Hello, and welcome to the First Quarter twenty twenty one Results Call. Today, I'm pleased to present Gerard Palidis, Member of the Executive Board and CFO. Please go ahead with your meeting.
Yes, thank you, and good morning, ladies and gentlemen, and welcome to Vopak's first quarter interim update. I will present a few prepared remarks over the next twenty minutes and update you on the developments this quarter. We've also published the analyst presentation on the website, which you have access to. And today we have a busy day. We have our annual AGM.
So we will manage the meeting to meet our commitments that are following this analyst call. But thank you for making time. We will make time for you as well. Best to our ability. Before I start, I have to point to the disclaimer content of the forward looking statement, which you have available, read it carefully, and then we go on to the meeting.
So let's go to the key messages, slide number three. First quarter twenty twenty one was impacted by the additional cost of the Texas winter storm. Notwithstanding, we still improved the outlook for growth project contributions in 2021. During the first quarter, we continued the financial performance and improved occupancy rates of our portfolio compared to last year in a continued volatile market. EBITDA for the first quarter amounted to €200,000,000 This is an increase of €10,000,000 or 5% year on year if we eliminate the negative currency translation effects that were building up in the course of last year.
The increase of €10,000,000 also reflects new contributions from growth projects and as I said the negative industry impact of the Texas winter storm impacting chemical supplies not only in the region of Gulf Of Mexico, but worldwide supply chains. Results from joint ventures including currency movements effects were lower compared to the same period last year. EBITDA performance was supported by our cost initiative and the savings are tracking well. Costs for the first quarter were €149,000,000 which is below 2020 levels and considerably below our cost outlook of €650,000,000 for the full year 2021. Towards the end of twenty twenty, we experienced a gradual pickup in volumes and chemical throughput levels.
However, in Q1, the chemical market was disrupted by events in the Gulf Of Mexico. Oil performance was broadly stable. Our proportional occupancy rate, reflecting our economic interest in our ventures and subsidiaries for the first quarter reached 89%, reflecting improved demand for industrial services and some reduced rented capacity mainly in The Netherlands. Our net profit was €73,000,000 reflecting an earnings per share of €0.58 The cash dividend of €1.2 will be paid on the April 29, following a positive confirmation later today in the Annual Shareholder Meeting. Our financial framework and capital allocation priorities are unchanged.
This quarter, we started operations of the Vopak Moda Houston gas terminal. This is a great step forward, which has been in the making for a long period and we now look forward to the contribution of Moda Houston. Initially, we will start up with some small gas bullet type storage tanks and a large ammonia tank is expected to start in Q3. New capacity expansions in Mexico and The Netherlands were delivered during the quarter and there is some capacity still remaining on those assets and we look forward to the contribution throughout the remainder of this year and years to come. This led to a total capacity for Vopak of 35,700,000 cubic meters at the end of the first quarter.
Total capacity is subject to the continued investment in the portfolio. And as you know, the composition has changed significantly in the last two years. Over Q2 and Q3 this year, we expect to start up the Greenfield Industrial Terminal in Qinshu, China, with an initial capacity of 290,000 cubic meters. Growth projects in general are progressing very well this year and we've improved the outlook for growth project contributions in 2021 to the higher end of the range that we indicated earlier at the end of Q4 last year, the range of 30,000,000 to €50,000,000 We now expect to be at the higher end of that range for this year 2021. Let's move to the comparison of Q1 this year to Q4 last year.
As I said, the start of the year was impacted by the discontinuities in the industry manufacturing base in the Gulf Of Mexico due to the extreme weather conditions. This has a negative impact of approximately €5,000,000 in our EBITDA performance of this quarter and that is a mix between revenue and cost. The effect of the Texas winter storm was felt beyond the Gulf Of Mexico in other regions and caused short supply of product with high chemical product prices and short product supply chains. Moving to Asia and The Middle East now. Performance reflected the improvement post the one off negative accounting adjustment we experienced in Q4.
Our industrial terminal PT2SB, which is a valuable asset in our portfolio of assets, has a solid commercial performance in Q1 twenty twenty one. And our client that sits behind the terminal is progressing with commissioning, starting up, etcetera of its facility throughout the year. LNG and China performance have been broadly stable this quarter. The performance of the LNG division reflects resilient performance of the portfolio. And in LNG, after ten years of continuous and safe operations, Gate Terminal in Rotterdam in The Netherlands will start its major maintenance turnaround to ensure we continue to deliver best in class service for its customers.
The maintenance work has been planned for a long period and will be executed over a period of approximately one month starting the 06/15/2021. This means there is an impact on our operations for a short period of time, which has been well planned between the asset and the customers. Europe and Africa performance mirrors less rented capacity, mainly in The Netherlands, with lower occupancy in chemicals in Botlek and to some extent also in oil. Performance in Americas was negatively impacted by the Texas events, winter storm. The portfolio delivered a return on average capital employed of 10.3%, reflecting also some of the commissioning of the new assets that come into the mix.
Turning to divisional performance trends. We expect that the effects of the chemicals supply chain interruption will phase out during the second and third quarter of this year and the remainder of the year. Supply chains over the world will reestablish itself and therefore supply will be better matched to demand. Performance of PT2SB in Asia and Middle East recovered from the negative volatility we experienced in the 2020 during the first quarter. Europe and Africa occupancy remained impacted by less rented capacity mainly in The Netherlands with lower occupancy in chemicals and in oil.
The China and North Asia division continued to benefit from market opportunities driven by supply chain uncertainties. Performance of Europe and Africa reflect a new portfolio after divestments, operational IMO 2020 capacity and an upswing in occupancy in the oil segment. LNG occupancy rates remain strong and in line with the nature of the long term take or pay commitments. Let's look at investments. We aim to create value capital to attractive growth projects and remain capital disciplined.
In the last years, we have announced and delivered a significant number of projects focused on growing our portfolio and reestablishing the EBITDA momentum post the divestments of late twenty nineteen early twenty twenty. For 2021, growth investments remain to be targeted in the range of 300,000,000 to €350,000,000 And year to date, we've invested €71,000,000 including equity contributions to joint ventures. Guidance for sustaining Search and IT CapEx remains unchanged. We expect to spend annually 30,000,000 to €50,000,000 in IT and complete the rollout digital terminal management system by the 2022 or early twenty twenty three. Moving on to portfolio positioning.
We continue to make significant steps in our portfolio to create long term value. We've chosen for a portfolio with a focus on gas and industrial terminals and our aim is to add new energy and feedstocks in that mix. Current funnel of opportunity support our belief that we are making the right choices and creating momentum to allocate capital into new energy as well. We continue to transform the portfolio and improve the quality of the EBITDA and our company will move towards more sustainable forms of energy and feedstocks. We are excited by future prospects and are committed to continue investing in growth and divest where that's opportune.
Our aim is to allocate the majority of our growth investments to industrial gas and new energy infrastructure. Positive views on chemicals have not changed and our new growth investments in oil infrastructure are expected to be reduced. And will be mostly targeted towards strengthening the hub positions. In Q4 twenty twenty, we announced the acquisition of the Dow assets in the Gulf Of Mexico. That contract is now up and running and starting to contribute to earnings in the course of 2021.
Strategy execution. Moving on to our industrial terminal and new energy developments. During the quarter, we had good progress with greenfield industrial terminal construction. We closed 2020 to Dow acquisition that I mentioned. And we're also making good progress, as I mentioned already in this opening remarks with Kinshu in China.
Later in the year, we expect to take an FID on another industrial terminal in China. And we expect the industrial terminal in Gulf Of Mexico, Corpus Christi to start its operations this year. Moving on to Slide nine. There you see an exciting new development and this is all about capital allocation and not about revenue. And I mean that for the left hand side of this slide, the hydrogen bromine flow battery.
As we have previously mentioned, Vopak will play an important role in facilitating the energy transition. We are uniquely positioned because our existing infrastructure plays well into the requirements of the new infrastructure. Vopak has entered into a joint ambition with Elastor to scale up the capacity of hydrogen bromine flow batteries in a period of two years and then further develop it to industrial scale. The first efforts, the first pilot will be looking at a storage of 200 kilowatt hours and a power of 100 kilowatt hours or sorry kilowatt. That's relatively small, but we will scale up towards 503,000 kilowatt hours over a period of two years two years if we are successful.
The first effort, if you imagine how big is that trial or pilot, is a 40 foot container. It just gives you some dimensions. Moving on. To the right hand side of the slide. In the 2020, we have approximately 9,000 cubic meters of pressurized LPG storage capacity brought into operations in Flissinger, matching the growing interest and market commitment for additional pressurized storage capacity.
Our broad expertise in handling pressurized liquid gases is very useful for any potential hydrogen storage in the future. Turning to proportional information, As we've pointed out, we have more and more interest into joint ventures, which means that the reported consolidated EBITDA and the proportional EBITDA, which reflects our economic interest across all our assets, start to look different. And you see the delta between the consolidated EBITDA of 200 and the proportional EBITDA of two forty six. The two forty six of course is our economic interest. Our proportional occupancy was 89% in the first quarter and reflect good performance of the joint venture oil terminals and continued strong performance of our joint venture gas and industrial terminals.
Let me now turn to looking ahead. New contributions from growth projects to replace EBITDA from divested terminals in 2019 and 2020 are expected to be at the higher end of our range for additional EBITDA in 2021, the range of 30,000,000 to €50,000,000 Of course, will be subject to market conditions and currency movements. We expect to manage the cost base including additional cost for new growth projects to be managed below the range of $6.15 that we mentioned earlier. So good momentum on projects, good momentum on cost. We confirm our ambition to allocate growth capital of 3,000,000 to €350,000,000 and in the coming years, as I said already, the majority of our investments will be towards the categories indicated on the slide.
Let me summarize the key messages. We've proven to be able to adapt to the changing business dynamics of 2020 and manage well the volatility in the beginning of twenty twenty one. We've grown our EBITDA by 5% compared to a year ago and occupancy has improved. Also last year, in the full year, we've grown our EBITDA relative to the year proceeding. So Vopak is proving robust in its financial performance and committed to its strategy, which is in full execution.
To support that, we will watch our cost and we will manage that below what we thought was possible when we set the target for 2021. And that target was $615,000,000 including the new assets we expect to come in below that. With that, I want to move quickly to Q and A. Again, we have a full day. We've allocated ample time, we hope, for Q and A and look forward to discussing the results with you today.
So operator, if you could open the lines, and then we can take some questions.
Thank you. Our first question comes from the line of Thomas Adolph. Please go ahead.
Good morning, Gerard. Few questions for me, please. Just firstly, on CapEx. Just comparing your presentation from 1Q versus the presentation from the full year results, and the bar looks a bit lower. I was just wondering what has changed from, you know, when you presented 4Q results or whether it was just kind of a mistake in the presentation.
So that's just to clarify on that. And then secondly, just on the occupancy rate for subsidiaries, it's come off to 88% from 90%. Presumably, it's a function of the oil contracts rolling over. Just wondering what the outlook is for the rest of the year. Yes.
There's a bit more volatility, but clearly, the shape of the curve doesn't look anywhere as good as as as last year. So what's the potential range of outcomes that you see? And then maybe finally, just on the throughput business, you know, you've, highlighted chemicals remains difficult, and perhaps the industry is bringing forward maintenance to to to make to take benefit from, you know, the the plants being already shut in. Obviously, that has an impact on your business in in in The US, but shouldn't that shouldn't that benefit your business outside of The US? So just trying to kind of better understand the dynamics there as well.
Thank you.
Yes. Thank you, Thomas. The investment question, that was not deliberate. So you've looked clearly more closely at the slide than we intended. There's not supposed to be a subtle or explicit change to that slide at all lower to the message.
The 300,000,000 to €350,000,000 is what we aspire to. Most of that is in motion. There's an element of opportunistic investment, of course, where you things may happen or may not happen. That's mostly when you negotiate on certain assets in M and A situations. And M and A, I'm and you know how we mean M and A.
It's not company M and A, but it's asset M and A. And that I would have given you exactly the same response at Q4. So there's no daylight in that at all. So apologies if we didn't quite reflect that on the slide. That was not intentional.
On the occupancy, occupancy has done well compared to a year ago. Compared to Q4, you see a little tailing off. I would hope and expect that we can have a more normalized year in 2021, where we can see some of that restore itself again and have a more normal fluctuation of occupancy. What you see particularly, which is not being very helpful in the occupancy is the item I've mentioned before, which is the utilization of the Panama assets that I was not very optimistic on that in Q4 and that hasn't changed. We are fighting hard to create that market to get proper permits from the government to boost that business.
But it's hard work. So there, I'm I'm I'm not spotting a momentum change yet despite our efforts. The rest of occupancy, I think, is more normal. We hope, obviously, to get some support out of the chemicals market, I. E, when I say we hope, that's the bit we don't control, how active that market is in its throughput.
Last year was for clear reasons not good for throughput. This year looked to start to be better, but was interrupted with the events in Gulf Of Mexico. We hope that unfolds over the or reverses over the quarters to come and across 2021 and 2022, see that that chemicals activity in the world is reestablishing itself. The problem is mostly the tightness of the supply into the demand. So if you have tight supply, then it is absorbed immediately into demand, which means that infrastructure and storage is less in demand relative to when that supply reestablishes itself.
Now to an extent, you're right, you would expect, okay, maybe you get the alternative flows of products from The Middle East, in particular, into Europe for instance to create some additional activity. But you have to realize that 70% of the ethylene capacity in the Gulf Of Mexico was taken out. Now that is not from a supply point of view into the supply tightness, something you just eliminate worldwide by rediverting some flow. So I think the chemicals industry was quite jubilant in the prices that they experienced in Q1, at least for those that were up and running, because if you're not up and running, you cannot enjoy those prices. But the prices as such don't influence us that much in FOPAC.
What we need is the molecules, the activity and the absolute prices don't impact us on the quarterly performance. It does influence us in the long run-in terms of chemicals investments. So if the chemicals companies do well, then over time that will trigger investments for us. So yes, it should restore that throughput. The timing is a bit difficult to read.
I would say '21, '22, that should come back, hopefully quicker, and we deal with that. There's nothing more I think you asked. So I think I answered all the questions, Thomas.
Yep. Thank you.
Thank much. You you, Thomas.
And the next question comes from the line of David Kerstens. Please go ahead.
Good morning, Gerard. Three quick questions, please. You highlighted the drivers for the impact on occupancy rates in Europe and Africa. I was wondering what is the reason that occupancy came down in Asia, Middle East? I think you said two points on a proportionate basis.
Is it still being held back by capacity out of service for maintenance? And when do you expect that, that will come back on the market? Second question is around the impact of the maintenance at the Gate LNG Terminal. Can you quantify the EBITDA impact of that terminal being out of service for about a month? And then finally, did I understand correctly that the Dow acquisition did not yet contribute to earnings in the first quarter?
Thanks very much.
Yes. Thank you. Let me first deal with Gate. Gate has been planned for a long time. As you can imagine, the facility the LNG facility here in The Netherlands has been operating uninterrupted for a period of ten years.
And at a certain moment, you have to do your maintenance. This has been coordinated in great detail with the customers. The effect the shutdown will play out over Q2 and Q3. We will not give specific guidance on that effect. And in terms of supply, clients have obviously been planning for this for a long time.
So alternative arrangements will have been made by them as appropriate. But we don't specify an EBITDA number, David, on that. Singapore or Far East, Fujairah was a little bit lower on the occupancy. We saw a little bit lower occupancy in Pakistan. We saw a little bit lower in Singapore all relative to Q4 because compared to a year ago, it's all a lot better.
Singapore is still working its way through. What the points that we highlighted in 2020 and the other bits and pieces are sort of normal market movements, I would qualify them. So hopefully, over time, Singapore brings that occupancy a bit up. In Europe, you have the same effect in of a slightly lower occupancy that was mainly in Europoort and in Bottlec. It's a combination of some normal market movement and shutdowns.
Europoort is expected to have the majority of its shutdown and maintenance activity in the first half and then a better availability in the second half of this year. What else did you ask? You remind The Dow acquisition.
The contribution of the Dow acquisition.
Yes. The Dow acquisition across Q4 and Q1 had a modest contribution. The buildup more relevantly across the entire 30,000,000 to €50,000,000 and as I said, we will we are confident we can get to the high end of that. Is more back end loaded than front end loaded. So you have a lighter contribution of project contributions in Q1 than we look forward to in the remainder of the year.
And that will play out over the remainder of the year. The South African market is still building up. It's doing well asset wise in line with the market that we've seen in South Africa. So the asset is doing well, but it's ramping up in its earnings potential. Same for the Dow, same for other projects in the portfolio.
As I said, its contribution is building up and more in the second half or even third quarters than in the first quarter.
Okay, great. Thank you very much.
Thank you, David.
And the next question comes from the line of Lukas van Beek. Please go ahead.
Yes. First of all, I have a question on the oil market, if you can comment on the dynamics there at the moment. And my second question is still on the Gater. And I understand that you don't want to give a specific guidance on the impact. But can you talk us a bit through the mechanics?
So you said that customers are prepared. Does that mean that they will schedule their throughputs in such a way that the month that the terminals offline will have a limited impact on revenues? Or should we interpret it differently? Are there any costs that will be expensed during this month of maintenance that we should take into account? So how does it work?
Yes. On oil dynamics first, oil market is the contango is limited at the moment to jet. But the whole point of backwardation and contango I think is less relevant than it used to be in the past. It's still to an extent relevant, but less relevant. The oil markets in general are behaving in a more normalized manner now.
Production, of course, was completely taken by surprise by the demand falling away massively last year in a short period of time. Production adjusted, so supply adjusted and now demand is coming back and then supply will adjust back into that. The oil prices have been in the second half of last year when oil prices already were switching to backwardation. In fact, the irony, of course, is that the oil prices continue to rise when the market was in backwardation. So sometimes these pricing dynamics are, well, difficult to explain, at least the perceptions of it.
What we look at is a more normalized market. The only one that is in Contango is the jet. And the jet will obviously adjust to people in the world traveling again or not. And that if the world can move to a more normalized and more welcome future than what we experienced in 2020, the sooner the better of course for everybody. But it doesn't preoccupy us at the moment disproportionately compared to the attention it was getting a year ago.
And we're very pleased with the fact that we've, well, gotten to better occupancy across the portfolio. If you look at gate, when I said it's been planned for a long time, that means that you need to do the engineering of course and the planning of all the activities. And the clients, the customers of ours, they need to make their arrangements to manage their supply and demand flows of the product. The terminal itself is not available for one month. That effect will be spread out over the two quarters.
There will be some expensing. I'm not commenting on revenues and I'm not commenting on EBITDA, But it's clear that the facility is not available for four months and that effect will be spread out over Q2 and Q3.
Thank you.
And the next question comes from the line of Tys Baerkelder. Please go ahead.
Yes. Good morning, Taylor. First question is on LNG, the 10% on all your newly planned projects. I think, meanwhile, we've seen seven or eight preannouncements of projects you're working upon. But also this quarter, it seems no progress in these projects.
So can you explain what is happening there and whether we maybe even risk write downs when these projects do not come to the market? Second question is on guidance. You were a quoted company talking with investors who want to make a return. I want to see that the company has an ambition to reach certain financial targets. We are not seeing those financial targets.
Market is not seeing them. So when can we expect clearer guidance? And then third, that's maybe more a remark or a question on behalf of a client of mine. What can you maybe give some clarity on how board's discussions are going on, let's say, the share price of OPEC being flat for, let's say, ten years in a row despite all the COVID announcing changes, new projects, etcetera, etcetera?
Okay. Thanks, Thijs. Let's first talk about LNG. The LNG portfolio is developing well. We now have four assets in the portfolio.
We are planning on projects and spending time and effort on Germany, China. We've mentioned Hong Kong before. We've mentioned the L and D data center linked development with Keppel in Singapore. All those projects are progressing. They are progressing at their own speed.
Germany, the main issue in Germany is the whole permitting discussion in Germany. The commercial side is quite healthy. And from supply into the Northwest European market, it's a very attractive proposition. We are continuing to spend money developing that asset more than we would normally do pre FID. So you're right there.
We have been highlighting it for some time. But it's not we're not deviating from the past. We continue to develop it and the competition has actually folded. There was at a certain moment a competitor, one or two sites, they have folded. And I think everybody is now banking on the success of Germany LNG by Vopak, which is a joint venture effort again.
In terms of China, China LNG, it's a new facility on an existing site of Vopak. So it plays to our strengths. It has everything going forward. It has a new partner, which is the local demand aggregator. And we are continuing to build the or design the the facility.
We the jetties have best I remember, but I didn't check it recently, but the jetties have been made ready. And also there, you need to tidy up on some of the permits and the regulatory issues. Again, it's progressing well. It's also same as Germany hard work, but you need to take 1,000 steps and we're taking them step by step. Hong Kong is an LNG import facility, which is exactly well positioned in the energy mix ambition of Hong Kong.
From that point of view, it's an attractive proposition. It will be an import facility with a floating storage and an offshore buoy to connect to the shore. The point there is to finalize the commercial negotiations, and that is a binary thing. It either happens or it doesn't happen, commercial negotiation, it looks attractive. It looks good.
But the deal is never done till it is done. The advantage of Hong Kong is we're not spending money on it like China or Germany. So from that point of view, the fact that Hong Kong is a bit more binary is not an issue, But it's still looking good. Singapore is progressing well with Keppel. And then we made two announcements on South Africa and on Australia, and they are very early days.
They are made together with interested parties to to develop that, but there's little money involved on a relative scale and therefore not a concern. So I'm not concerned about the fact that it's costing us money. Yeah. Of course, I am. But I think the the business proposition is okay, and the risk reward is okay, Thijs.
On the reflections on the share price, of course, that is not a thing that we would comment on. However, we obviously have noted that share price has not done well recently. It's in a way disappointing because if you look at the EBITDA momentum, the proportional EBITDA, the robustness of the portfolio, our credentials in new energy as a path into the additional path into the future. It's all fully in line with our strategy. The operational momentum is good.
The cash flow momentum is good. The balance sheet is in good shape. We're paying dividends. Last year, we bought back some shares. So sometimes it's maybe a bit puzzling for us why the market does what the market does.
But I think the and it plays a bit on your point on guidance. We are certainly not going to entertain guidance on a quarterly basis. I think there's that is a distraction which is not adding any value for that short moment that it is relevant. We manage the company on short term performance. We will be held accountable each quarter and each year.
We give guidance on our return ambitions 10% to 15% on capital employed. Our added EBITDA from growth 30,000,000 to 50,000,000 our cost ambition, so you can take a view on that. Where it is more difficult is market conditions. We've seen extreme volatility last year in foreign exchange and in oil. I think if we if we look through that, particularly foreign exchange, I think the results of the company are are good.
I will not say very good because if I would say very good, then I would dismiss the fact that we believe they could be better. So the results could be better if we had not had held back on the projects last year due to the global difficulty to deliver projects in supply chains that were not functioning on the construction side. And the foreign exchange has just not helped us. But on that account, I say they are good. The company is extremely healthy.
We have a compelling strategy. There's no other company comparable to us across the space. We're the global leader in industrial terminals. We are the one of the few companies that can actually, in our space, talk about new energy with credentials. So I'll let the market decide whether that combination of distribution of dividends, dividend stability, growth of the portfolio, strengthening the EBITDA and the strategy is appealing or not.
But share the fact that the share price is in my view disappointing relative to the quality of the company and I have full confidence in the quality of the company. Now that also answers implicitly your request on guidance. The things we control, we give guidance on. The things we don't control, foreign exchange and volatility in markets would make it extremely difficult to have a sensible discussion about the guidance. So we are still not going to give more guidance than what we give at the moment.
And if you say we don't give guidance, literally that is true on EBITDA. If you look at the component parts, I think we do give a fair bit.
Sorry to interrupt, but as a board, you discuss with each other and and you make decisions with each other into you must have have an ambition where you want to stand in three to five years from now. Let's let's look at 02/2025. VOPEC, where where do you want to stand? What kind of assuming normalized market? Assuming flat Forex, we all know that Forex is volatile.
That's for all the companies we cover. And if forex changes, yeah, it's the market will understand that you changes that you change that long term guidance. But to me, it's absolutely not feasible where do you want to stand as a company in 2025 with what kind of financial returns, with what kind of capital employed. That's that's simply what I mean, and and that's, I think, what investors need. And only if you, as an infrastructure company, make clear where you want to stand in five years or ten years from now, whatever, also financially, then in my view, investors will be willing to follow or not follow you, but but then at least it's clear where we as or where the shareholders can keep U.
S. Board accountable to.
Okay. Noted, Thijs. I've given you my response, but I've noted your input. I think the longer term ambition is a fair point. If we can stay away from quarterly or annually and pull it over to a longer horizon, I have I have sympathy for that, and we do discuss that.
So leave that thought with us, and we'll we'll see what what that brings. Thanks.
We have one more question from the line of Kieran Mulder. Please go ahead.
Yes, good morning. Can you hear me?
Yes, Kirijn. Good morning.
Yes, good morning, everyone. Yes, my questions are focused on expansion. First of all, can you give me an idea about the expansion impact in the first quarter? And then the second is, you have raised your guidance for the expansion, 30,000,000 to €50,000,000 to the high end of that range. What's the reason?
Because in my view, if I look at the tables, then it looks like there's some delay here and there, maybe slightly, but maybe in in in maybe in Bottlec, maybe in Corpus Christi. So that does not contribute. And the lockdowns are not over, so that means also a risk of delay. So is there can you maybe update us on situation on these projects and why you are raising your guidance on this yes, in this respect?
Yes. The contribution in the first quarter was about €5,000,000 maybe a little bit more, 5,000,007 million euros thereabouts. So relatively light compared to what you what we expect in the remainder of the year and building up. That is relative that is relative sorry, that's relative to Q1 twenty twenty. If you take the range of 30 to 50, when we set the range, Kirijn late last year at the Q4 results, we of course already took a few on the factors that you mentioned.
And we have derisked some of that in our progress and therefore are more confident than we expressed at the end of Q4 with sort of conservative 30 to 50 range and we're moving So that I'm not saying that the factors you mentioned are not factors in the market, But relative to how we assess those in Q4, we are confident that we can safely move up the range.
Okay. And then and and then with regard to to your cost level, let me say, from some to below $6.15. Yeah. As I am well informed, that does in let me say that does include, let me say, the expansion. So your running rate at 149 indicates 600.
Is that is that the calculation? 600 underlying plus €10,000,000 for related to the expansion further expansion? Is that the correct idea?
Yes. The idea is correct. I don't comment on the exact numbers. Otherwise, I would have given you an exact number. But yes, the logic is absolutely correct.
And we are totally on top of our costs with more even focused we anticipated at the start of the year. And it's proving to be productive, and we'll have a payout on that, I hope.
And do you see more opportunities in cost containment or not in the
we do. And it's an aggregate of well all opportunities that are being scrutinized constantly and it's across a wide range of activities. The only thing that doesn't work is the utilities. The utilities last year was extremely low because of the prevailing commodity prices. And now we like everybody are faced with utility bills that are higher than a year ago.
But in aggregate, almost all the costs are pointing in the right direction. What world could be even be better if we had lower utilities and regretfully in some places, the port authorities also decide it's a good moment to increase their rates or their real estate taxes. And that is very unfortunate. Certainly, when business should be promoted, they decide exactly opposite, which is unfortunate and I would say shortsighted, but that is reality.
Okay. And then my final question, if I'm allowed. So on the effect of the winter storm in Texas, there's a direct effect in America and indirect. Did you calculate complete impact on your business of the winter storm in third quarter and maybe some impact on the second quarter?
No. What we did is we well, no and yes. What we did is we assessed it at approximately €6,000,000 which is the combination of let's say the core business and some cost effects. And when I say core business, mean the revenues. Some cost effects that €6,000,000 is a Gulf Of Mexico area number.
So it's not a worldwide number. Worldwide, I don't think it was a plus or a minus for us. It just meant that products came from different source, I. E. Our customers sourced from different locations if they needed to find different supply points.
Europe for instance was the one who responded to Europe is The Middle East. If you look at for instance the styrene market, the styrene market, the majority of styrene in Europe comes from The U. S. It comes from Houston and it comes from Baton Rouge. Imports from Saudi are only 14%, and and I'm talking the the Ara region there, Amsterdam, Rotterdam, Antwerp.
Mhmm.
So if you have this interruption from from the from The US, you you will see that people like The Middle East will will start ramping up a bit. As it happens, this is exactly the period where we are starting up our styrene facility in the bottleneck. So if you now have a market that is dislocated, a tough place to start. So that doesn't help. But we didn't put a number on the rest of the world.
Okay. So thank you.
Okay.
It's going well, I think. Is there any other question?
There are no further questions. So I'll hand it back for closing remarks.
Okay. Thank you all. What resonates with me is the continued question about guidance. The rest is I think more easy to handle almost the movements in the quarter and the outlook. As I said, we call it a good, but slow start of the year.
We've grown our business again by 5%. Our initial first small steps in new energy are now becoming reality. The portfolio is showing a more robust composition of EBITDA, I. E. We've replaced the EBITDA of assets that we thought would not create long term shareholder value additionally with higher quality EBITDA.
And the ambition of the company over the quarter and over the year to stay away from that, but into a translation as Therese made the point, do think is fair. We have that of course. We always hesitate on it, but we will consider it because I think Thijs made the point very eloquently, but it's not an easy point. Leave it with us again. We will think about it.
Thank you for attending. Thank you for taking the time and talk to you soon.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.