Vopak Hit as Demand for Oil and Chemical Storage Falls

01.03.2013 -

Dutch oil and chemicals storage firm Vopak missed fourth-quarter operating profit forecasts and warned of only limited growth this year as a weak manufacturing sector cuts demand for its services.

The bulk of Vopak's customers are companies in the oil and chemicals industries whose fortunes are determined by the health of the broader economy.

Europe's manufacturing industry has been hit hard by a prolonged period of economic weakness as governments drive through austerity measures in a bid to reduce their debts.

A business survey on Friday showed the sector appeared no closer to recovery last month.

Vopak said its quarterly operating earnings before interest, tax, depreciation and amortization (EBITDA), excluding one-off items, rose 8% to €190.8 million ($250 million), partly reflecting weakness in its home market.

Analysts in a Reuters poll had expected fourth-quarter adjusted EBITDA of €197 million, with forecasts in a range of €192 million to €200 million.

"While this was not a big miss it was also not encouraging," said ING analyst Quirijn Mulder in a note.

"The main miss was in the Netherlands ... probably due to higher costs and lower utilization rates."

Quarterly operating profit in the Netherlands rose 4% from a year ago, while utilization fell to 87% from 95%.

Vopak said it expected only limited growth in EBITDA this year, with new capacity coming online only towards the end of 2013. It had originally set an EBITDA target of €725 million to €800 million for 2013, but achieved that a year early as EBITDA for 2012 rose 20% to €763.6 million.

"The opportunities to grow EBITDA are very limited this year," Jack de Kreij, chief financial officer, told Reuters.

He said there was little scope for Vopak to improve margins at its terminals further, while the utilization rate - which fell to 91% in 2012 from 93% in 2011 - was expected to remain steady at around 90% this year.

"That only leaves capacity and we have limited capacity coming online towards the end of 2013," he said.

Vopak's projects under construction will add 5.2 million cubic meters (cbm) of storage capacity in the years up to and including 2015, and result in total storage capacity of 35.1 million cbm.

Vopak offers oil, chemical and biofuel storage in major ports including Rotterdam, Fujairah, Tallinn and Singapore.