Koninklijke Vopak Uns/Adr

Pationa Kaptur, Head of Investor Relations, to begin today's conference. Thank you.

Good morning, everyone, and welcome to our first half 2023 results. My name is Pationa, Head of IR. Our Executive Board will guide you through our latest race results. We will refer to the first half 2023 analyst presentation, which you can follow on screen and download from our website. After the presentation, we will have the opportunity for the Q&A. A replay of the webcast will be made available on our website as well. Before we start, I would like to refer you to the disclaimer content of the forward-looking statement, which you are familiar with. I would like to remind you that we may make forward-looking statements during the presentation, which evoke certain risks and uncertainties. Accordingly, this is applicable to the entire call, including the answer provided to questions during the Q&A. And with that, I would like to turn over the call to our COD, Grisha.

Thank you, Fiona, and a very good morning to all of you joining us in the call. Let's take a look at the key highlights of this first half of 23. The first half of the year shows improved performance. The need for our services was strong across the different products and regions, and we served our customers well. We continue to deliver on our strategy to improve our financial and sustainability performance, to grow our base in industrial and gas terminals, and to accelerate towards new energies and sustainable feedstocks. We reported improved financial results with an EBITDA of 494 million, a 14% increase compared to the same period last year, and an occupancy of 91%. We are actively managing our portfolio by divesting assets like Savannah, as well as repurposing existing capacity, for example, in Los Angeles and Deer Park in the United States. Besides financial improvements, I want to emphasize the focus on improving our sustainability performance. We continued the trend of reducing our CO2 emissions in the first half of 2023. Looking ahead, I'm pleased to confirm our 2023 outlook as we remain focused on long-term value creation through disciplined and balanced capital allocation. Now moving over to growth. We are solidifying our leading industrial position in Singapore and China, while at the same time expanding our footprint in gas with LPG and LNG investments. Today, we announced that in Singapore, we are creating a long-term industrial integration between the Banyan Terminal and the new production plant of an existing customer. In LPG, we announced in April an agreement with Altagas for a partnership to study a large-scale LPG export facility in Western Canada that's next to our existing RIPET facility. In India, we announced in April to proceed with four expansion projects, together with our joint venture partner Aegis, in existing locations, strengthening our leading position in this fast-developing country. We're pleased that the first project has already been commissioned in Haldia just a few weeks ago. Our energy projects in the Netherlands that further enhance the energy security and supply of Northwest Europe are going as planned. To continue with our strategic goal of accelerating towards new energies and sustainable feedstocks, we have commissioned new infrastructure in the Port of Rotterdam related to waste-based feedstocks. Also, we successfully got access to a prime location in Europe's leading petrochemical and industrial cluster. Moving to share some of the key market dynamics. and how they impact the demand for our infrastructure services. I'd like to give you some details on how the markets in which we operate develop and their impact on Volpac. To start with the gas side, energy markets normalized in the first half of 2023 after the disruption of the Russia-Ukraine war. While LPG prices were volatile during the first half, LPG imports in India continue to grow by about 5% per year. For VOPAC, we see that the demand for energy infrastructure remains healthy, particularly in the Netherlands. The other terminals in Mexico, Colombia, and Pakistan show a stable performance as per their role in the local energy systems. Moving on to new energies and sustainable feedstocks. The momentum for hydrogen and ammonia continues to accelerate. We see an increasing interest in infrastructure to store and handle ammonia in the different regions. And the trend of a growing demand in sustainable fuels also continues to be there. Now, moving on to the energy markets, we serve through the storage of oil products. Oil flows are still rebalancing, following the international sanctions regime. This leads to changing flows, being more long-haul, generally spoken. A growing demand at the one side versus production cuts announced by OPEC Plus are causing volatility in the market. These market dynamics caused favorable demand for our storage services. Oil distribution terminals serving local growing markets had a stable performance. Now let's take a look at the manufacturing markets. We served through our industrial and chemical terminals. Activity in the global manufacturing markets was slowing down in the first half of this year, caused by, among others, higher cost of production. Also, China's economic recovery is slower than expected, resulting in an overall bearish sentiment also for the second half of the year. In Europe, higher import volumes that make up for less local production lead to favorable demand for our infrastructure services, serving chemical markets. Throughput flows in our industrial terminals remain stable but may be impacted in the second half of the year, specifically in Asia and China. Relative impact is limited since the majority of our revenue on these terminals come from take-or-pay contracts. We're actively managing our portfolio in multiple ways. First, by rationalizing. In this past half year, we divested our chemical terminal in Savannah, in the US. Also, we received offers to divest our chemical terminals in Colombia. The strategic review of our chemical terminals here in Rotterdam is still in progress. Furthermore, we are repurposing some of our existing assets, like in Los Angeles, for example, where we repurpose existing tanks for sustainable aviation fuel and renewable diesel. Finally, some assets are transformed to serve our customers for future new energies. A good example is the concession of the prime location we acquired in Antwerp, which will be transformed for new energy projects. Now let me take you through the different elements of our business performance in a bit more detail. The starting point is the first half year of 2022 with an EBITDA of 433 million euro. Divestments we did had a negative impact of around 5 million on the EBITDA when we compare it to this first half year. Also, we experienced some negative currency translation effects of 2 million euros. The oil markets have been favorable the first half of this year. High occupancy rates and contract renewals drive growth in EBITDA from our oil portfolio. With regards to the chemical markets, we have overall stable demand across the portfolio. Next to the increased need for import of chemicals in mainly Europe, indexation of our contracts is partially compensating the rising cost and has supported the revenue increase. In the gas market, we see the LNG market is back to a normalized level, as the available capacity is meeting the market demand on our LNG and LPG terminals, and our LNG and LPG terminals are performing their role in local energy systems. When comparing our cost base to the first half of last year, we see an increase of €30 million, mainly driven by inflation, higher energy and personnel costs. Finally, we have delivered on our growth projects, which have contributed €6 million in this first half year. This all results in 14% EBITDA growth to €494 million. Next to the financial performance, improving our sustainability performance is important to us. On all elements, environmental, social and governance, we improved or maintained a stable performance. As you know, safety is our first and foremost priority to take care of our employees and contractors and the communities we are in. We maintained a good performance on our process safety event rate and are happy with our improved personal safety performance. We reduced our emissions by 13% compared to the first half of 2022. Also on diversity and inclusion, we make steps forward. Women make up for more than 20% of our senior management today. Moving on with our second strategic pillar, to grow our base in industrial and gas terminals. As you can see on this slide, we solidify our position in the key industrial clusters of Houston and Singapore. At our depart terminal, strategically located in the use and ship channel, we will repurpose and expand part of the existing capacity into vegetable oil storage, underpinned by a long-term commercial agreement. We will invest 58 million euro and expect to commission the first phase in the first half of 2024. In Singapore, at a Banyan terminal, we will repurpose existing capacity and create a new pipeline connection with a new industrial plant of an existing customer, also supported by a long-term commercial agreement. The investment is around 15 million euro, and commissioning is expected in the first half of 2025. Next to solidifying our footprint in industrial terminals, we expand in gas terminals. I want to highlight four projects. in LNG and LPG, which we have announced in the first half of 2023. We signed a new partnership with Elta Gas for an LPG and bulk liquids export facility in West Canada. This strategic location has a significant logistical advantage in terms of deep water access and transport time towards Asia. On two locations in India, we will expand LPG capacity by 20%. together with our partner AGES. These terminals fulfill an important distribution role to switch to cleaner fuels. Commissioning is expected to be in 2025. In the Netherlands, we are progressing well on two LNG opportunities related to the fourth tank expansion at GATE and completion of the acquisition of 50% of the shares of Ames Energy Terminal. We're also delivering on the third and last strategic pillar to accelerate towards new energies. We focus on four areas, hydrogen, CO2 infrastructure, low carbon fuels and feedstocks, and long duration energy storage. We see momentum continue to build around these four areas by increasing interest from our customers and new regulations worldwide. Two proof points mentioned here. In Vlaardingen in May, New capacity was commissioned for waste-based feedstocks for the production of biodiesel and sustainable aviation fuel. This project started in 2021 and around 90 million euro was invested. In Antwerp, we have access now to a prime location in Europe's leading petrochemical cluster, which will be redeveloped with the primary aim to make a positive contribution to the decarbonization of the industrial cluster. The market interest for new infrastructure for ammonia, a product that we are storing already for more than 20 years at six locations around the world, remains high. To summarize, we improved results and made good progress on our strategic goals in the first half of this year. The need for our services was strong across most divisions and along all lines of products we store and handle. We benefited from Volpac's well-diversified infrastructure portfolio, serving both the manufacturing markets as well as the energy markets around the globe. We improved our financial performance with strong first-half results and continued our efforts in further improving our sustainability performance. We made good progress in growing our base in industrial and gas terminals around the globe, and a healthy interest is shown in accelerating towards new energies and sustainable feedstocks. Supporting these three strategic priorities, we simplified our organization structure with the aim of enhancing execution capabilities mainly at the country level and improving efficiency. As a result, we removed the division layer in our structure. Going forward, we will be organized in nine business units. We're positive that this change will help us on all strategic priorities. With that, I want to hand it over to our CFO, Michiel Gilzing, who will give you some more insights on the financial side of things.