February 15, 2020 [Reuters] – Dutch oil, gas and chemical storage company Vopak reported higher fourth-quarter earnings on Wednesday, citing good performance from converted IMO 2020 capacity and contributions from new projects in Brazil, Mexico, Panama and Singapore.
IMO 2020, a new rule from the International Maritime Organization (IMO) which curbed sulfur content in marine fuel, came into effect at the beginning of this year.
Vopak confirmed its 300-500 million euro target for growth-focused investments in 2020 and said it intended to use the majority of cash from recent divestments to grow its portfolio, while also earmarking 100 million euros ($109 million) for a share buyback program it aims to complete this year.
Vopak’s shares were up more than 4% in morning trade, with KBC Securities analysts saying overall results were slightly better than expected and noting the group’s plans to return cash to shareholders.
In 2019, the global storage tank operator recorded a total cash inflow of nearly 550 million euros from divestments while building up its gas and chemicals capacity.
“The outlook is that we will further have a reduced in component of oil in our portfolio and an increase in chemicals, industrial terminals and gas,” Chief Financial Officer Gerard Paulides, told Reuters. “In fact the entire divestment in 2018-2019 was all oil,” Paulides said.
He added that the company made its first investments in hydrogen and solar energy in the fourth quarter, which is in line with its strategy to focus on new energies, but specified these investments were at the moment purely opportunity driven.
Paulides said the coronavirus epidemic, which has killed 1,113 people in China, so far has not affected project timelines and the group overall guidance, even though Vopak has seen extra storage inquiries from existing customers.
The group operates several storage terminals in mainland China.
Vopak’s earnings before interest, taxes, depreciation and amortization (EBITDA) came in at 204.8 million euros in the fourth quarter, up from 180.7 million euros in the same quarter year ago.
The Dutch industrial storage firm also said it will propose a 2019 dividend of 1.15 euros per share, a 5% increase from the dividend of 1.10 euros per share in 2018.
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