Vopak has reported strengthened 2019 financial performance with strong EBITDA, increased earnings per share as well as plans to increase its Shanghai terminal.
The storage operator reported a full year 2019 EBITDA of €830 million, an increase of €96 million from 2018 as a result of good aggregate business (including new assets) performance of €37 million, positive currency translation effects of €14 million and positive IFRS 16 effects of €45 million.
The company reported good performance from new assets, partly offset by hub terminals in Europe and Singapore and said the occupancy rate of 84% reflected IMO 2020 capacity conversions during the year and ongoing market conditions at oil hub terminals.
Vopak has also launched a share buyback programme to return €100 million to shareholders following the completion of the divestment of the terminals in Algeciras, Amsterdam and Hamburg.
Additionally, the company will expand the Vopak Shanghai – Caojing Terminal with 65,000 m3 for chemical gas products. This industrial facility serves the chemical plants that are located in the Shanghai Chemicals Industry Park and its adjacent areas. The additional storage capacity has been fully rented out under long-term contracts and is expected to be commissioned in the second half of 2022.
Commenting on the results, Eelco Hoekstra, chairman of the executive board and CEO of Vopak, says: '2019 was a successful year for Vopak. We executed our strategy, realised strong EBITDA and significantly increased earnings per share.
'Between 2017-2019, we have been transforming our portfolio through €700 million divestments and €1 billion investments in new growth projects. We successfully divested almost 5 million m3 of oil capacity, mainly in Europe, and bolstered our hub positions. We prepared our oil hub terminals for IMO 2020 and expanded storage capacity in future growth markets. In 2019, we expanded our LNG business in Pakistan and Colombia and started the construction of new industrial terminals in China and the US. Our portfolio is well-positioned for future developments. As part of our new energies' focus, we made our first investments in hydrogen and solar.
Delivery of our digital strategy has progressed well. We continued the roll-out of our new cloud-based system for our terminals, as part of broader efforts to develop our digital architecture. Growing Vopak's digital capabilities and using data are key to our short-term performance and long-term value creation, as well as to our position as the leading independent tank storage company.'
Looking ahead, Hoekstra says that the company remains focused on growth and will use the majority of cash from recent strategic divestment to grow the portfolio.
'We aim to grow EBITDA over time with new contributions from growth projects and IMO 2020 converted capacity and replace the EBITDA from divested terminals, subject to general market conditions. In the period 2020-2022, Vopak may invest €750 million to €850 million in sustaining and service improvement capex, subject to additional discretionary decisions, policy changes and regulatory environment.
'To complete the Vopak's digital terminal management system build and roll-out, Vopak expects to spend annually €30 million to €50 million in IT capex over the period 2020-2022. We continue with further strengthening our cost culture and expect to compensate for annual inflation in our cost performance. We will continue to look for attractive ventures in new energies and innovative technologies. Growth investment for 2020 could amount to €300 million to €500 million.'
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