Vopak lifts profit forecast on high tank storage demand, added capacity (updated)

Koninklijke Vopak NV

26/07/2024 09:23

(Adds new investment paragraph 6, CFO quotes in paragraphs
7-11)
    By Alban Kacher
       July 26 (Reuters) - Dutch tank storage company Vopak
 VOPA.AS  slightly raised its 2024 core profit target on Friday,
after strong demand across its markets and expanded terminal
capacity boosted second-quarter results.
    Instability in the Middle East has stretched global energy
supply routes, while Russia's war on Ukraine has pushed European
countries to seek alternative oil and gas supplies, increasing
demand for storage space.
    Vopak, which operates terminals and storage facilities
worldwide, expects its proportional core earnings (EBITDA) to
come between 1.15 billion euros and 1.18 billion euros ($1.25
billion and $1.28 billion) this year, lifting the bottom end
from 1.14 billion euros.
    It also raised its planned capital expenditures related to
growth projects from 300 million euros to 350 million euros.
    Vopak is seeking to expand its gas and industrial terminals
to increase cash returns, and to shed less profitable assets in
the oversupplied chemicals market.
    The group said it would invest 462 million euros to build a
large-scale liquefied petroleum gas export terminal in Prince
Rupert, Western Canada.
    The terminal is expected to be operational by the start of
2027 and have a significant impact on Vopak's results from there
on, finance chief Michiel Gilsing told Reuters in an interview.
    Gilsing said Vopak, which is operating close to its maximum
storage capacity, might need to raise customer rates and manage
expenses going forward, as it seeks to preserve margins from
higher labour costs.
    But there is a greater opportunity in building new units, he
said.
    While demand in Europe has normalised after the stress
caused by the war in Ukraine, Vopak sees a healthy gas-related
demand from countries like Colombia, Australia and South Africa,
Gilsing said.
    "There is a enormous demand for gas a few years from now
because gas fields in those countries are depleting or they have
an ambition to replace coal-fired plants by gas fired plants,"
he added.
    Vopak's proportional EBITDA, excluding exceptional items,
rose to 301.6 million euros in the second quarter, beating
analysts' average forecast of 298 million euros.
($1 = 0.9215 euros)

 (Reporting by Alban Kacher in Gdansk; Editing by Milla Nissi)
 ((alban.kacher@thomsonreuters.com))