Vopak reports on 2016 and sets direction towards growth and productivity improvement
February 17, 2017 --
|In EUR millions||2016||2015|
|Results -excluding exceptional items-|
|Group operating profit before depreciation and amortization (EBITDA)||822.3||811.5||1%|
|Group operating profit (EBIT)||558.4||555.5||1%|
|Net profit attributable to holders of ordinary shares||326.1||325.3||0%|
|Earnings per ordinary share (in EUR)||2.56||2.55||0%|
|Results -including exceptional items-|
|Group operating profit before depreciation and amortization (EBITDA)||1,023.2||805.2||27%|
|Group operating profit (EBIT)||759.3||549.2||38%|
|Net profit attributable to holders of ordinary shares||534.0||282.2||89%|
|Earnings per ordinary share (in EUR)||4.19||2.21||90%|
|(Proposed) dividend per ordinary share (in EUR)||1.05||1.00||5%|
|Occupancy rate subsidiaries||93%||92%||1pp|
|Storage capacity end of period (in million cbm)||34.7||34.3||1%|
|Cash Flow Return On Gross Assets -excluding exceptional items-||10.5%||10.4%||0.1pp|
|Senior net debt : EBITDA||2.04||2.73|
Highlights for the year 2016 -excluding exceptional items-:
- EBITDA increased by 1% to EUR 822 million (2015: EUR 812 million).
- Adjusted for currency translation effects and divestments in 2015 and early 2016, EBITDA increased by 7%.
- EBIT increased by 1% to EUR 558 million (2015: EUR 556 million).
- Net profit attributable to holders of ordinary shares of EUR 326 million was in line with prior year (2015: EUR 325 million). Earnings per ordinary share (EPS) of EUR 2.56 was comparable to prior year (2015: EUR 2.55).
- Cash Flow Return On Gross Assets (CFROGA) after tax was 10.5% in line with prior year (2015: 10.4%).
- Worldwide storage capacity on a 100% basis increased by 0.4 million cbm to 34.7 million cbm compared to year-end 2015, despite the completed divestments of the UK assets and the Japan terminals.
A dividend of EUR 1.05 (2015: EUR 1.00) per ordinary share, payable in cash, will be proposed during the Annual General Meeting on 19 April 2017.
- Total exceptional gain before finance costs and taxation amounts to EUR 201 million (2015: loss of EUR 6 million) which mainly comprises of the divestment of the UK assets and an impairment in the EMEA division.
2016 was a year in which we celebrated our 400-year history. A milestone for our company. Instilling a sense of pride in all of us. Our 2016 results show that we are on the right track in our pursuit of leadership in our industry. We operated the Group's network above 90% occupancy levels, accomplished better safety performance levels, higher customer satisfaction scores and an employee engagement score at par with high performance companies in the survey database. Regretfully, the new year started with a fatal accident involving a contractor at one of our terminals in Belgium. This tragic incident reminds us again that ensuring a safe workplace for all, is our first priority.
Following the outcome of our business review in 2014, we worked hard on the further alignment of our global network. As a result, we initiated a divestment program, which we finalized in 2016 with the sale of the development project in Dongguan (China) and the terminals in Japan. We also successfully completed the sale of our UK assets. At the same time, we executed our strategy in line with the updated portfolio criteria. In 2016, we started activities in Panama, expanded in the United Arab Emirates and opened a new LPG facility in Singapore.
Vopak improved its EBITDA -excluding exceptional items- from EUR 763 million to EUR 822 million in the 2014-2016 period despite the missing contributions of the divested terminals. This has positively impacted our EPS development from EUR 2.31 in 2014 to EUR 2.56 in 2016, making it possible to raise dividend for two consecutive years, while maintaining financial flexibility to set direction towards further growth. We are currently developing new projects in among others Panama, Houston and announced today to double our capacity in South Africa. We also aim to expand our business through regasification assets as indicated with the Exmar transaction. The finalization of this transaction is subject to consent and cooperation of multiple stakeholders. These projects result in the redeployment of proceeds from divestments in new growth markets.
For 2017, we are confident that Vopak will again achieve an average occupancy rate of at least 90%. We expect to make additional investments in disciplined capacity growth, technology and innovation projects and replacement of IT systems to drive productivity improvements. The majority of these investments will contribute to the results in the period 2019 and beyond. Taking into account the timing difference of the to be realized efficiency benefits and the missed contributions from divestments in 2016, we expect that the 2017 EBITDA will not exceed the 2016 result.
Strategic direction for 2017 to 2019
The Strategic direction of Vopak is set towards disciplined growth and productivity improvement:
- Vopak is well-positioned to take several investment decisions in the 2017-2019 period to capture growth.
- In addition to growth capex and in line with the previous 2014-2016 capex program,
- Vopak aims to spend a maximum of approximately EUR 750 million on sustaining and service improvement capex for the period 2017-2019.
- To support margin developments, Vopak aims to drive further productivity through organizational and operational efficiency resulting, among others, in a reduction of the cost base with at least EUR 25 million by 2019.
- Vopak has decided to invest approximately EUR 100 million in the period 2017-2019 in new technology and innovation programs as well as replacing its IT systems.
After carefully assessing the likelihood and timing of new expansion projects, we have clarity on our ability to take several investment decisions in the 2017-2019 period and thereafter. Based on extensive market studies, and as explained during the 2016 Capital Markets Day, we see clear growth opportunities resulting from the growing global demand for plastics, chemicals, food and agricultural products, as well as an increasing demand for energy, particularly in non-OECD countries. We will continue directing our business development efforts even more on chemical (industrial) terminals and gas markets, through regasification assets, while pursuing oil related opportunities in emerging markets. Regions of specific interest for growth include the Americas, Middle East and Asia.
In the last years Vopak has focused on effectiveness of its organization, processes and assets. With this foundation in place, Vopak seeks now to further improve its efficiency. New technologies will enable this by speeding up operations, increasing safety and improving services for our customers. We will accelerate investments to experiment with new technologies and, if attractive, scale these capabilities to our network. We aim to leverage on the maturity levels of our enhanced functional capabilities to increase productivity and improve organizational efficiency to support margin developments.
During the period 2017-2019, Vopak anticipates volatility in energy, commodity, financial markets and unpredictable geopolitical developments. Notwithstanding inherent short-term effects, Vopak believes it will be able to continue its long-term growth journey and positive EPS development while maintaining a Cash Flow Return On Gross Assets after tax (CFROGA) between 9% and 11%.
With a solid foundation we are overall well-positioned to successfully set out in our strategic direction for the period 2017-2019 towards disciplined capacity growth and productivity improvements.
Chairman of the Executive Board and CEO of Royal Vopak
For more information please contact:
Liesbeth Lans, Manager external communications
Telephone: +31 (0)10 400 2777
Investor Relations contact:
Chiel Rietvelt, Head of Investor Relations
Telephone: +31 (0)10 400 2776
The analysts' presentation will be given via an on-demand video webcast on Vopak's corporate website www.vopak.com starting at 11:00 AM CET on 17 February 2017.
Annual report 2016 and financial statements
The Annual Report 2016 and financial statements, prepared by the Executive Board and to be presented to the Annual General Meeting of 19 April 2017 for adoption, are published on Vopak's website (http://www.vopak.com/investors/reports-and-presentation).