May 1, 2023 [Reuters] – Dutch tank storage company Vopak (VOPA.AS) on Wednesday raised its 2023 core profit outlook, with favourable storage demand expected to persist for the rest of the year.
Vopak has bet on increasing demand for storage of oil and gas products coming from long distances, as several markets ebb away their dependency on Russian supplies.
“Flows have changed quite a bit due to the Russian crisis, which is beneficial for the storage market because supply chains are more difficult and have been amended,” Chief Finance Officer Michiel Gilsing told Reuters.
Shares were up 3% in early trading.
Western countries are rushing to diversify their energy sources away from former supplier Russia, rebuilding stocks and investing in terminals and floating storage and regasification units (FSRU) to absorb extra supply from the U.S. and other major producers.
“Some products now move via the Middle East to other locations while in the past there was maybe a direct point-to-point delivery,” Gilsing said.
Vopak’s occupancy rate was 92% in the first quarter, up from 90% in the previous three months, led by higher occupancy in the Europe & Africa and Asia & Middle East divisions.
“Occupancy at 92% shows that demand for storage is very strong due to redundancy fears and longer lead time,” said Lampros Smailis, analysts at brokerage Van Lanschot Kempen.
Vopak expected its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to exceed 950 million euros ($1.04 billion) this year.
It had previously forecast an annual EBITDA of between 910 million and 950 million euros, up from 887.2 million in 2022.
The company sees operating cash return of above 12% in 2023, up from around 12% expected previously.
Vopak’s first-quarter EBITDA was 249 million euros, ahead of analysts’ average estimate of 233 million euros.
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