July 19, 2013 [Bloomberg] - Royal Vopak, the largest chemical and oil storage company, fell the most in more than four months in Amsterdam trading after lowering its profit forecast and announcing a 350 million-euro ($460 million) share sale.
Vopak dropped as much as 6.6 percent, the biggest decline since March 1, and traded down 5.6 percent at 43.245 euros as of 12:49 p.m. local time. Trading volumes were already almost twice the three-month daily average.
Full-year earnings before interest, taxes, depreciation and amortization excluding one-time items will be 730 million euros to 780 million euros, Vopak said today. That compares with an earlier target of 760 million euros to 800 million euros.
The company, based in Rotterdam, has seen declining demand for fuel storage in the Netherlands, a trend exacerbated by oil-market backwardation. Such pricing, where deliveries made in the near future cost more than those made later, reduces the financial incentive to keep supplies in storage.
“We are experiencing some uncertainty with respect to the renewal of expiring contracts resulting from the backwardation in this gasoil and crude-oil market,” Chief Financial Officer Jack de Kreij said today on a call with analysts.
The company said profit so far this year has been little changed from a year earlier and the market will be similar in the second half. First-half Ebitda excluding items totaled 385 million euros amid lower demand for crude, gasoil and biofuel storage and higher pension costs, Vopak said in a statement.
Worsening Trends
“After a disappointing first quarter we awaited confirmation from the second,” Michael Roeg, a Brussels-based analyst at KBC Securities with a hold recommendation on the stock, said in a note. “It seems trends have been worsening.”
Vopak proposed a share sale to fund growth as it pursues an Ebitda target of 1 billion euros in 2016, the company said in a separate filing. Existing holders would get a stock dividend, according to plans that will be put to investors on Sept. 17.
The shares, with a fixed annual dividend of 1 euro apiece, would have a nominal value of 5 cents each. Majority holder HAL Investments BV (HAL), with a stake of about 48 percent, has already pledged support. ING Groep NV and JPMorgan Chase & Co. will coordinate the offering.
Vopak remains “confident in the long-term outlook” for its business, it said today. “The growth of global energy use and the increasing geographical imbalance between production and industrial consumption continues to require additional movement of energy, chemicals and vegetable oils.”
