Hello, welcome to the Vopak Q3 2019 Interim Update. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question answer session. Today, I'm pleased to present Gerard Paulides, CFO of Royal Vopak. Please go ahead with the meeting.
Yes, thank you, operator, good morning, and welcome to the Interim Update of Royal Vopak for the Q3 2019 results. In the next 20 minutes, I will update you on some of the developments and the financial statements. My prepared remarks will refer to the analyst presentation as published on our website this morning. Before we start, I would like to refer to the disclaimer for forward-looking statements, which you're very familiar with. The clarification in this statement should be taken into account with respect to any looking ahead comments and/or guidance provided. Accordingly, this disclaimer is also applicable to the entire call, including our Q&A. Let's go to the key messages for the quarter. We've significantly increased earnings per share this year, and also this quarter delivered robust financial performance.
We delivered on our strategy execution by taking important steps in our portfolio transformation this quarter through divestment and through new capital investment. Earnings measured as EBITDA came in at EUR 625 million. An increase of more than EUR 70 million compared to previous year. This reflects strong aggregate performance, including our gas and industrial joint venture terminals and including positive lease accounting effects, IFRS 16. Year-to-date earnings per share of EUR 2.07 significantly increased and grew by more than 25% compared to last year. In terms of strategy delivery, we commissioned 1.4 million cubic meters of new capacity, including the industrial terminal in Malaysia and a gas export terminal in Canada. This quarter, we acquired an LNG import terminal in Colombia. Our LNG portfolio now stands at 1.2 million capacity, now covering four regas terminals.
In addition, we have three specified developments ongoing for new business development opportunities in LNG. This quarter, we also sanctioned a new greenfield industrial terminal of 290,000 cubic meters for chemical manufacturing plants in Qinzhou in China. We announced chemical capacity expansions of 90,000 cubes in Antwerp and in Altamira, Mexico. In September, we completed the divestment of the oil terminals in Amsterdam and Hamburg. The IMO conversion projects in Rotterdam and Singapore are being delivered. The capacity is mostly operational and will start to support results in Q4, as will Panama. Looking forward, the targeted cost level of EUR 676 million for 2019, as communicated last year, is expected to be outperformed, subject to currency exchange movements. Our cost focus is supporting our EBITDA delivery. Lastly, our digital transformation is progressing well.
This quarter, we delivered a new release of our cloud-based Vopak terminal management system, which will go live in Panama and Singapore before the end of the year. We will have seven terminals live and expect to more than double this number by the end of 2020. Let's move on to some of our key figures. Financial performance in 2019 was robust, despite a low occupancy rate that reflects oil market conditions at hub locations and planned conversion activities related to IMO capacity, particularly in the second and third quarter. Corrected for IMO activities, occupancy rates stay above 85% year to date. This year, we delivered EUR 537 million cash flow from operations, demonstrating the resilience of the portfolio. Net profit was EUR 264 million, resulting in an earnings per share of EUR 2.07. A significant increase compared to last year.
We delivered a return on average capital employed of 12.4%. Turning to some year-to-date numbers. Year-to-date 2019 versus 2018. This year, we provide pro forma numbers that exclude the IFRS 16 effects to allow a like-for-like comparison with previous years. Reported EBITDA of EUR 625 million. Included contributions from divested terminals in Amsterdam, Hamburg, and Algeciras of around EUR 55 million. Plus contributions from new assets like PT2SB, the Ridley LPG export terminal in Canada, and LNG in Pakistan. The Europe and Africa division reduced financial performance due to a high amount of capacity that was out of service for IMO 2020 conversion projects in Rotterdam. Performance in Asia and the Middle East reflect a strong contribution from joint ventures, including the new industrial terminal in Malaysia and the oil terminal in Fujairah that operated at much higher occupancy rates in 2019.
This was, however, offset by performance in Singapore. Performance in the Americas was supported by the good business environment in the chemical segment and the commissioning of the new LPG export terminal in Canada. China & North Asia benefited from restarted operations of our industrial terminal in Haiteng in China mid last year. The performance of the LNG division benefits from the growth of the portfolio through the acquisition of the LNG import facility in Pakistan. Turning to some divisional performance trends. Occupancy rate in the Europe & Africa and also in Asia & Middle East division reflect conversion activities, particularly Rotterdam and Singapore and Q3 to Q2. The chemicals and gas occupancy rates have been stable, which is mostly noticeable in the numbers of the Americas and the LNG division. Let's have a look at Q3 versus Q2.
EBITDA for the third quarter came in at EUR 202 million, explained mainly by a negative delta for Singapore and the reduction in Europe & Africa was primarily explained by a soil remediation provision in Belgium, while performance in Europoort was at the same low occupancy level as in Q2. The Asia & Middle East division on balance was comparable to Q2 and reflect the weakened performance in Singapore from IMO conversion activities, which intensified in the third quarter but was offset by strong performance from the new assets in the portfolio, including a settlement for the allocation of historical results by the partners in PT2SB in Malaysia. Apologies. Vopak's ultimate shareholding in PT2SB is 25%, but for 2019 and 2020, the economic shareholder for the JV result and the dividend is 30% due to a preference share structure that Vopak currently holds.
The results for global functions, corporate, and other activities decrease as EUR 3 million insurance costs were included in this quarter. A brief update on the composition of our repositioned fuel oil exposure. We're converting our fuel oil network for new specifications as per IMO 2020 and divested fuel oil positions in Estonia and Hamburg. We moved to a fuel oil portfolio of roughly 2.5 million cubic meters for very low sulfur fuel oil and flexible lineups, and also keep some capacity for high sulfur fuel oil, mainly in Rotterdam. Most of the fuel oil capacity has now been converted and delivered back to the market with commercial contracts in place for practically all capacity. Singapore is still delivering some capacity into the fourth quarter.
At the same time, Panama is starting up, opening a new position at the Atlantic side of the Panama Canal close to U.S. supply sources. Commercial coverage for Canada is building up nicely and to expectations. Occupancy rates reflect current market conditions at oil hub terminals and the execution of conversion activities for IMO. Early 2019, conversion activities started in Rotterdam, and in Q2, we initiated the IMO conversion in Singapore with out of service capacity at its peak end of Q3. The impact of temporary IMO conversion projects is 4%-5% on overall occupancy in this quarter alone. The occupancy rate also reflects some operational downtime as well as some planned maintenance events.
For example, at our chemical terminal cluster in Rotterdam, we face some underperformance due to infrastructure downtime, and at the same time, we are expanding with new styrene capacity at Botlek in Rotterdam, as announced earlier. This capacity will come in in 2020. We make interventions where needed to resolve these operational issues to enable higher sustained levels of occupancy rates and performance. This is also happening at Penjuru in Singapore, and it is part of our sustaining CapEx investment, where we spent in total EUR 750 million for the period 2017 to 2019. All of this is reflected in our present occupancy rate that is momentarily below the range of 85%-95%. In the 85%-90% range, if we correct for the planned IMO conversions, which have now come back online in Q4. Moving on to our cash flow performance.
This year, we delivered cash flow from operations of EUR 537 million. We delivered EUR 537 million cash flow from operations and a year to date sustaining service and IT investment of EUR 206 million. We have investment momentum in 2019 and invested already more than EUR 425 million year to date in our growth projects, in line with our outlook. Our debt position decreased to EUR 1.8 billion as a result of the divestments of Amsterdam and Hamburg. The senior net debt to EBITDA ratio was 2.81 for the end of September. With our portfolio performance and strong balance sheet, we are well positioned to continue to allocate capital to the growth of our global portfolio in 2020 and beyond, and make distributions to shareholders. Let me comment a bit more on investment phasing.
We break down our investments in growth investments and other investments. In the period 2017 to 2019, we said we would expect to invest approximately EUR 1 billion. We remain within that range. Also for sustaining CapEx and service and IT, we expect to stay within the ranges we indicated, EUR 750 million and EUR 100 million respectively. We are well positioned to continue to grow the portfolio. For 2020, we can see investment levels in the range of EUR 3 million-EUR 500 million again, subject to developments in the business environment, of course. At our Q4 results, we intend to give some further guidance on the other parts of our investments, namely sustaining and service and IT CapEx, using a similar three-year period as we've used in the past.
In the meantime, upon completion of the Algeciras transaction, the third one out of the Northwest European oil divestments, we will announce how we will use the divestment proceeds and the net gain we realize in line with the strategy and financial framework. Let's look at portfolio transformation. We've announced significant projects in 2019 with the focus on growing our portfolio towards industrial, chemical, and gas terminals. The divestment of some of our European assets has a material impact on the portfolio shift and reduces the oil contribution. Looking further ahead, we continue to explore opportunities in new energies as well and develop, for instance, the hydrogen value chain. Let's now look at two of our portfolio transformation highlights in more detail. In September, we acquired a 49% shareholding in the LNG import facility in Colombia.
This is the first LNG project contributing to our target to take final investment decisions for one to three new gas terminal opportunities in the period 2019 to 2020. In the last 12 months, we've doubled our LNG portfolio and now operate four import terminals. This year, we invested almost EUR 100 million in LNG projects for the acquisitions in Pakistan and Colombia. That represents almost 25% of our total investment in growth. We're also developing three new LNG projects in Hamburg, Hong Kong and in Zhangjiagang, China, near Shanghai. Another highlight is the new industrial terminal project in Jinzhou in southwest China that we announced today. This new industrial terminal project will have an initial capacity of 290,000 cubic meters and will be used for the storage of methanol, acetic acid, and other chemical products.
The industrial terminal is covered by a long-term commercial contract and is expected to be commissioned in the second half of 2021. This is also the first project to realize our target to land one to three new industrial terminal opportunities in the same period, 2019 to 2020. We continue to focus on new industrial terminal projects in Asia and in the U.S. Gulf Coast to realize more of these opportunities. Turning to non-IFRS proportional information. We provide additional performance insights on a comparable basis for subsidiaries, joint ventures, and associates by means of proportionate consolidation based on the economic interest of Vopak in our entities. These numbers are becoming more important as the relevant share of JVs and associates in our EBITDA is increasing. The year-to-date EBITDA from JVs is around EUR 250 million on a pro forma basis, or currently 37% of the total proportional EBITDA.
The trend in IFRS proportional data is the same as the trend in IFRS reported numbers. To stress the relevance of the proportionate number, we've added the EBITDA number in the headline table of our press release. Let me go back to recap the key messages before we turn to Q&A shortly. We delivered robust financial performance and increased earnings per share by more than 25%, mainly on the back of the aggregate performance of subsidiaries and joint ventures. This quarter, we've taken important steps in the delivery of our strategy and the portfolio transformation. We completed the divestment of two oil assets, we've acquired an LNG terminal, and started a new greenfield industrial terminal project in China. We will maintain our focus on performance delivery and long-term value creation and look at our diversified portfolio with confidence for the period ahead of us.
Let me close out with some more looking ahead statements. Our IMO capacity conversion is mostly delivered, and the cost program is being executed as planned. We expect to exceed the plan. In terms of growth, we continue to transform our portfolio in line with our strategic direction. On the back of a good business development funnel, we expect our growth investment momentum of 2019 to continue, and expect investment levels in the range of EUR 300 million-EUR 500 million for 2020. That ends my prepared remarks, and we will now open up the lines through the moderator to go into your questions and answers. Thank you. Operator, if you can take over the call.
Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Luuk van Beek from Degroof Petercam. Please go ahead.
Yes. I have two questions. First, on the CapEx level that you indicate for 2020. You indicate a range of EUR 300 million-EUR 500 million. Is the lower end of that range fully based on decisions you have already taken, or should you take further decisions to reach the lower end of that range? My second question is on the IMO 2020 capacity that you have converted. Has that already been available and in use from the start of the quarter, or is it gradually building up and is the impact on Q4 still limited?
Okay. Luuk, thank you. The EUR 300 million-EUR 500 million to a large extent is already supported with investment decisions. We have also line of sight for further investment decisions we still have to take. Therefore, I'm confident we will be at least investing EUR 300 million, but the range is fair. I think we might be pushing towards the higher end of the range, if we are successful in 2020, and I don't see any reason why we wouldn't be. IMO, of course, a big topic. It has dominated many of our discussions in 2019, and to an extent, even 2018. Our activities have been very successful. We've delivered the conversion at the indicated cost of EUR 40 million. Rotterdam is virtually done, and will start contributing in the fourth quarter and in 2020. Fujairah is done, is already contributing.
A little bit masked in the Asia & Middle East numbers because of the downtime in Singapore. Singapore is the toughest one, in terms of the Q3 performance. Singapore almost took out their entire fuel oil capacity, and was therefore operating at a certain moment, close to zero for fuel oil capacity. They are rebuilding that now or starting that up, so they will start contributing as well in Q4 and towards 2020. The commercial coverage of all that capacity is very good. It's virtually sold out, subject to operational flexibility that we always wish to maintain. Secondly, there's a bit more operational maintenance taking place in Singapore, but all of that would be in normal operational boundaries that you would expect. Panama is starting up.
Panama has fuel oil capacity on the Atlantic side, as opposed to the traditional dominance of bunkering activity in the Pacific side, where Vopak, by the way, was not present. We have developed a position on the Atlantic side, and that will start contributing from Q4 as well. In Q4 and in 2020, we expect to have good utilization of our fuel oil capacity, and contracts are well-established. Panama still has a little bit to go because they are a new greenfield development. However, we're very satisfied with the level where we already have commitments. That's a bit of a different discussion than Fujairah, Singapore, and Rotterdam. Most catching up has to happen in Q4 by both Rotterdam and Singapore. We also incurred some costs, Luuk, in cleaning costs, which also impacted Q3, which goes together with the conversion activity. That completes my comments on IMO.
Thank you.
Okay. That's very elaborate. Thank you.
The next question comes from the line of Quirijn Mulder from ING. Please go ahead.
Yeah, good morning. Quirijn from ING in Amsterdam. A couple of questions on the IMO 2020. It does look to me that you are not as ready as you would like to be for the fourth quarter, and that you are still a couple of things have to be done in the fourth quarter. Is that correct, that assumption? Or you say it's completely according to plan, and we are ready for our clients? My second question about the industrial terminal you are going to build in China. It's a 51% stake. Can you explain to me why that's possible that you have now a majority stake in an industrial terminal and not a minority stake or joint venture stake, like Caojing 50% only? What's the consequence of that?
Okay. First of all, the IMO readiness. I think you are not reading our message as we intend. Let me explain it better. We are virtually done, and the timing is as it should be because the market was also not earlier ready to take supply and demand decisions on their flows. You now see the activity of the upstream refineries and the downstream shipping companies, which has allowed us to timely book the capacity. We have virtually sold out, as I said, apart from operational ranges. Rotterdam is done. They have lifted their first cargos or brought their first cargos in in September. Fujairah is already working to capacity, and there's different elements in the mix there. Of course, given the regional position of Fujairah. Fujairah is at satisfactory or strong occupancy relative to a year ago.
The main catching up, I think, relative to those two assets is in Singapore in executing the activity, but they are also on schedule. I only qualified the Singapore statement because of further, let's call it, maintenance activities in the portfolio, including the fuel oil. It's also ready to start contributing. I think Q3, we really saw the deep point in the performance of the fuel oil assets and the downtime and the cleaning cost. I think we're in good shape, Quirijn. For China, the position we have in China is not dissimilar to other places where you have perhaps a slightly different percentage than what you might think, 50/50 or 49, 51 the other way around. It will be a JV. It will be an associate, therefore. That is because of the joint venture shareholder agreement, which has many attributes.
The consolidated effect of those attributes is that it is an associate. That will be how we will report it, Quirijn.
Okay, thank you. The next question comes from the line of David Kerstens from Jefferies. Please go ahead.
Good morning, Gerard. Three questions, please. First of all, can you please comment on the strong performance of the joint ventures in Asia & Middle East? I think you highlighted Pengerang and Fujairah, but I think the net profit was up EUR seven million sequentially. I understand there might be some one-off impacts. Can you just elaborate what was behind that strong increase quarter on quarter, and how much is recurring and how much was one-off? Secondly, also on IMO 2020, you said that still some capacity in Singapore is not yet operational. Does that leave you room to benefit from the very strong market conditions you're currently seeing there in fuel oil storage? Will that lead to higher storage rates in your Singapore business as you still have to, or is that capacity all contracted already and is there not much further upside to be maintained?
The third question is regarding the Saudi attacks in September. How has that impact your crude storage business in the various locations, particularly in Fujairah and in Singapore? Have you seen a positive impact on crude storage following this disruption in production in Saudi Arabia? Thank you very much.
Okay. Thank you. I'll try to remember all of your questions. Asia, first of all, what's the mix that you see happening in Asia? First of all, the item we already discussed, which was the downtime in IMO in Singapore. Then you have offsetting that, contributions from Fujairah and from PITSB and from PT2SB. Those are the two Malaysian assets. One is the oil products terminal next to the main terminal, which is the industrial complex terminal, PT2SB. PT2SB this year is indeed a complex story with many ups and downs between the quarters because this asset is a substantial asset and it's being started up. You see some pluses and minuses across the quarter. If you would average that out, the settlements related to past cost or other commercial discussions.
If you average that out, you would see through a performance which is repeatable in 2020. We will continue to enjoy the benefits of PT2SB in a similar level, but with some more, hopefully steady contribution than before. Those are the two elements I think that are particularly relevant in the momentum in Asia. If I move to the upside in Singapore. Let me repeat again because I'm clearly not yet, I think, clear enough. The second quarter was the starting of the Singapore activity in terms of conversion. It intensified significantly in Q3. We reached a deep point in Q3, and now it's coming back on. It's coming back on with Q4 and into 2020.
We have some operational flexibility to accommodate market movements or other requirements that we may have, but that's in the normal range of operational flexibility that we require for our lineup. The further comment I made is that in Singapore, there's some maintenance activity going on in this space that continues. Again, that is more normal maintenance. You will not see, let's call it 95% utilization, but you see a normal operational, slightly lower activity level due to the two factors that I indicated. In Q4 and going forward, you will see fairly quickly a full contribution from Singapore, from Rotterdam, from Panama, and continued from Fujairah. The Saudi impact. Let's first look at Saudi itself. We have a position in Saudi in terms of storage. That is actually developing very well.
The event itself was a shock to the supply and demand system, that was managed fairly quickly by the Saudis. I think for all intents and purposes, probably not noticeable for us or in fact for many others other than people that take real traded exposure on the commodity. Our developments in Saudi and the structuring of our JVs is going well, and I would also expect a good contribution from that in 2020. In fact, better than in 2019. Fujairah, which is near all that geopolitical unrest, but on the other side of the Strait of Hormuz, this year has picked up business relative to last year.
I think what you see there is, well, you can't totally dissect it, but what you see is a flight to a quality storage player like Vopak, who is able to operate according to all the international requirements and sanctions, and that benefits our business activity level. It's transparent and clear what we're doing there. The team is well-equipped to deal with these changing circumstances, and it's shown in customers coming back into the port. Singapore, no, I've not seen any impact from Saudi in Singapore or any other location, to be honest, whether it's Singapore or other terminals. It appears to be a one-off event that was absorbed by the market very quickly.
Right. Good. Thank you very much for all the color. Much appreciated. Thank you.
The next question comes from the line of Uri Zenir from Kempen. Please go ahead.
Hi. Thanks for taking my question. Actually, most of my questions have been answered. Just one. Following the divestment of your terminals, I was wondering if you can give us a bit of update. What's your intention with the excess of cash? Thank you very much.
Yes, Uri. Thank you. What we said is we would come back to that when we complete the divestments. We've now completed 2 out of the 3. The profit, which is of course the subject of the distribution discussion in the context of the cash received. We will complete that when we complete the Algeciras divestment. That is going well. There were some complications in that position initially, which we've solved satisfactory to all concerns, interests. We expect to complete Algeciras end of January. That is then the moment when we will discuss our distribution intentions or growth intentions. End of January, of course, is very close to our Q4 results, which are the 12th of February.
Depending on how that actually plays out, we may comment on literally the end of January or the 12th of February on that composite question of how much will we be investing. We've already given you some color on the EUR 3 million-EUR 500 million. How much will we allocate to service and sustain, i.e., the comparable to the EUR 750 for three years you've seen in the past? How much will we invest in IT? That combined with our debt position and balance sheet structure will give us the opportunity to deal with the question of distributions to shareholders. I think all is open. We have a discussion still ahead of us to how we will actually deal with that.
It's developing as we hope it would, i.e., the cash is as we initially invested, announced, sorry, from the proceeds, and our investment levels are also continuing. It's a bit of a luxury position for us. I think the lineup we've done for 2019 is now paying out in the sense of our cash generation, our investment momentum, and our balance sheet structure. I'm very happy about how we are leaving 2019 and going into 2020.
Perfect. Very clear. Thanks.
The next question comes from the line of Thijs Berkelder from ABN AMRO. Please go ahead.
Thank you. Morning. I have four questions. First, it's not clear to me yet exactly what the one-off effects were this quarter. You talked about soil remediation in Belgium, a settlement in Malaysia, and additional insurance costs. What now is the overall impact for the Q3 results? Secondly, sustaining and IT CapEx. You originally guided EUR 850 million for the three years. You're now at EUR 710. You probably won't spend EUR 140 million in the fourth quarter, I assume. Is that being caused by environmental legislation, or should I see it more that environmental legislation forces you to invest much more than today in sustaining CapEx? Third question on Houston and Deer Park, the neighboring terminal had a huge fire. What effects are you seeing now in Q3 as a result of that?
Fourth question, can you maybe give a more general comment on what you see in the chemical market right now with chemical flows slowing down? Do you also see a slowdown in your throughput levels due to the trade war between China and the U.S.?
Let's start with the chemicals one. I'll work my way back. Thijs, thank you for the questions. Chemical throughput relative to a year ago across our network actually increases probably up to 5% or so. Activity levels in chemicals are, from a throughput point of view, are increasing. Business development opportunities are healthy. Our occupancy rate is also good across a longer period for chemicals in 2019. The effects that you indicate in terms of less attractive chemical markets, in the infrastructure storage part of that argument, we don't see that. Activity levels are good. Houston, of course, a big chemicals position as well for us. You've seen that in the first half of the year, Houston was impacted in terms of extra cost and throughput on the site due to the neighboring ITC. Very unfortunate fire and incident.
That has restored to normal levels in the second half of the year. We are operating at normal levels. Our extension that went live this year is also functioning well. From that point of view, I think the year to date, you see the number being held back a little bit by the ITC incident, but we are now recovering from that in the second half. The second half should be better than first half. Sustaining CapEx. That is always, of course, an item where we need to be very deliberate in terms of how much we invest, at what pace. You do see pressure from regulations worldwide. You also see that customers are sometimes not so willing to reflect that in rate adjustments, of course. That is a very traditional area to manage well. Therefore, we have typically multi-year programs in that.
We run it at EUR 750 million. I think that's a good number. We saw some extra activity in 2019 in sustaining CapEx. We'll come back to that in Q4 results to give the new outlook. I'm very comfortable we will stay slightly within that number actually for Q4, for the period 2017 to 2019. IT is developing as planned, so there's no movement in that IT component really. The one-off items, we saw a soil provision in Belgium of about EUR 2 million. We had an insurance settlement of about EUR 3 million.
Positives.
No, negative.
Negative. Yeah.
Yeah. There is smaller bits and pieces on other items, and there must be, I'm forgetting one somewhere. Just bear with me for a second. There's some offsetting in aggregate. Oh, it's indeed what you said, Thijs, you said it yourself, the PT2SB, the Malaysia settlement that more or less compensates that. Those negatives that I just mentioned. If you look at the aggregate effect for the quarter, then I would label it as more or less neutral. We wondered why were we missing consensus by a little bit. That is, what is it? About 2% or so, 2%, 3%. I think it is because of the unexpected higher cost levels. Because the other elements were more or less foreseen, the IMO downtime, except for the cleaning cost. I think the cleaning costs were higher, and the occupancy hit was bigger.
Where the market expected occupancy to be somewhere about 84%, we actually hit 82%, and we hit some cleaning costs. Fundamentally, that doesn't change anything. It is literally a 2% or 3% on the quarter, but I'm comfortable we can explain that.
Yeah. Coming back by David mentioned EUR 7 million jump in the associates results. Asia is underlying only EUR 2 million because it includes that settlement on the undersold terminal. Yeah.
That also shows or masks, in a way, the very negative Singapore and the positive from Malaysia and from that point of view, if you compare to last year, the contribution from Fujairah. The theme is exactly the same as you see over the year. You see IMO downtime, you see new business development, new assets coming in. You see strong performance from joint ventures. You see costs being managed well. The number in Q3, in my mind, and everybody will have an opinion about that. In my mind, was because the downtime in Singapore was deeper and the cleaning costs related to Singapore was also more than the market anticipated.
Clear. Thank you.
Just as a reminder, if you do wish to ask questions, please press zero one on your telephone keypad. Our next question comes from the line of Andre Mulder from Kepler Cheuvreux. Please go ahead.
Good morning. Still a few questions left. First one on your position in high sulfur diesel in Rotterdam. What's the reason for keeping that at such a high level? I would assume that most people switch to LSFO and to scrubbers. What's keeping you from reducing that further? Next to that, in the past, you used to say that every one point in utilization would mean EUR 15 million in EBITDA. Is that still applicable or has that changed? Your comment, please.
First of all, the composition of the lineup. You will see that across the board, we have in the existing assets, so Singapore, Rotterdam, Fujairah, halved our high sulfur fuel oil exposure. We have, of course, divested Algeciras or will divest, and we will divest or have divested E.O.S. in Estonia. The high sulfur fuel oil component has been significantly dropped. What you see, Andre, is that high sulfur fuel oil, of course, will react to market demand. The pricing and the spread between high sulfur fuel oil and low sulfur fuel oil and perhaps MGO, if you want to throw that in the mix, will push high sulfur fuel oil to a pricing point where people mix that output from the refineries into the required specification, and therefore they will take advantage of market pricing to come to the blend.
What we've done is we've lined up our mixing, pumping, and flexibility of capacity to allow our customers to do that. That is why we create some space for high sulfur fuel oil. It would actually be detrimental to our offering if we would eliminate that. In fact, what you see with the customers is that they're asking for that flexibility, and we're building into that. You see that across fuel. You even see that in the one that we didn't discuss, the position we've created in Panama, where we were making an adjustment to our lineup this year that we were building just for this very point that you asked a question about, which for us is therefore a positive, not a negative. The fuel oil capacity. The sensitivity of the numbers.
The Q3 numbers that we mentioned, the impact of fuel oil is four to five percentage points on the total of the reported number, which is 82 for Q3 alone. The four to five percentage points sensitivity that you would impose on that relates to the out of service capacity, which is coming back in. That capacity is 1 million cubes. 1 million cubic meters of fuel oil roughly across, let's call it Europoort and Singapore, would then come back in, and that would give you the sensitivity of the Well, per percentage point, if you wish, you can calculate, but it's 1 million cubic meters in fuel oil capacity, because not every capacity, of course, is the same. If you then aggregate at total Vopak level and correlate sensitivity across our entire business activity, you have a different sensitivity. I wouldn't match those two.
I would match it on the basis of 1 million cubic meters of fuel oil capacity. I hope that explains it, Andre.
Yeah, in a way. This one point, is that still applicable for EUR 50 million in EBITDA?
For the total portfolio, I'm just looking at the total portfolio composition, which is now changing so much. I think I would like to come back to that point, Andre. If I just take a simple comparison, I say, well, we're now at 85 occupancy and we look at the total posted EBITDA, that would be the simplest way of looking at it, I think. I would like to come back to that.
Okay, fine.
We have a follow-up question from the line of David Kerstens from Jefferies. Please go ahead.
Thank you. Just another question, please, on the balance sheet. You said that, I think, the trailing leverage ratio, net debt to EBITDA, was at 2.881 times at the end of the quarter, including the proceeds from the divestment of the terminals in Amsterdam and Hamburg, but also still including the EBITDA contribution, I think, from those terminals. How do you see the leverage ratio developing into 2020, including your new investment program of EUR 300 million to EUR 500 million? Is it basically fair to assume that you will roughly remain at this level and that the divestment impact of Amsterdam, Algeciras, and Hamburg will be more than offset by the IMO 2020 recovery, and as a result, your leverage ratio will be below three times? Any color would be very helpful. Thank you.
The EBITDA is excluding divested assets or to be divested assets. That's the way you calculate these things.
Your EUR 2.8 is excluding the EBITDA contributions from-
Correct
those three terminals. Right. Okay.
The way I would look at capacity movements and the divested assets, I think more of the new assets coming in compensating that than IMO. IMO is a separate discussion. I've already given you the dimensions for that. In terms of headroom versus the EUR 300 million-EUR 500 million combined with the business CFFO momentum, we'll see. I think there's a good discussion to be had at the end of Q4 when we have line of sight on the investments going forward. Therefore, as far as I'm concerned, all options are open in terms of balance sheet management.
Great. Thank you very much.
As there are no further questions, I'll hand it back to the speaker.
Okay. Thank you for that. I also noted the continued interest again on IMO, of course. What I would like to do is bring you back to the entire company. We are satisfied with financial performance, acknowledge that Q3 was a little bit less on account of the extra cost and downtime in Singapore. If I eliminate that in my mind, then the earnings momentum that we promised for 2019 is going exactly as we hope it would. We are confident with the financial performance. The transformation of the portfolio is actually doing well as far as we are concerned. The divestments are working, the new assets are coming in, and we're lining up new investment decisions, as we've discussed today. We look with confidence at 2020. We acknowledge all the geopolitical issues in the world.
So far, the impact has not resulted in a negative sentiment for us in terms of our investment opportunities. Of course, we're not immune for GDP developments in the world, but our new business activities continue to provide us, I think, earnings momentum opportunity. I'd like to thank you for your time and listening, and your comments. We'll no doubt dialogue further, and you have access to our investor relations team to clarify more points if you wish. With that, I'd like to close the call and thank you for your attendance.
This now concludes our conference call. Thank you all for attending. You may now disconnect.