Leading terminal operator
Royal Vopak has announced that net profit attributable to shareholders during the first half of this year - excluding exceptional items - decreased by 7 percent to EUR 123.5 million, from EUR 132.4 million in 2010.
Vopak said the decrease was mainly due to the slightly lower group operating profit and increased finance costs caused by a negative currency effect on current account positions and hedges as well as the issuance of new senior unsecured notes in the Asian Private Placement market during the second half year of 2010.
In HY1 2011, Vopak’s revenues were EUR 561.1 million, an increase of 3 percent compared with HY1 2010 (EUR 543.9 million), including a positive currency translation effect of EUR 4.3 million.
Group operating profit rose by 50 percent to EUR 335.4 million (HY1 2010: EUR 222.9 million), of which EUR 117.5 million was caused by exceptional items. Excluding exceptional items the group operating profit declined by 2 percent to EUR 217.9 million (HY1 2010: EUR 223.0 million), including a positive currency translation effect of EUR 2.9 million.
In comparison with HY1 2010, Vopak said the profit margins -excluding exceptional items- were negatively impacted by the higher out of service rate for all divisions, the uncertainties in the biofuel market (CEMEA and North America), the rail car restrictions at the Deer Park terminal (North America) and the higher pre-operating expenses for new projects (mainly OEMEA).
The Asia divisioin was able to improve its margin, through a combination of business and operational efficiency improvements and economies of scale benefits resulting from ongoing capacity expansions.
The net result of joint ventures -excluding exceptional items- increased by 7 percent to EUR 42.2 million (HY1 2010: EUR 39.4 million), despite the divestment of Bahamas Oil Refining Company (BORCO). The increase was mainly attributable to the improved results of the joint ventures in Tallinn (Estonia) and Fujairah (UAE).
Commenting on the results,
Eelco Hoekstra, Chairman of the Executive Board of Royal Vopak said: "The strategic role of our tank terminal network in the supply chains of our customers results in a healthy demand for our services. We continue to experience robust demand for oil storage services. Demand for chemical storage service is strong in Asia, relatively stable in the Americas and encouraging in Europe. However, restrictions in rail car handling at our Deer Park facility as a consequence of a dispute with a neighboring competitor and regulatory uncertainties in the biofuels segment, have negatively affected the organic growth of our current results, specifically in our divisions North America and Chemicals Europe, Middle East & Africa. It is encouraging to note that, despite an intensified tank maintenance program, our occupancy rate has remained stable at 92 percent since early Q3 2010.
"Following the divestment of our 20% equity stake in the Bahamas Terminal in February 2011, we announced 3.5 million cbm of expansion projects. These announcements include new tank storage terminals for oil products at strategic locations in China and Malaysia. In addition we acquired a terminal in India and are working towards the completion of the acquisition of an LNG terminal in Mexico. This underlines our business development capabilities and efforts. We are proud to commission large expansion projects at the end of Q3 2011, like the Gate terminal and Amsterdam Westpoort. Both terminals will contribute positively to our results in the second half of 2011. Vopak is on track in this transition year. Based on the healthy demand for tank storage, capacity expansion projects and our growth strategy we remain well positioned to realize an EBITDA between EUR 600 - 640 million in 2011, growing to an EBITDA between EUR 725 - 800 million in 2013."
Outlook
Projects under construction and the acquisition of CRL Terminals in the port of Kandla (India) will add 7.5 million cbm of storage capacity in the period up to and including 2014. The total investment for Vopak and partners in these projects involves capital expenditure of around EUR 2.7 billion, of which Vopak’s total remaining cash spend will be around EUR 0.5 billion. Following the divestment of BORCO (3.4 million cbm) in 2011, Vopak said the completion of these expansion projects will result in a worldwide storage capacity of 33.0 million cbm as per end of 2014.
Vopak said it expects the market for storage and handling of oil products to remain robust, while market circumstances for storage and handling of chemicals were said to be 'encouraging'. Although at the end of the second quarter, some positive signs have been noticed with the implementation of the first European certification schemes for biodiesel products, uncertainties on subsidies and potential new developments in legislation remain.
Some significant expansion projects, like Amsterdam Westpoort phase 1 and Gate terminal (both in the Netherlands) are scheduled to be completed, in time and within budget, at the end of Q3 2011 and are expected to positively contribute to the EBITDA development in HY2 2011.
Taking into account the positive contribution from capacity expansions in HY2 2011 and the divestment of our 20% equity stake in the Bahamas Terminal (BORCO), Vopak said it continues to expect a group operating profit before depreciation and amortization (EBITDA) -excluding exceptional items- between EUR 600 and 640 million, assuming no material changes of the Euro against other applicable currencies (2010: EUR 598 million). The earnings per share -excluding exceptional items- in HY2 2011 are expected to be higher than in HY1 2011, taking into account the 2011 EBITDA outlook and the expected lower finance costs in HY2 2011.
"Based on the healthy demand for tank storage, the current storage capacity expansions in progress and focused growth strategy, Vopak continues to be well positioned to realize a group operating profit before depreciation and amortization (EBITDA) between EUR 725 - 800 million in 2013," Vopak said.
