Koninklijke Vopak Uns/Adr

Hello and welcome to the Royal Vopak Q3 2026 results update. Throughout the call, all participants will be in listen-only mode. And afterward, there will be a Q&A session. This call is being recorded. I am pleased to present Meis Wovlander, Investor Relations Manager at Vopak. Please go ahead with your meeting.

Good morning, everyone, and welcome to our Q3 2026 analyst call. Our CEO, Vic Richelle, and CFO Michiel Gilsing will guide you through our latest results. We will refer to the Q3 2026 analyst presentation, which you can follow on the screen and download from our website. After the presentation, we'll have the opportunity for a Q&A. A replay of the webcast will be made available on our website as well. Before we start, I would like to refer 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 involve certain risks and uncertainties. Accordingly, this disclaimer is applicable to the entire call, including the answers provided during the Q&A session. With that, I would like to turn the call over to Dick.

Thank you very much, Mees, and good morning to all of you joining us in the call this morning. Let's move to our results. We delivered an outstanding performance in the first nine months of the year. and in which our well diversified portfolio, robust customer demand and strong contributions from our growth projects drove a record level of cash generation. This is reflected in our occupancy rate of 91%. Our proportional EBITDA grew by 5% year on year, that is on an adjusted basis, accounted for negative currency translation, divestment impact, and the specific one-off recorded in Q2 of 2025. Our operating free cash flow grew to 671 million euros, driven by record cash generation in the third quarter. We also continued to make good progress on our growth strategy. In the Netherlands, we successfully commissioned the fourth tank at our gate terminal. The new capacity is backed by long-term take-a-pay contracts and is delivering returns in line with targeted investment multiples. In Canada, Phase 1 construction of Reeve remains on schedule for commissioning in the first quarter of 2027. We're also progressing with the construction of the Optimization 1 project for additional throughput capacity, which is expected to be in service in the second half of 2027. Furthermore, were advancing the Optimization 2 project for additional capacity to reach a potential FID by the end of 2026. In India, AVTL commissioned capacity to store ammonia at our Pipavav location and made final investment decisions to further expand capacity. Enter Outlook. Our strong operational performance and the contributions from our growth projects continue to drive momentum. As a result, we're raising a full year outlook for proportional EBITDA and proportional operating free cash flow. As always, this remains subject to ongoing market circumstances and currency fluctuations. Then looking at shareholder returns, we introduced an interim dividend with the first payment of 72 cents per share distributed this September. And we've completed 75% of the 100 million euro share buyback tranche, which is part of a multi-year program of up to 500 million. Let's take a closer look at the breakdown of our results, specifically for the different terminal types we operate. We see an overall solid performance across the portfolio, with higher results year on year. Our strong oil performance was driven by robust activity in key oil hubs like Rotterdam, alongside improved results from our oil distribution operation in South Africa. The chemical segment benefited from the contribution of newly commissioned capacity in the US, combined with improved autonomous performance. Gas and industrial terminals, supported by long-term contracts, on balance, delivered a stable performance and achieved higher throughputs year-to-date. All in all, this has led to a proportional EBITDA of €906 million, which is an increase of 5% compared to the same period last year on an adjusted basis. Having discussed results, I'd like to provide some context on the conflict in the Middle East, particularly the impact we're seeing in our network. This conflict has triggered a historic supply-side shock across energy and manufacturing markets, driving product shortages and price volatility. As we operate on a global scale, these disruptions aren't confined to the region. They extend across our broader terminal network. We must therefore look at both direct and indirect effects across our network to see the complete picture. Taking a closer look at our direct exposure to the region, we own and operate four storage terminals across the Middle East, with strategic locations in Saudi Arabia and the United Arab Emirates. Around 5% of our proportional EBITDA is generated by these terminals, and they represent around 4% of our capital employed. Our terminals in Saudi Arabia are linked to industrial clusters, while our Fujairah terminal in the Emirates, located outside of the Strait of Hormuz, functions as an oil hub. Due to the disruptions caused by the conflict, we see reduced activity and customer utilization in our Middle East terminals. Now, in terms of indirect exposure, we saw differentiated performance across our network, where strong performance at select terminals were partially offset by softer activity elsewhere. For example, in India and Pakistan, we saw a drop in rented capacity and activity level as prices triggered demand destruction across price-sensitive domestic sectors. compounded by shipping disruptions and export delays from key Gulf suppliers. However, we also saw positive effects. To substitute for the loss of product volume from the Middle East, we've seen a rebalancing of trade routes emerging. Our key terminals, hub terminals, play an important role in facilitating this, leading to increased activity. Also, security of supply concerns are leading to increased storage demand at some locations, which has supported spot sales. To conclude, this conflict has again proven that the diversification of our portfolio across geographies and products is one of our key strengths. As we navigate a volatile global landscape, we've demonstrated the ability to meet our customers' evolving needs regarding energy security, affordability, and sustainability. Now taking a closer look at these dynamics, it's clear that the investments we have made in the past years are proving to be highly relevant to address the main themes in energy markets. At GATE in Rotterdam, we support Europe's security of supply by providing essential LNG import capacity. In Canada, our reef terminal connects Western Canada production directly to Asia, cutting shipping times down to just 10 days compared to the 25 from the US Gulf Coast, delivering significant cost advantages. Meanwhile, in India, AVTL is enabling the transition to cleaner fuels by building the infrastructure to import products such as LPG and ammonia. In parallel, Our recent battery energy storage systems investments are advancing into execution, providing the physical buffer capacity required for grid stability. To summarize, the infrastructure that we own and operate and the investments that we've made in the past years continue to be highly relevant in the fast-evolving landscape of energy and manufacturing markets. and with our diversified portfolio of strategically located terminals, we enable the secure, affordable and sustainable flow of products meeting our customers' evolving needs. As mentioned, the gate terminal in Rotterdam is critical to provide energy security to Europe. This terminal enables our customers to import liquefied natural gas via seagoing vessels from various countries and distribute it as gas through pipelines, ships and even trucks. This is successfully reducing the historical reliance on single source pipeline imports and domestic production, improving security of supply. In 2023, we took an FID together with our partner, GASUNI. to build an additional tank with a capacity of 180,000 cubic meters. The proportional investment for Vopak was around 175 million euros. After a construction period of three years, the fourth tank was officially commissioned on the 1st of October this year.