Royal Vopak Issues Optimistic Forecast, Expects Net Income to Increase in 2001

March 14, 2001
Koninklijke NV (Royal Vopak) Vopak has issued an optimistic forecast for its performance in 2001. With the acquisition of Ellis & Everard, half of Royal
Koninklijke NV (Royal Vopak) Vopak has issued an optimistic forecast for its performance in 2001.

With the acquisition of Ellis & Everard, half of Royal Vopak’s growth target for chemical distribution was achieved. The effect in distribution would be that sales increase by 45%, to Euro 4.9 billion, and operating income increases by Euro 59 million (before goodwill amortization). Integration of organizations in the United States and Europe began in early 2000 and is now well underway. Synergy benefits are expected to amount to Euro 17 million before income taxes in 2002. Non-recurring cost as a consequence of the Vopak chemical distribution organization will be recognized as extraordinary expense in 2001.

Vopak will continue to improve communication with its customers using Internet technology. In the United States, links have been established between Vopak’s ICT systems and those of its customers.

In Singapore, a joint venture between Vopak Terminals Singapore (Vopak’s interest is 69.5%) and Semb Corp will build a third terminal on the island of Jurong. This terminal, with chemical storage capacity of 350,000 cubic meters in the first phase, will provide integrated logistics services to chemicals manufacturers, distributors, and transporters.

Optimization of the terminal network in Europe is progressing. Based on product and customer specialization in the Rotterdam-Antwerp area, petroleum product storage is being concentrated as much as possible at the Europoort terminals.

In chemical logistics, Vopak initially had to contend with low inventories in 2000 due to high product prices. Lost ground was made up in the second half of the year through increased output of the terminals and better utilization in tanker shipping. This trend is expected to continue in the first half of 2001. The good performance of oil logistics in 2000, during which market imbalances boosted demand for terminal services and tanker shipping, is expected to continue in early 2001.

This outlook is based on assumption of an oil price range between US $25 and US $30 per barrel and a soft landing for the US economy.

Based on internal organizational improvements launched in the past year, net income, before amortization of goodwill (Ellis & Everard) of some Euro 18 million and before extraordinaries, is expected to rise by 19% to 21 %. After amortization of goodwill, net income is expected to rise by 8% to 10%. This includes additional financing expense in connection with the acquisition of Ellis & Everard.

Due to divestments in oil and gas logistics (terminals in Pernis and Nijmegen in the Netherlands, 50% interest in IMTT terminals in the United States, 50% interest in Tankstore in Singapore, and the former Paktank Botlek terminal in the Netherlands) operating income fell by Euro 17 million. Improved results at Chemgas and in deep-sea tanker shipping contributed to higher operating income. Tank storage results in Rotterdam and Singapore recovered in the second half of the year. In Tallinn, operating income benefited from increased volumes. High oil prices raised bunker costs and reduced bitumen demand. Portfolio adjustments have led to improved returns compared with 1999.

Acquisitions in chemicals logistics, expansions in Asia, divestments of the former Paktank Botlek Terminal in the Netherlands, and the 50% interest in Gamatex in Belgium on balance lifted operating income by Euro 4 million. Improved results in Asia and in logistic services more than offset lower results in coastal shipping due to high bunker costs.

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