Vopak publishes the outcome of the business review announced at the Capital Markets Day held in December 2013 and referred to in the Q1 2014 Trading Update. The business review focused on the status and timing of all projects under consideration, the further alignment of Vopak’s global network, and areas to increase efficiency.
Vopak will maintain its strategic orientation based on growth leadership, operational excellence and customer leadership. Vopak has updated its portfolio criteria for existing terminals and new projects and will enhance its capital and organizational efficiency
Vopak will sharpen its focus on increasing free cash flow generation throughout the company and on improving its capital efficiency, supporting cash flow return and EPS objectives;
Vopak will initiate a divestment program of around 15 primarily smaller terminals, currently contributing around 4% to its overall EBITDA;
Vopak aims to reduce its sustaining and improvement capex program from the earlier indicated maximum EUR 800 million to approximately EUR 700 million until 2016;
Vopak expects to structurally reduce its current cost base with approximately EUR 30 million from 2016 through productivity and organizational efficiency enhancements;
Vopak expects, on the basis of current market insights, to realize an EBITDA –excluding exceptional items- exceeding the 2012 results of EUR 768 million latest in 2016.
Over the last decade, Vopak has focused on growing a well-diversified global network and on further professionalizing its operational and commercial processes on a step-by-step basis. This growth orientation combined with a relentless drive on safety and service enabled Vopak to build today’s leadership position in the independent tank storage market.
However, since 2013, the tank storage market has been adversely impacted by a substantial incremental supply of storage capacity as well as by legislative and geopolitical developments. This has resulted, mainly in Europe, in new market dynamics with different consequences for different product-market combinations and pressure on occupancy rates and pricing.
Additionally, the timing of new profitable expansion projects has become less apparent. As a result, Vopak’s financial outlook for 2014 is no longer fully aligned with the company’s longer-term growth ambitions as defined in the 2010-2012 period. Against this background, Vopak carried out the business review.
The review of the overall strategy leads to the conclusion that Vopak has an effective and sound strategic orientation based on growth leadership, operational excellence and customer leadership.
Yet, the review identified the potential to align the execution of the strategy with the challenges and opportunities of the new market dynamics.