Koninklijke Vopak Uns/Adr

Hello, and welcome to the OPAC Q1 2024 results. My name is George. I'll be the coordinator for today's event. Please note, this conference is being recorded and for the duration of the call, you'll be in the listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I'd like to hand it over to your host today, Ms. Fathiona Tocciu, Head of IR. Please go ahead.

Good morning, everyone, and welcome to our Q124 Results Analyst Call. My name is Fathiona Tocciu, Head of IR. Today, our CEO, Dick Rischel, and CFO, Mihail Yeltsin, will guide you through our latest results. We will refer to Q124 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. Before we start, I would like to refer to the disclaimer content on 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 involves certain risks and uncertainties. Accordingly, this is applicable to the entire call, including the answers provided to questions during the Q&A part. With that, I would like to hand over the call to this.

Thank you very much, Fatjona, and a very good morning to all of you joining us in the call. Let's move to slide four and moving into the key highlights of Q1 2024. We delivered 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. Let me give you some highlights of the different elements of our strategy. The need for our services remains strong across the portfolio, reaching a proportional occupancy of 93% as we continue to serve our customers well. We reported improved financial results, growing our proportional EBITDA by 9% when adjusted for the divestment impact. Also, our operating cash return improved significantly, from 15.4% last year to 17% at the end of this quarter, driven by a lower average capital employed due to the divestments and a positive contribution from growth projects. Our strong business performance led us to increase our full year 24 outlook for both proportional EBITDA and reported EBITDA, which Michiel will further explain. Let's take a look at growth. We are solidifying our leading position in India with the acquisition of a new terminal in Mangalore, the east coast of the country. The terminal with a capacity of 44,000 cubic meters is a good addition to our extensive footprint in the fast-growing economy of India. Also in Western Canada, together with our joint venture partner, Altagas, we're making good progress in our development of a greenfield LPG export facility. FID is expected in the first half of this year. Now let's move to accelerating towards new energies and sustainable feedstocks. During the first quarter, we commissioned repurposed infrastructure in Singapore for blending biofuels into marine fuels. This is an important first step at our Sabah Rock terminal to be a sustainable multi-fuels hub in the future. At the same time, we're making good progress in Vlaardingen, the Netherlands, to repurpose another 34,000 cubic meters of existing infrastructure for biofuel feedstocks. Also in Brazil, 30,000 cubic meters of capacity is being repurposed for sustainable transportation fuels. In Singapore, we successfully completed our first ammonia bunkering operation together with our partners at our Banyan terminal. These developments fit well in our strategy to accelerate towards new energies and sustainable feedstocks. Moving on to some of the dynamics of the key markets in which we operate. and how they impact the demand for our infrastructure services. Let's start with the gas markets. We saw continued high utilization of our LNG infrastructure, and LPG demand is growing around the world, driven by petrochemical and residential demand. Given the take-or-pay nature of our contracts, the financial performance in this segment was relatively stable, while spec in Colombia contributed positively. For new energies and sustainable feedstocks, we see continued momentum for infrastructure that supports low-carbon products. The pipeline for CO2 and ammonia projects continues to be solid. Energy markets were relatively stable. There's a continued healthy demand for infrastructure due to ongoing rebalancing of trade flows around the world. Our oil hub terminals in Singapore, Fujairah, and Rotterdam continue to have a strong demand. Finally, manufacturing markets, served by chemical distribution terminals. They still experience some pressure. Impact so far on our terminals is limited, but remains uncertain in the remainder of the year. The industrial terminal segment, predominantly served by long-term take-up pay contracts, showed a stable performance. Now let me take you through the different elements of our business performance in more detail. Compared to the same quarter last year, we experienced a negative currency translation effect of €5 million and a divestment impact of €21 million. The oil markets, as I said, remained favourable in the first quarter of this year. High occupancy rates and contract renewals drove the growth in EBITDA from our oil portfolio across the globe, especially in the oil hubs in Rotterdam, Fujairah and Singapore Straits. Chemical markets remain characterised by the oversupply of end products. throughput levels in our industrial terminals remained solid. And our terminals storing LNG and LPG saw increasing revenues, mainly in the Netherlands and Spec Colombia. Expenses in the first quarter were slightly higher than in Q1 last year, mainly due to increased personnel costs. Growth projects contributed positively to our results compared to last year, with a contribution of 18 million euros on a proportional basis, driven by projects in the Netherlands and the United States. All in all, this resulted in a proportional EBITDA of €298 million, and when adjusted for the divestment impact, as mentioned, this is a 9% increase compared to the first quarter of 2023. As mentioned before, next to improving the financial performance of our portfolio, we keep focusing on improving our sustainability performance as well. We have an absolute reduction target for our scope one and two emissions for 2030, which is a 30% reduction compared to our baseline year of 2021. And it includes the additional emissions as a result of growth projects. By the end of 23, we realized a reduction of 25%. Increasing the share of renewable energy is one of the lines of action that we have in order to decarbonize our existing and future operation. One important way to do so is electrification of our operations and by acquiring renewable electricity. This year, we were able to switch four terminals in the United States to 100% renewable electricity, bringing the total number of terminals using renewable electricity to 35 in the portfolio. Let's move to India. Because together with AGES, our joint venture partner, we are growing rapidly in India, storing mainly liquid products in LPG, supporting the economic growth and making alternative lower carbon fuels available throughout the country. Our joint venture was established in the middle of 22 with a capacity of 1.3 million cubic meters in five strategic locations. A significant number of FIDs was taken to further grow our footprint. And currently, we are expanding in five locations, in both capacity for liquid products as well as for gas. Today, we announced another acquisition in Mangalore, a terminal with a capacity of 44,000 cubic meters will be added to the network. With all these expansions and acquisitions, our capacity in India is expected to grow to 1.8 million cubic meters in 2025. With regards to our third pillar of our strategy, accelerate towards new energies and sustainable fuels and feedstocks, we see good momentum around the world. After repurposing capacity in the US, the Netherlands and Singapore, we're also progressing well in repurposing capacity in Brazil and the Netherlands. With this repurposed capacity, we are well positioned to help our customers to store low carbon fuels and feedstocks. In Antwerp, we're making good progress in cleaning up our new strategic plot of land to redevelop the site to support new energy infrastructure investments. In the field of electricity storage, we announced an investment of 9 million euro in two battery systems close to Houston with a capacity of 10 and 20 megawatt hours. These developments fit well in our strategy to accelerate the investments for infrastructure in new energies and sustainable feedstocks. Now let's take a look at our cash generation, because the cash generation in this portfolio, in the portfolio for this quarter was strong. We further strengthened the balance sheet with a leverage of 1.76 times total net debt to EBITDA. We are returning value to shareholders by increasing the dividend to €1.50 per share And we are progressing well in our share buyback program, of which around 30% has been completed so far. We're well positioned for future growth with a healthy pipeline of projects for both strategic levers to grow in industrial and gas terminals and to accelerate towards new energies and sustainable feedstocks. We confirm our consolidated growth outlook of investing around 300 million euro this year. with attractive and accretive returns. To summarize, we delivered another strong quarter. We reported improved financial results on the back of favorable market conditions and high occupancy. We create connections through our well-diversified global portfolio by growing our base in India and making good progress on repurposing existing capacity for low-carbon fuels and feedstocks. Our well-diversified terminal portfolio is supporting energy security and energy transition. And we drive progress as we capture the opportunities of the energy transition. As a result of all of the above, we create and return value to our shareholders. With that, I want to hand over to our CFO, Michiel Geelzing, who will give you more insights on the financial aspects of this first quarter. Michiel.