-year, although Vopak says this was largely due to “relatively high out of service capacity” in its Rotterdam terminals as they prepare for the IMO 2020 changes. Vopak notes that the economic outlook for the Eurozone area remains weak as a result of adverse dynamics, ongoing uncertainty over Brexit, and weaker demand from the automotive sector.
Revenues from the Asia and Middle East division rose by 3 per cent against first-half 2018, with group EBITDA up 17 per cent. Vopak enjoyed higher revenues from its chemical terminals, although this was partly offset by work at its Singapore sites to ready them for IMO 2020.
The Americas division posted a 9 per cent increase in revenues and a 19 per cent rise in EBITDA, although this was partly accounted for by currency movements. Much of the rest of the gain reflected additional capacity commissioned in Houston, although there were difficulties here during the period as a result of the fire at ITC’s nearby Deer Park terminal in March.
The small China and North Asia division recorded a 19 per cent increase in revenues and a 40 per cent rise in EBITDA compared to first half 2018. Much of the improvement was due to the acquisition of the Ningbo terminal in early 2019 and the restarting of the Heiteng industrial terminal in June 2018.
Vopak’s activities in LNG grew by 7 per cent over first-half 2018, largely as a result of its investment in the Engro Elengy Terminal in Pakistan in December 2018. This division is, though, an important part of Vopak’s strategy going forward, as Hoekstra explains: “Looking further ahead, we continue to explore opportunities in new energies.”
In addition, Vopak’s digital transformation is “progressing well”. A cloud-based digital terminal management system is being rolled out at terminals around the world.
[post_title] => Vopak: On the up
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[post_name] => vopak-on-the-up
[post_modified] => 2019-08-05 11:20:39
[post_modified_gmt] => 2019-08-05 10:20:39
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[guid] => https://www.hcblive.com/?p=11340
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