Earnings call: Vopak reports growth and sustainable strides in Q1 2024

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Earnings call: Vopak reports growth and sustainable strides in Q1 2024
Credit: © Reuters.

Vopak (VPK.AS), a leading tank storage company, has announced its Q1 2024 results, which show a robust improvement in financial performance and a strong commitment to sustainability. The company reported a 9% increase in proportional EBITDA, adjusted for divestments, and maintained a high proportional occupancy rate of 93%. Vopak also declared a dividend increase to €1.50 per share and revised its full-year 2024 outlook upwards, with an increased proportional EBITDA range.

Key Takeaways

  • Vopak's proportional EBITDA grew by 9%, and occupancy rates remained high at 93%.
  • The company expanded in India and is developing a new LPG facility in Canada.
  • Sustainable initiatives include repurposing infrastructure for biofuels in Singapore.
  • Dividend increased to €1.50 per share, and the full-year 2024 outlook was revised upwards.
  • Growth projects contributed €18 million on a proportional basis.
  • Strong cash flow generation with €276 million in Q1; share buyback program underway.
  • The net debt to EBITDA ratio stood at 1.76 times.

Company Outlook

  • Proportional EBITDA range for 2024 is now €1.14 billion to €1.18 billion.
  • Consolidated EBITDA range for 2024 is €900 million to €940 million.
  • Commitment to investing in industrial and gas terminals and moving towards new energies.

Bearish Highlights

  • Chemical market weaker, with fewer opportunities to increase rates.
  • Lagging effect on storage demand due to decreased product demand, observed in Singapore and Belgium.

Bullish Highlights

  • Strong oil market leading to increased revenue per cubic meter.
  • Excitement about growth opportunities in Canada and India.
  • Positive signals in the chemical market, with an expected pickup in demand.


  • Specific numbers on the effects of the oil price situation were not provided.
  • Expectation of a decrease in operating cash return (OCR) throughout the year.

Q&A Highlights

  • The 12% OCR target is a long-term minimum, with the current 17% return seen as sustainable.
  • Price increases in the oil sector have a limited impact, with high occupancy and ancillary revenues contributing positively.
  • Cautious optimism for the chemical sector with some positive signals, though with a potential lag in storage demand.

Vopak's first quarter of 2024 has been marked by financial growth and sustainable development. The company's strategic expansion in India, coupled with its sustainable initiatives, such as the blending of biofuels in Singapore, underscore its commitment to growth and environmental responsibility. With a revised upward outlook for the year and a strong financial position, Vopak is poised to continue its positive trajectory in the tank storage industry.

InvestingPro Insights

Vopak's recent Q1 2024 results highlight a company on the rise, with a solid financial performance and a forward-looking approach to sustainability. In line with these results, InvestingPro data and tips provide additional insights that could be valuable for investors considering Vopak's stock.

InvestingPro Data indicates that Vopak has a market capitalization of approximately $5.1 billion, with a P/E ratio as of Q1 2024 standing at 11.26. This valuation metric suggests that the company is being traded at a price reflecting its earnings, which may appeal to value-oriented investors. The revenue for the last twelve months as of Q1 2024 is reported at $1,513.22 million, with a high gross profit margin of 96.99%, indicating effective cost management and a strong market position.

An InvestingPro Tip highlights Vopak's record of raising its dividend for 6 consecutive years, showcasing a commitment to returning value to shareholders. This is further substantiated by the company's ability to maintain dividend payments for 22 consecutive years, a testament to its financial resilience and stability.

Moreover, the stock is trading near its 52-week high, with a price 93.48% of the peak, aligning with the company's positive momentum as reflected in its recent financial results. The InvestingPro Fair Value estimate stands at $46.36, suggesting potential upside from the previous close price of $37.98.

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Full transcript - Koninklijke Vopak Nv (VOPKF) Q1 2024:

Operator: Hello and welcome to the Vopak Q1 2024 Results. My name is George. I'll be coordinator for today's event. Please note, this conference is being recorded and for the duration of the call, you'll be in a listen-only mode. However, you'll have the opportunity to ask questions at the end of the presentation. [Operator Instructions] I'd like to hand you over to your host today, Ms. Fatjona Topciu, Head of IR. Please go ahead.

Fatjona Topciu: Good morning everyone and welcome to our Q1 2024 results analyst call. My name is Fatjona Topciu, Head of IR. Today, our CEO, Dick Richelle, and CFO, Michiel Gilsing, will guide you through our latest results. We will refer to Q1, 2024 analyst presentation, which you can follow on screen and download from our website. After the presentation, we will have the opportunity for the Q&A. A replay of the webcast will be made available on our website. Before we start, I would like to refer to the disclaimer content on the forward-looking statements, which we are familiar with. I would like to remind you that we may make forward-looking statements during the presentation, which involves certain risks and uncertainties. Accordingly, this is applicable to the entire call, including the answers provided to questions during the Q&A part. With that, I would like to hand over the call to Dick.

Dick Richelle: Thank you very much, Fatjona and a very good morning to all of you joining us in the call. Let's move to Slide 4 and moving into the key highlights of Q1 2024. We delivered on our strategy to improve our financial and sustainability performance, to grow our base in industrial and gas terminals, and to accelerate towards new energies and sustainable feedstocks. Let me give you some highlights of the different elements of our strategy. The need for our services remains strong across the portfolio, reaching a proportional occupancy of 93%, as we continue to serve our customers well. We reported improved financial results, growing our proportional EBITDA by 9% when adjusted for the divestment impact. Also, our operating cash return improved significantly from 15.4% last year to 17% at the end of this quarter, driven by a lower average capital employed due to the divestments and a positive contribution from growth projects. Our strong business performance led us to increase our full year 2024 outlook for both proportional EBITDA and reported EBITDA, which Michiel will further explain. Let's take a look at growth. We are solidifying our leading position in India with the acquisition of a new terminal in Mangalore (NS: MRPL ), the East Coast of the country. The terminal with a capacity of 44,000 cubic meters is a good addition to our extensive footprint in the fast-growing economy of India. Also, in Western Canada, together with our joint venture partner, AltaGas (TSX: ALA ), we're making good progress in our development of a greenfield LPG export facility. FID is expected in the first half of this year. Now, let's move to accelerating towards new energies and sustainable feedstocks. During the first quarter, we commissioned repurposed infrastructure in Singapore for blending biofuels into marine fuels. This is an important first step at our Sebarok terminal to be a sustainable multi-fuel hub in the future. At the same time, we're making good progress in Vlaardingen in The Netherlands to repurpose another 34,000 cubic meters of existing infrastructure for biofuel feedstocks. Also in Brazil, 30,000 cubic meters of capacity is being repurposed for sustainable transportation fuels. In Singapore, we successfully completed our first ammonia bunkering operation, together with our partners at our Banyan terminal. These developments fit well in our strategy to accelerate towards new energies and sustainable feedstocks. Moving on to some of the dynamics of the key markets in which we operate and how they impact the demand for our infrastructure services. Let's start with the gas markets. We saw continued high utilization of our LNG infrastructure and LPG demand is growing around the world, driven by petrochemical and residential demand. Given the take-or-pay nature of our contracts, the financial performance in this segment was relatively stable, while SPEC in Colombia contributed positively. For new energies and sustainable feedstocks, we see continued momentum for infrastructure that supports low carbon products. The pipeline for CO2 and ammonia project continues to be solid. Energy markets were relatively stable. There's a continued healthy demand for infrastructure due to ongoing rebalancing of trade flows around the world. Our oil hub terminals in Singapore, Fujairah, and Rotterdam continued to have a strong demand. Finally, manufacturing markets served by chemical distribution terminals. They still experience some pressure. Impact so far on our terminals is limited, but remains uncertain in the remainder of the year. The industrial terminals segment predominantly served by long-term take-or-pay contracts showed a stable performance. Now, let me take you through the different elements of our business performance in more detail. Compared to the same quarter last year, we experienced a negative currency translation effect of €5 million and a divestment impact of €21 million. The oil markets, as I said, remained favorable in the first quarter of this year. High occupancy rates and contract renewals drove the growth in EBITDA from our oil portfolio across the globe, especially in the oil hubs in Rotterdam, Fujairah, and Singapore Straits. Chemical markets remain characterized by the oversupply of end products. Throughput levels in our industrial terminals remain solid. And our LNG -- our terminal storing LNG and LPG saw increasing revenues, mainly in The Netherlands and SPEC Colombia. Expenses in the first quarter were slightly higher than in Q1 last year, mainly due to increased personnel costs. Growth projects contributed positively to our results compared to last year with a contribution of €18 million on a proportional basis, driven by projects in The Netherlands and the United States. All-in-all, this resulted in a proportional EBITDA of €298 million. And when adjusted for the divestment impact, as mentioned, this is a 9% increase compared to the first quarter of 2023. As mentioned before, next to improving the financial performance of our portfolio, we keep focusing on improving our sustainability performance as well. We have an absolute reduction target for our Scope 1 and 2 emissions for 2030, which is a 30% reduction compared to a baseline year of 2021, and it includes the additional emissions, as a result of growth projects. By the end of 2023, we realized a reduction of 25%. Increasing the share of renewable energy is one of the lines of action that we have in order to decarbonize our existing and future operation. One important way to do so is electrification of our operations and by acquiring renewable electricity. This year, we were able to switch four terminals in the United States to 100% renewable electricity, bringing the total number of terminals using renewable electricity to 35 in the portfolio. Now, let's move to India, together with Aegis, our joint venture partner, we are growing rapidly in India, storing mainly liquid products and LPG, supporting the economic growth, and making alternative lower carbon fuels available throughout the country. Our joint venture was established in the middle of 2022 with a capacity of 1.3 million cubic meters in five strategic locations. A significant number of FIDs was taken to further grow our footprint. And currently, we are expanding in five locations in both capacity for liquid products, as well as for gas. Today, we announced [Indiscernible] acquisition in Mangalore, a terminal with the capacity of 44,000 cubic meters will be added to the network. With all these expansions and acquisitions, our capacity in India is expected to grow to 1.8 million cubic meters in 2025. With regards to our third pillar of our strategy, accelerate towards new energies and sustainable fuels and feedstocks, we see good momentum around the world. After repurposing capacity in the U.S., The Netherlands, and Singapore, we're also progressing well in repurposing capacity in Brazil and The Netherlands. With this repurpose capacity, we are well-positioned to help our customers to store low carbon fuels and feedstocks. In Antwerp, we're making good progress in cleaning up our new strategic plot of land, to redevelop the site, to support new energy infrastructure investments. In the field of electricity storage, we announced an investment of €9 million in two battery systems, close to Houston with a capacity of 10 megawatt and 20 megawatt-hours. These developments fit well in our strategy to accelerate the investments for infrastructure in new energies and sustainable feedstocks. Now, let's take a look at our cash generation because the cash generation in this portfolio -- in the portfolio for this quarter was strong. We further strengthened the balance sheet with a leverage of 1.76 times total net debt to EBITDA. We are returning value to shareholders by increasing the dividend to €1.50 per share, and we are progressing well in our share buyback program, of which around 30% has been completed so far. We're well-positioned for future growth with a healthy pipeline of projects for both strategic levers to grow in industrial and gas terminals and to accelerate towards new energies and sustainable feedstocks. We confirm our consolidated growth outlook of investing around €300 million this year with attractive and accretive returns. To summarize, we delivered another strong quarter. We reported improved financial results on the back of favorable market conditions and high occupancy. We create connections to a well-diversified global portfolio by growing our base in India and making good progress on repurposing existing capacity for low carbon fuels and feedstocks. Our well-diversified terminal portfolio is supporting energy security and energy transition, and we drive progress, as we capture the opportunities of the energy transition. As a result of all of the above, we create and return value to our shareholders. With that, I want to hand over to our CFO, Michiel Gilsing, who will give you more insights on the financial aspects of this first quarter. Michiel?

Michiel Gilsing: Thank you, Dick and good morning to everyone on the call from my side as well. Let me first start on delivering our shaping of the future strategy. Let me take you through our financial results of the first quarter in a bit more detail. I will first give some more insight in our performance in Q1, then discuss our strong, stable and long-term cash flow generation, and our long-term fundamentals, including our increased outlook. To start off with the financial performance for the first quarter of this year compared to Q1, 2023, proportional EBITDA grew adjusted for divestments with €25 million, a 9% increase compared to last year, driven by contributions from growth projects and better organic business performance. On a consolidated basis, EBITDA grew by €7 million, a 3% increase backed by favorable storage demand. As you can see, the proportional occupancy remained high at a level of 93%, which reflects a solid demand for our business. Looking at the proportional operating cash return, we achieved an OCR of 17%, a 1.6 percentage point increase compared to last year's first quarter, driven by a lower average capital employed due to the divestments and contribution of growth projects on the other hand. If we zoom in on the quarter compared to fourth quarter of last year, we see a higher proportional occupancy rate at 93%, a 2% point increase compared to Q4. This increase is related to the reduction of the base capacity in Europoort by around 380,000 cubic meters, in line with our previously announced ambition to gradually reduce oil capacity there in order to accelerate towards new energies and sustainable feedstocks. Revenues adjusted for divestment remained stable and with regards to operating expenses, we see a decrease of 15% compared to the previous quarter adjusted for the divestment impact. Proportional EBITDA increased by 10% when adjusted for a €12 million divestment impact. A closer look at the performance of the business units, which shows a continuing trend of improvement across the regions. Adjusting the first quarter of 2023 for the divestment impact of €21 million, we had a positive trend across all business units. A stable performance in Asia business units, driven by the good performance in our oil and gas terminals. The Netherlands saw improved performance, especially in Rotterdam. And in Q1, 2024, growth projects had a positive contribution of €18 million on a proportional basis from projects in the United States and The Netherlands. Adjusted for divestments, this is an improvement of €25 million, similar to a 9% increase year-on-year. All-in-all, we experienced a robust demand for our services, driven by an increased demand for energy and continued rebalancing trade flows around the world. Moving to the cash flow generation. Our cash flow generation continued to be strong in the first quarter of 2024, driven by a positive business performance. We generated €276 million, which is mainly driven by the joint venture dividends, as well as cash generated by the group companies. Due to a timing effect between declaring and paying out the dividend, the cash inflows from dividends were significantly higher this quarter. After tax payments, derivatives impact, and other cash flow from investing and financing activities, we had €190 million cash flow from operations. This is the available cash flow that we can allocate towards operating CapEx, which is our license to operate, growth CapEx and shareholder returns. As you can see, the business is able to self-fund the needs for the mentioned elements. Dividends paid to shareholders will be paid in the second quarter of this year, which will be visible in our half year results. Looking at the net cash flow, it is good to mention that it's partly used to execute the share buyback program, which we are executing at the moment. The strong cash flow generation led to an increase of proportional operating cash flow per share to €1.83. The balance sheet was further strengthening, resulting in a total net debt to EBITDA of 1.76 times. Going forward, obviously, it is very important for us to maintain this healthy cash flow overview to make sure that we are, to a large extent, self-sufficient and are not rapidly increasing our leverage. As Dick mentioned it already, we are increasing our full year 2024 outlook and I want to give some more detail on the drivers behind this. We see strong market indicators and favorable demand for our storage infrastructure. Together with a solid business performance, we continue to focus on improving our results. And thirdly, growth projects will contribute to our results in the quarters to come. Our strong performance and strategy execution, coupled with favorable market condition positions us well to revise our outlook for full year 2024 upwards. We increased the proportional EBITDA outlook to a range of $1.14 billion to €1.18 billion for the full year and the consolidated EBITDA range is increased to €900 million to €940 million for the full year 2024. Looking at the overall outlook, other elements remain unchanged. Consolidated growth CapEx is still expected to be around €300 million and with regards to consolidated operating CapEx, this will be around €230 million. On the longer term, our proportional operating cash return to be above 12%, which we believe is a healthy return for our type of business under different market circumstances. Our commitment to invest €1 billion in industrial and gas terminals and €1 billion to accelerate towards new energies and sustainable feedstocks towards 2020 -- 2030 remains unchanged as well. Our leverage ratio remains 2.5 times to 3 times EBITDA as a management range, and our dividend policy remains unchanged. Bringing it all together, we delivered on our financial performance despite divestments, our assets generate strong, stable, and long-term cash flows. With a well-diversified portfolio in terms of the products we store, in the geographies we operate, we are able to create connections. And we are driving progress via our capabilities to capture new opportunities and growth investments. These factors combined create value to our stakeholders. And this concludes my remarks in the presentation, and I would like to hand it back to Dick for the Q&A.

Dick Richelle: Thanks Michiel. And with that, I would like to ask the operator to please open the line for Q&A.

Operator: Most certainly sir. [Operator Instructions] Our very first question today is coming from David Kerstens calling from Jefferies. Please go ahead. David, your line is open, sir. Could you please ask your question?

David Kerstens: Apologies, I was on mute. Thank you very much. Good morning everybody. I've got a couple of questions. First of all, please, on the dividend phasing that you mentioned, you had a strong increase, I think, up to €123 million from dividends. Is that related to the one-off payment you received from the joint venture in Pengerang? And how does that phasing move in the coming quarters? Will that be offset in Q2? Then on the second point, you had a strong contribution from new capacity of €18 million. I was wondering if you could quantify what the impact was of the acquisition of the 50% stake in the EemsEnergyTerminal? And then I had a question on the -- yes, the robust demand for oil storage that you're talking about as a result of the rebalancing of trade flows. How much longer do you expect that effect to continue? And is there any positive impact on the disruption in the red sea on the occupancy in the terminals in Fujairah? And maybe finally, on the Europoort capacity reduction, is that only impacting your occupancy rate? Or are there also other accounting effects? Is it still in your invested capital, the 380,000 cubic meters? Thanks very much.

Dick Richelle: David, hi good morning. I'll talk you through your third question, which is the question on the oil storage, which indeed is continuing to be healthy, the demand for storage. If you look at the occupancy rates that we see in that segment, they're just very healthy, especially in hub locations, 95% and upwards. And Fujairah is indeed contributing to that also quite a bit. You see that the tenure of our contracts is increasing a bit. And there's just a very healthy demand for the infrastructure that we put in that market. Michiel, you will take the -- probably the other question.

Michiel Gilsing: Yes. Let me start with the dividend phasing. Indeed, the first quarter was rather positive in terms of dividend upstreaming from our joint ventures. A lot of these dividends were actually already declared in Q4 and then indeed received in Q1, and then they account for, let's say, the cash flow, obviously, but also account for the net debt-to-EBITDA calculation. One -- indeed, one relatively large part of it is the Pengerang one-off payment that will not be offset in Q2. So, it's just a payment we received. But you may expect for the remainder of the year, although we still expect quite a high dividend in line with our policy of at least 90% of the net profit of joint ventures that for the remainder of the year, the dividend cash in will be a bit slower than Q1. So, Q1 was quite exceptional. Second question was related to the €18 million contribution of growth project and what the impact was of the EET acquisition, but we don't disclose any details on that. So, I have to leave it there, David, unfortunately, for you. And then on the Europoort capacity, there's no accounting impact because a big impairment was taken already in 2022. So we impaired already quite significant the Europoort capacity, taking into account, first of all, let's say, the energy transition, but secondly, also taking into account some of the capacity conversions we're going to do at the Europoort location. So, that accounting impact for this year is limited, but was taken in the past.

David Kerstens: How much was that as maybe as a reminder on Europoort and what was the impact on invested capital?

Michiel Gilsing: We took an impairment in 2022 of €240 million.

David Kerstens: Just related to this?

Michiel Gilsing: Not just related to this to a -- well, first of all, related to taking out some capacity over time, of which this is the first chunk, but we will take more capacity out over time and replace it with renewable projects. And the other one was that we factored in the energy transition in our full portfolio. So, we looked at the outlook for oil products going forward. And we said, yes, okay, if you look at how the energy transition could evolve, and let's take a bit more conservative approach, especially in the period 2040, 2050 on what this capacity can still generate in terms of cash flow.

David Kerstens: Yes, awesome. And maybe just for my understanding, when you repurpose capacity, do you write it off before repurposing and then it comes back, as a growth contribution from a growth project?

Michiel Gilsing: No, it depends on what the conversion is. So for example, in L.A., we did a conversion to renewable diesel and sustainable aviation fuel, but then you reuse effectively existing capacity, since there is no need to write it off. But sometimes, you demolish capacity. So if you really demolish capacity and build something new, then obviously, you need to take the book value of the demolish capacity out of your books because that's not there anymore. And then you indeed will see growth investments because you replace it with complete new infrastructure. But if you reuse all the infrastructure and use that for the conversion, then obviously, you don't need to do that.

David Kerstens: Okay, that’s great. Understood. Thank you very much.

Michiel Gilsing: Thank you, David.

Operator: Thank you. We'll now move to Jeremy Kincaid coming from Van Lanschot Kempen. Please go ahead.

Jeremy Kincaid: Good morning all. I just have two or three questions as well. The first one for me is just on the revenue per cubic meter. On a year-on-year basis, it still looks like it's growing quite strongly, but from the fourth quarter to the first quarter, it looks like there was a slight decline. And obviously, you had some divestments, but I was just hoping you could provide some color around what you think the underlying revenue per cubic meter is for the business, just help provide some context? Thanks.

Dick Richelle: I think on the -- let me take this question. First, on the revenue per cubic meter, it's always a mix of different products. So, if you look at revenue per cubic meters, if I break it down quite quickly in the portfolio and you see that on the gas side, the revenue per cubic meters are quite high because that's the nature of the business. Infrastructure is relatively expensive. On the industrial terminal side, you see that revenues per cubic meter are lower than on the gas side, but still relatively high, depending on the type of infrastructure and industrial locations. Sometimes it's purely chemical, sometimes it's a combination of chemicals and gases, sometimes also a bit of oil. And there, you see revenues per cubic meter for chemical distribution is in most of the times, the third in a row. And then oil revenues per cubic meter are the lowest and especially in the hub locations, where you have large oil capacity. That's where you see that revenues per cubic meter are far below, let's say, the gas. So, the divestment impact that has -- that has changed the mix a bit. If you take chemicals out, so you get relatively a bit more on the oil side. On the other hand, what you also see in Q4 is that we have excess throughput revenues, which are related to contracts, which sometimes are impacting the revenue per cubic meters as well. So, there is quite a few factors, which influence this. So purely looking at revenue per cubic meter does not always give you the right indicator. In general, what we see is on the renewals, we see quite a bit of opportunities to increase revenues per cubic meters for the oil capacity. It's very limited at the moment for chemicals. And for gas and industrial terminals, revenue per cubic meter are really based on the take-or-pay components of contracts. So, that's a bit the story around revenue per cubic meter.

Jeremy Kincaid: Okay. That's clear. Maybe to ask in another way, would you say the increase in those renewals for -- so obviously, oil market sounds very strong compared to six months ago, but would you say the other markets are heading in the right direction? Or would you say they are more going sideways in terms of the ability to increase storage rates when you have those renewals?

Dick Richelle: Well, we have a lot of renewals in the oil market, so that helps us if the market is strong. Then you see automatically with price increase that revenue per cubic meters are increasing. For gas and industrial terminals, there's a lot of take-or-pay business. So, these revenues per cubic meter are not rapidly increasing. The only increase is if there is inflation correction. But it's not like we are renewing these contracts continuously. We only renewed them once in a while. And on the chemical side, you see that the market is -- well, in certain locations, like Europe, like Singapore, like China, chemical distribution is weaker than normal. And as a result, you see less renewal opportunities to increase the rates.

Jeremy Kincaid: Okay. That's clear. And then one final one. It sounds like there's a lot of demand in some of your growth markets like obviously, in Canada and in India, and your balance sheet is clearly very strong. Could you just provide some comments around any opportunities you're seeing outside of the €2 billion that's already earmarked, like do you think there's any scope to see upward revisions to that €2 billion of growth CapEx over time?

Michiel Gilsing: Yes, I think, Jeremy, if you look at, indeed, we're excited to see what hopefully will come to us in Canada, confirming our positive outlook on growth in India. So, in general, if you look at the bucket of growth investments in gas, LNG, LPG and industrial, depending on how this year will develop, we are indeed reaching or close to reaching the limits of what we have announced two years ago. So, I think when the time is there, we will have a good look at it and see if a revision is required. I think from an attractiveness of investing in those areas that continues to be high on our agenda because we see good opportunities in industrial expansions and in gas opportunities in the different geographies, where we are. So, we'd like to continue and allocate growth CapEx to that part of our strategy. So, we'll hope to update you when we see these projects that we're currently working on coming to the moment of FID, which is the moment of truth.

Jeremy Kincaid: Sure. Understood. Okay. Thank you for your time.

Michiel Gilsing: Thank you.

Operator: Thank you. We now move to Thijs Berkelder of ABN AMRO-ODDO. Please go ahead, your line is open.

Thijs Berkelder: Yes. good morning. Congratulations with a strong start of the year. First question is on, Michiel, you may have explained the reason for the slow start of the year in terms of spending on growth CapEx and sustaining CapEx, how you keep the guidance as it is, but like you start you seem to be not reaching the target? Then on spending on growth CapEx versus spending money on your share buyback, can you explain the reasoning behind thinking, should I spend it on new projects versus own shares? And finally, maybe on the cash flow bridge given, can you give me a number for the working capital effect in Q1 and the derivative effect in Q1?

Dick Richelle: Let me maybe go for question two on how we look at growth CapEx versus the share buyback program, Thijs and by the way, good morning, and thanks for your compliments on the start of the year. What we did Thijs, when we announced the share buyback program, we took into account the execution of our strategy, and the execution of our strategy allocating the amounts that we indicated on a yearly basis, as well as the target that we set ourselves between 2022 and 2030 on grow and on accelerate. So, taking that into account, not lowering it, not slowing it down, but basically reconfirming the excitement over those growth opportunities. And over and above, we see that there's an opportunity to move ahead with the share buyback program. So, it's not an either/or, but at least for this year, it's -- it's an opportunity to do those things concurrently. Both have the growth CapEx, as well as have the share buyback program being executed. And then when it comes to the end of this year and subsequent years, when we sit in 2025, we will have a good look at that. But for us, again, the most important thing is that we can continue to execute our strategy successfully, and we do not see any hindrance, as a result of the share buyback program that we're currently executing.

Michiel Gilsing: And then maybe on the third question, which is more related to the cash flow bridge. Yes, especially if you look at the impact of derivatives has been relatively limited in the first quarter 2024. And what you tend to see in the working capital is that the financing expenses are paid every half year, Thijs. So, that's normally, where you see quite a bit of impact of working capital taking place. Working capital business is most of the times relatively stable in terms of accounts receivable, accounts payable, the bigger movements have most of the times to do with these items like financing expenses.

Thijs Berkelder: Okay. Thank you.

Operator: Thank you. Ladies and gentlemen, once again--

Michiel Gilsing: The slow start of the CapEx, yes, the slow start of the CapEx, the growth CapEx is, it's -- it always goes a bit in chunks depending on where the projects are. But although it might look a bit slow, we still are quite convinced that we can reach the outlook for the year. But obviously, that also will be related to certain number of FIDs we still need to take, and we hope to take in the remainder of the year. And on operating CapEx, you tend to see always a slower first quarter because people are effectively lining up all the operating CapEx projects based on the approval they got from us to spend money on operating CapEx. Second, third and fourth quarter are most of the times significantly higher than the first quarter. So, you see that we spent a little bit less than €40 million. The outlook is still €230 million, so that means on average, we should spend around €60 million, a little bit less. So, you may expect a pickup in the second to third and the fourth quarter.

Thijs Berkelder: Yes. Maybe one follow-up question. I'm seeing that your -- especially on OpEx, you delivered clearly stronger than a year ago. Is that primarily energy costs related? And can you give me a short indication on what has happened to your staff expenses?

Michiel Gilsing: Yes. What you tend to see is indeed the bigger -- the biggest impact is coming from energy cost, Thijs. So, the reduction in energy expenses is the most significant benefit for us. If you look at labor cost, it is -- it is still relatively under control, but still increasing. And second quarter normally increases a bit further because salary increases will kick in, in April. So, that's why the first quarter is normally a bit lighter in terms of personnel expenses than the second and the third and the fourth quarter. But the major positive impact has been the energy and utilities decrease.

Thijs Berkelder: Okay. Thanks.

Operator: Thank you very much sir. [Operator Instructions] We'll now move to Andre Mulder calling from Kepler Cheuvreux. Please go ahead.

Andre Mulder: Good morning. Three questions from my side. Firstly, on the proportional cash flow return of 17% compared to a target of 12% plus, of course, the 17% is higher than 12% plus, so that's in line with -- the gap is seemingly quite large here. Would you say that the 12% is conservative? Or would you expect that, that 17% is not sustainable? That's the first question. Second question on -- can you give a bit more detail on what the impact has been of your increase of prices in the oil side? Thirdly, although you say that the chemicals industry is still quite weak, we see some glimmers of hope. Do you see some positive signals yet in that market?

Dick Richelle: Andre, good morning. Maybe on your second and third question, on the oil side, so the impact of price increases, I would say, is relatively limited and relatively speaking to where you see two years ago, three years ago when occupancy went up, we had a double effect of renting out more tanks and the tanks that we were renting out also against higher rates. Over time, if you reach a certain more stable, high level of occupancy, the opportunity to further increase rates is relatively limited. It still happens a bit, but it's not to the same extent, as where we've seen the bigger increase in the few years back. It's still overall a very healthy development. And especially, if you see activity level being high, you see the ancillary revenues definitely contributing in that segment. So, it's across the board oil. It's in the three hub locations, and then I take Singapore Straits, as one, which we have a few terminals. It just continues to be very healthy with high occupancy rates and just healthy, but not massive tariff improvements. I think that's one. I think on the chemical side, yes, indeed, we read, and we can all see some glimmers of hope with some of our customers that expect for the second half of this year and/or into 2025, the demand for their products is slowly picking up. However, if you start to translate that to demand for storage, there's always a bit of a delay factor in it because when demand for their products is lowering, it's not immediately that the demand for storage is going down. That will always have a bit of a lagging effect when contracts are up or when supply chains are being actually adjusted to the actual situation. So, I think for now, as we say, the impact has been relatively limited, limited to Singapore and Belgium. But we just need to watch this space cautiously on what happens in the remainder of the year. I think that's probably the best way to describe it.

Andre Mulder: Dick, can you hand a number on this oil price thing?

Dick Richelle: No, we cannot hand the number because it's also -- it's across the board. It's hard to put an exact number on the combination of the effects of occupancy and rate increase versus [Technical Difficulty]

Andre Mulder: Okay. Maybe and then [Technical Difficulty]

Dick Richelle: Can you mute your line? Yes, thank you. Hello, can you mute your line? Somebody has unmuted and we're having difficulties [Technical Difficulty]. Hello?

Operator: Gentlemen, we seem to have be -- having a background noise, is coming from Andre Mulder's line. We have muted it.

Fatjona Topciu: Yes. Can you please just mute Andre, while we answer his question.

Operator: I have done so ma'am. It is muted.

Fatjona Topciu: Thanks so much.

Operator: You're welcome.

Dick Richelle: Okay. And maybe back to the first question of Andre, on the OCR, 17%. Is that sustainable? Well, normally, this is a quarterly measure. So, that means first quarter is, as already indicated, relatively low in terms of operating CapEx. So, it means free cash flow is in the first quarter, most of the times higher than in the second or third and the fourth quarter. So, you tend to see that the OCR tails off during the year. So it's not the -- it will not be the end result of 2024. That's for certain. Is it conservative to 12%? And the indication we have given this is a long-term OCR. And obviously, the markets are quite strong at the moment, but we also want to make sure that we generate this 12% in markets, which are less strong and weaker. So, for us, it is a long-term minimum target in good and in bad years. So, that's the explanation. So, it may look a bit conservative if you look at today's performance, but let's see how we go once the markets are weaker than they are today. Next question, please, if there is any.

Operator: We do not appear to have any further questions at this time. And I'd like to turn the call back over to Mr. Dick Richelle for any additional or closing remarks. Thank you.

Dick Richelle: If there's no further questions, I want to thank you for participating for joining us in the call. If there's any further questions or updates you want to have, you know where to find Fatjona and the IR team. Thanks for your interest this morning and have a wonderful day. Bye, bye.

Operator: Thank you very much. That will conclude today's presentation. Thank you for your attendance. You may now disconnect. Have a good day and good bye.

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