Vopak will maintain its strategic orientation based on growth leadership, operational excellence and customer leadership. Vopak has updated its portfolio criteria for existing terminals and new projects and will enhance its capital and organizational efficiency.

• Vopak will sharpen its focus on increasing free cash flow generation throughout the company and on improving its capital efficiency, supporting cash flow return and EPS objectives;
• Vopak will initiate a divestment program of around 15 primarily smaller terminals, currently contributing around 4% to its overall EBITDA;
• Vopak aims to reduce its sustaining and improvement capex program from the earlier indicated maximum EUR 800 million to approximately EUR 700 million until 2016;
• Vopak expects to structurally reduce its current cost base with approximately EUR 30 million from 2016 through productivity and organizational efficiency enhancements;
• Vopak expects, on the basis of current market insights, to realize an EBITDA –excluding exceptional items- exceeding the 2012 results of EUR 768 million latest in 2016.

Over the last decade, Vopak has focused on growing a well-diversified global network and on further professionalizing its operational and commercial processes on a step-by-step basis. This growth orientation combined with a relentless drive on safety and service enabled Vopak to build today’s leadership position in the independent tank storage market.

However, since 2013, the tank storage market has been adversely impacted by a substantial incremental supply of storage capacity as well as by legislative and geopolitical developments. This has resulted, mainly in Europe, in new market dynamics with different consequences for different product-market combinations and pressure on occupancy rates and pricing. Additionally, the timing of new profitable expansion projects has become less apparent. As a result, Vopak’s financial outlook for 2014 is no longer fully aligned with the company’s longer-term growth ambitions as defined in the 2010-2012 period. Against this background, Vopak carried out the business review.

The review of the overall strategy leads to the conclusion that Vopak has an effective and sound strategic orientation based on growth leadership, operational excellence and customer leadership.

Yet, the review identified the potential to align the execution of the strategy with the challenges and opportunities of the new market dynamics. Vopak sees value creation options both in the terminal portfolio as well as in the execution of its business:

1. In light of the changing energy and petrochemical landscape and a continuing economic shift from West to East, Vopak has updated its terminal portfolio criteria for its existing terminals, and for its business development activities. Vopak has defined the following terminal portfolio criteria:

• major hubs, supporting intercontinental products flows;
• terminals facilitating growth in global gas markets;
• import distribution terminals in major markets with structural deficits;
• industrial and chemicals terminals, in the Americas, the Middle East and Asia.

Accordingly, Vopak will initiate a divestment program of around 15 primarily smaller terminals, currently contributing around 4% to its overall EBITDA, with the objective of further aligning its global network.

The early selection of growth projects on the basis of the criteria stated above will further ensure the quality of projects under development against lower overall costs.

The divestment program and business development focus will lead to a gradual shift of Vopak’s portfolio of terminals towards growth markets in the coming years.

2. The review of the execution of its business confirms that Vopak has significantly improved the asset integrity, safety performance and service offering of its terminals through a systematic sustaining and improvement capital expenditure approach. Vopak has also invested in further professionalization of its organization through standards and procedures.

Vopak will benefit from its increased understanding and know-how and will optimize sustaining  and improvement capex programs supporting its capital efficiency priority while continuing its drive to further improve safety and service.

Enhanced internal control using the established standards and procedures as well as a goaldirected focus in business development enables productivity and organizational efficiency enhancements at headquarters, divisional offices and operational entities, to support our cash flow performance.

To strengthen its competitive position, Vopak will leverage its know-how to continuously improve its daily operational performance.