Vopak: Q3 group operating profit up 19% on last year
published: cw 43, 2005 in Logistics & ShippingKoninklijke Vopak N.V. (Royal Vopak), the world?s largest independent tank terminal operator specialising in the storage and handling of liquid and gaseous chemical and oil products, achieved an group operating profit excluding exceptional items for the third quarter of 2005 of EUR 45.6 million, which is 19% more then last years Q3 results.
The impact of exceptional items in Q3 2005 was a reduction in profit of EUR 1.5 million, caused mainly by a downward value adjustment on activities to be discontinued. Vopak?s group operating profit excluding exceptional items for the first three quarters of 2005 is EUR 130.6 million.
Barring unforeseen circumstances, Vopak expects its group operating profit excluding exceptional items for the whole of 2005 to increase by around 15%.
All divisions of the Vopak network, with the exception of Latin America, reported a growth in Q3 results compared with the same period last year. Other expenses went up due to new projects, such as the feasibility study into the development of an LNG terminal on the Maasvlakte at Rotterdam.
Market developments
Differences in demand and supply and political developments around the world mean that the markets for oil products are highly dynamic. Due to the permanent imbalance between demand and supply in the various regions, Vopak has seen an increase in the trade in oil products and consequently a growing demand for storage capacity. In addition, production was halted in areas in the south of the US hit by hurricanes Katrina and Rita this quarter. This resulted in higher imports of these products to the US from Europe, among other regions, enabling Vopak to increase its storage and handling activities for oil products at its European oil terminals.
The demand for clean fuels is rising, mainly due to specific regulations in Europe and North America. This has resulted in increasing flows of vegetable-based products which are then processed in mineral fuels such as gasoline and diesel. Vopak is exploiting this development by offering special storage for such products, sometimes in combination with third-party production facilities. An example of this is the storage and production of biodiesel.
The demand for storage of chemical products is also increasing. In Europe, the larger volumes of chemical imports are the main reason for the higher demand for Vopak?s storage capacity. Ongoing economic growth in Asia is resulting in increasing demand for storage. In North America, increased activities in the chemical industry mean a higher demand for storage capacity for intermediate chemical products in particular.
Divisions
The Chemicals Europe, Middle East & Africa (Chemicals EMEA) division achieved a sharp increase in its operating profit, at EUR 12.9 million for the third quarter (Q3 2004: EUR 8.5 million). The higher demand for storage led to an increase in capacity utilisation and improved operating margins.
In a dynamic market, the Oil Europe, Middle East & Africa (Oil EMEA) division managed to increase its operating margins and maintain its high capacity utilisation rates, resulting in an operating profit of EUR 15.7 million (Q3 2004: EUR 13.8 million). While Vopak was able to benefit more in the third quarter from product flows to North America and Asia, the increasing competition pushed down the results in the Baltic Sea region. In the Netherlands, Vopak started to expand its capacity.
At EUR 14.4 million, the Asia division reported higher results (Q3 2004: EUR 13.2 million). The market developed favourably. In September, Vopak opened a new oil terminal in Darwin, Australia, with a capacity of 113,000 cbm. The construction of a biodiesel storage facility also got underway at the same location. The building of new terminals in China and Singapore, as announced previously, is progressing according to plan.
The operating profit reported for Latin America of EUR 3.8 million (Q3 2004: EUR 4.2 million) was down slightly on last year. The higher expenses (in appreciating local currencies) on US-dollar denominated contracts in particular could not be passed on in all cases.
In North America, Vopak managed to improve operating margins and increase its operating profit to EUR 5.4 million (Q3 2004: EUR 3.3 million). Hurricanes Katrina and Rita caused only temporary problems at Vopak?s terminals in the Gulf of Mexico, where no products could be transported for a short period of time. Construction of production and storage facilities for biodiesel was started at one of the terminals in Houston.
Profile
Royal Vopak is the world?s largest independent tank terminal operator specialising in the storage and handling of liquid and gaseous chemical and oil products. Upon request, Vopak can provide complementary logistics services for customers at its terminals. Vopak operates 73 terminals with a storage capacity of more than 20 million cbm in 29 countries. The terminals are strategically located for users and the major shipping routes. The majority of its customers are companies operating in the chemical and oil industries, for which Vopak stores a large variety of products destined for a wide range of industries.
Source: Vopak
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