Thank you for holding and welcome to the Royal Vopak conference call. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the conference to Mr. Jack de Kreij, Vice Chairman of the Executive Board and CFO of Royal Vopak. Go ahead, please, sir.
Yeah, very good morning. This is Jack de Kreij speaking. What we will try to cover is, as we call, an interim update of the Q1 2016 results. Because of our upcoming AGM, we will end the conference call at 9:30 sharp. We will leave ample time for questions. What I will do is give you a quick explanation, interim update of the Q1 results, and then leave room for any questions you may have. I refer to page two of the presentation, where I consistently would like to ask your attention for the forward-looking statements paragraph. Of course, anything we have included in this presentation does not incline any prediction of the future, but our best possible assessment of the developments going forward.
On page three, we have provided a quick summary of the topics we feel critical for updating you about the interim developments in our company. The overall perspective, of course, the long-term value creation. How does this growth and the results fit in that overall long-term value creation objective? The business highlights of the first quarter, the key figures, and the outlook for 2016 for the whole year going forward. With reference to page four, we would like to reiterate the key elements of our business model, where you translate that to the financial performance, the financial product developments, both in the present as well going forward to the future. As said, we have a global portfolio of terminals at key locations.
In our business model, we strongly believe that the selection of the right location is the key value driver going forward in order to accommodate any product flows independent of the demand factors driving, let's say, with respect to the demand for storage in that particular location. That might be imbalances between continents, that might be structural deficits, that might be contracted services like industrial terminals. It's all about the right location, the right infrastructure. As we have updated you in 2014, that has always got our maximum attention in order to sharpen, rationalize our portfolio as much as possible in order to make it future-proof. Critical in that respect from a financial point of view, in order to allow any future investments, of course, is that we have a good contract structure and supported with stable margins.
As we will see in the business highlights and also where we explained in the 2015 financial developments, we are still being able to generate stable margins, and also the contract renewals are not deviating from the normal, I would say, stratification of the duration of our contracts between one and three year, three to five year, less than one year. That provides a stable basis for leveraging on our network from an occupancy rate point of view. In order to support the growth, we strongly believe that we also need a solid balance sheet and a healthy capital structure, and that is also in Q1 reinforced, of course, because of the proceeds of the divestments of our U.K. assets, have we further enhanced the flexibility going forward for financing our growth strategy. Growth strategy, of course, requires a good selection.
It's not a matter of building more cubic meters. It's building cubic meters in the right format, in the right location, in the right product market combinations. That is essentially the focus of our growth strategy, being very selective and very disciplined in allocating that capital to the growth opportunities going forward. Of course, on the whole, we keep into account that the total portfolio should be able to provide a good risk-return basis and a very solid and healthy cash flow generation. These are the fundamentals of the way how we try to manage this global portfolio and how we would like to put the quarterly interim update in perspective of these long-term perspectives. When turning to page five, you quickly have an overview of the most important financial KPIs and the drivers behind these KPIs. The occupancy rate, as you know, is very critical.
We ended up in 2015 in 92%, while having experienced slightly lower occupancy rates in the year '13 and '14. I remember that we had many dialogues in the last few years about what is the potential direction of the occupancy rate development. Could it be further declining? When would it be able to increase it? That's the reason why we decided to provide you with a very clear view of the executive board of Vopak with respect to our expectations for the year 2016.
While we ended up in Q4 with an occupancy rate of 94% and an average occupancy rate of 92%, we want to make crystal clear our views with respect to 2016, that we feel that the combination of the locations of our terminals, the quality of the inquiries, the duration of the contracts will provide a solid basis for another year where we would be able to exceed the occupancy rate level of 90%. That is reconfirmed in our Q1 performance. Of course, this means that while having this occupancy rate above 90%, we should be able to step by step improve our EBITDA development, provided we can expand, of course, our total capacity in a very disciplined and selective way.
The reason why I say growth expansion is that because we feel that we are already operating at healthy EBITDA margins, we are well positioned to maintain those healthy EBITDA margins. There are situations where we can further improve them. There are situations where we can maintain them at the same levels. There might also be situations where we have to invest additional in service improvement, CapEx capabilities in order to justify further rate increases. That's the reason why we have carefully reflected that in our outlook paragraph that we say the primary driver is the occupancy rate. The solid results of 2015 will be repeated again in 2016. Please bear in mind the negative impacts of any divestments we have completed.
When looking back at the earnings per share, we are back on track again to show that also from an earnings per share point of view, we would like, of course, to exceed the level of 2012 at a certain point in time, excluding exceptionals. We're turning to page six. Quickly summarizing, total terminal network has not increased because of the divestments. We have stable revenues. We have a 4% growth of our EBITDA to EUR 250 million compared to EUR 206 million in 2015. Of course, as said, a healthy occupancy rate above 90%.
Page seven summarizes the occupancy rate development because this is believed to be a very critical KPI of the utilization of our total global network and also the driver behind revenue development, that we are currently back on the 90%-95% playing field. I said we reconfirm that the Executive Board's view is that we will be able to complete our activities in the year 2016 in that playing field above 90%. Looking at page eight, a quick summary of the sale of the U.K. assets, which as such, of course, resulted in the total proceeds of EUR 410 million, which will be used and will be allocated to provide more flexibility to identifying new projects. I would like to reemphasize that the selective capital discipline growth remains the basis for our growth strategy.
It's not that because we currently have additional proceeds, that we would suddenly allocate that to other growth prospects, which we would have rejected in other situations. That remains undiminished the basis of our growth strategy. Of course, with that flexibility taking into account potential opportunities in selected product market combinations, we strongly believe we are well positioned to support that part of our strategy as well. As said, we divested three wholly owned terminals, London, Teesside, and Windmill. Total 700,000 cubic meters. The total EBITDA contributions were slightly less than 4% of the full year 2015 EBITDA. The total gross cash inflow, as said, was EUR 410 million. The total exceptional gain was around and is around EUR 283 million, reported as an exceptional gain.
Let's say the tax impact is minimal because of the tax exemption as a result of participation structure as part of our total framework. These total proceeds will have a positive impact also on the net debt EBITDA development, I will cover that later on. If we refer to page 9, we see a consistent development of the key figures in Q1 2016. Stable revenues, slightly increased EBITDA, quite an increase in net profit because we also had some small one-off items in taxes, taxation, as a result of which there is a higher increase than you would normally expect based on the EBITDA development. Page 10. If you would include the exceptional items, you get a complete different picture because of the gain of EUR 283 million.
All the numbers will have a complete different reflection of the recurring activities we are currently anticipating going forward. The only KPI on which I would like to put some attention is the senior net debt EBITDA ratio. At Q1 2016, it's now at around 2.02, providing a sufficient flexibility, strong balance sheet in order to support our growth strategy going forward. In page 11, we have provided a kind of reconciliation between all the drivers behind the difference between the Q1 2015 EBITDA and the Q1 2016 EBITDA. FX effects always there. Most important, divestments. Going forward for Q2, Q3, Q4, this element of divestments will only increase because of the impact and the implication of the completed divestment of the U.K. assets, which have to be added to this as well.
We have a few positive developments in the different geographic regions. A combination of slightly higher occupancy rates in some regions, a combination of slightly higher EBITDA margins, but all in line. A solid performance in line with the solid performance we have been able to report in 2015, supporting our view of 2016, which will be another year with a solid financial performance going forward. Page 12, a quick segmentation. What is happening in the different regions. We will see that the Netherlands has started with quite an increase compared to the slightly lower occupancy rate we experienced in Q1 2015. You might recall that the occupancy rate in Q1 2015 was around a viably well 92%. The EBITDA development is primarily explained by two factors, an increase of the occupancy rate from 92% to 96%, excellent cost management. EMEA division.
We have to be careful always with the EMEA analysis because we completed some divestments, they will have more an impact on Q2, if I recall well, because then we have completed the Sweden transaction and the Finland transaction. In this situation, quite a stable performance. Asia, more or less to do with currencies, a slight difference between positive development in Asia with respect to occupancy from 90% in Q1 2015 up to 92% in 2016. The Americas, you have to take into account in the analysis, during the year 2015, the implications of the divestments of some of the U.S. terminals. Long story short, development Q1 2016 fully aligned with the 2015 development, not only slightly better than Q1 2015, but in line with Q4 2015, supported by solid occupancy rates, healthy margins, and as a result of that, a very solid EBITDA performance.
With those developments in mind, when referring to page 13, we would like to reiterate that we are well-positioned to, let's say, continue executing our strategy for long-term focused value creation, where translated to the year 2016, we believe that we are well-positioned to provide solid basis for a new solid performance in the year 2016 in line with the performance of 2015. While, of course, we have to take into account any implications with respect to the reported IFRS numbers resulting from the realized divestments. With that small interim update, I would like to refer to the moderator for any questions you might have in line with the principles, of course, of this limited interim update.
Ladies and gentlemen, we will start the question and answer session now. To be registered for the question and answer queue, please press star one. The first question is coming up from Mr. Dirk Verbiesen, KBC Securities. Go ahead, please.
Yes, sir. Good morning, gentlemen. Question on the sequential performance in the Netherlands. Let's say Q4 2015 versus Q1 2016. Looking at revenues versus EBITDA developments, there's quite a steep upward move in EBITDA. Jack, you explained the cost management. On occupancy quarter-on-quarter, there's not that much of a difference. Can you explain what the actual driver was beyond strict cost management? Is that contract renewal impact, or can you elaborate on that? Second question is on Americas. Basically the same kind of question, but there we see the opposite, in terms of sequential EBITDA Q4 2015 versus Q1. Also there, can you shed a bit of light what kind of run rate we should expect going forward for Americas? Thanks.
Yeah. A long story very short, Dirk. In fact, you have implied in your question already the answer, because it's indeed a combination of two factors, sometimes with a different mix. It's a combination of either cost management or additional one-off costs, which you could have in one quarter compared to the other quarter, combined with a healthy revenue development, which you properly explained as contract renewals. In general, with the small differences you will see between one quarter and the other quarter in any division, you so to speak, it's always explained by two factors. In general, healthy contract renewals, that's the positive side. Sometimes healthy cost management, but also in certain situations, we have one-off cost items as a result of which the picture might be distorted going forward. That is in general, I would, let's say, the explanation for both divisions, the Netherlands and Americas.
In general, you can say that particularly the Netherlands has a good contract renewal environment. Is that correct?
Yes, the point is, of course, a good contract renewal environment has two elements. One, the likelihood that a contract will be renewed. That means occupancy rate. Indeed, the Netherlands has proven since Q1 2015 to be able to continue operating between 90% and 95%. Indeed, if you translate it, what you are saying, the Netherlands is well-positioned to operate between 90% and 95%. The other translation of good renewal environment is pricing. As I said, with pricing, it's a matter of are we well positioned to demonstrate higher added value to the customer? Yes or no. That is location by location, tank pit by tank pit, the answer is different, as we stipulated in our year-end meeting, but also there with the high focus on service improvement CapEx, because that is absolutely what we had to do in the last few years.
We feel we are well positioned to maintain healthy margins in combination with also healthy occupancy rate for the remainder of the year.
Okay, thanks.
Next question is Martin den Drijver , SNS Securities. Go ahead, sir.
Yes. Good morning, gentlemen. I have a question with regards to Asia. You already provided a bit of the answer. Occupancy was up 2%, but EBITDA was stable year-on-year, where maybe we had expected the upward slope of Pengerang, Hainan's result in an even better performance. Can you elaborate on the developments in Asia and more specifically, Pengerang, Hainan? That will be my first question. The second question is the development of the operational cash flow growth. EBIT is up, yet the OCF growth is down by 12%. I know that there are some volatile elements therein, dividend from JVs, maybe some result of sales of assets. Can you elaborate on, for example, working cap and any other elements that impacted OCF? Thank you.
Okay. Martin, starting with the last question, indeed, operational free cash flow is not calculated on a proportionate basis, but indeed, as a starting point, I would say the IFRS equity accounting perspective, where the joint ventures are seen as participations. We don't take the proportion EBITDA they generate, but instead indeed the dividend distribution. The timing of dividend distribution might be quite different in periods and has quite a significant impact on the gross cash flow calculation. That is the main explanation. Working capital is absolutely not significantly deviating in all those periods and is absolutely so not an explanation of major changes between the gross cash flow development from this perspective between one period and the other period.
Okay.
The question about Asia. As you know, Asia is a portfolio with quite some different activities. We have industrial terminals, extremely stable long-term contracts. We have some hub locations, either in JVs or in group companies, and we have the chemical business. Where did we have most of the volatility in 2015 was in fact in some of our China locations, and I would say the derived business from the China developments in Singapore. That is exactly the reason why you have, again, in your reconciliation, you will see that most of the developments in those areas is the explanation of minor differences between one period and the other period.
Under managed stable business, industrial terminals, good development in the hub locations, but in the specifically derived business from China, you will see that if you compare certain periods, there are some minor differences when compared between one period and the other.
Okay. Thank you very much.
You're welcome.
Next question is from Mr. Albert Pranger, Kempen & Co. Go ahead. Please, sir.
Thank you. Gentlemen, thank you. Two small questions. The first is basically on your net debt EBITDA performance. The ratio improved significantly after the one-off of the disposal of the U.K. terminals. In order to see where we're heading, what's your long-term net debt EBITDA target, and do you expect to invest on the short term? My second question is with regards to minor acquisitions. Do you foresee any acquisitions in the near future?
If you elaborate on our growth strategy, as we said a couple of years ago, we said that we have arrived in a timing period where the timing is not as apparent with respect to the decisions to be made with respect to either greenfield, brownfield, or acquisitions. On the one hand, we have an economic development which is rather moderate on a worldwide scale. We have seen some expansion developments in certain locations. On the other hand, we see in the long term, I would say many positive developments requiring more infrastructure. We discussed, for instance, the change in the energy mix and the role of LNG. We have discussed the continuous economic growth and the implications of the use of chemicals in many consumer goods, construction industry, and automotive industry, and the role of, let's say, oil from an imbalance perspective, structural deficit perspective.
Long story short, we keep on focusing on identifying these growth opportunities. We are of the opinion that with our global network, with our well-positioned terminals and the identification opportunities, we have opportunities to grow our business. The timing, however, whether we can do this in a very short timeframe, mid-term frame, we have to be very disciplined in that. We remain disciplined, that is exactly the implicit answer on the net EBITDA ratio. We don't have at this stage, let's say, a target other than we have always been able to execute our growth strategy somewhere between 2.5 and 3.0. We have been able to allocate a lot of our operational free cash flow to the growth.
From a strategic point of view, what we are doing, of course, in the next 12 months, in the next 1.5 years, is looking, what is the timing opportunity? What is the added value of having even more flexibility? You were referring to acquisitions. Acquisitions has always been part of our strategic considerations, we felt that in many situations, greenfield investments or brownfield investments would provide us a better base for value creation to our customers. I would say the conceptual value creation perspective is undiminished the same. The fact that we have some more cash available is not changing that other than it provides us sufficient flexibility to move forward, we would like to continue that in a very selective and disciplined way.
Going forward, the net EBITDA ratio, of course, will be further affected by the dividend distribution, which will take place in the coming months with the ongoing sustaining CapEx investments and improvement CapEx, and of course, will also be affected by additional CapEx expansion investments in order to complete the projects under construction. The question whether there will be any additional projects on top of those projects currently under construction is absolutely yes. When those decisions will be made, that is still a factor we would like to remain very disciplined and not to give any guidance on.
Okay, perfect. Thank you.
Next question is from Mr. Dominic Etheridge, UBS. Go ahead, please sir.
Hello there. Good morning. Just a couple of questions from myself. Just going back onto the Asian performance, and obviously with where the oil markets are today, I'm assuming the oil part of the business, particularly in Singapore, should be relatively strong. I'm just wondering, therefore, if we look at the performance bit, I suspect there's a weakness probably in Singapore in particular in the owned area. Would you say that, what's going to get the particular chemical side stronger? What do you think is required from the market in order to improve the performance there? The second question is just a very boring modeling question. In terms of the contribution from the sold U.K. business, should we assume it's around about the 4% of EBITDA, from last year is what it contributed in Q1 this year? Thanks so much.
Let me see whether I can start with your boring modeling question, if I understand it well.
Yeah.
If I understand your question well, we gave guidance that the contribution was lower than 4% of EBITDA on a whole year basis.
Okay, sure.
Your question is, should I assume a proportional part to Q1? Is that the question?
Yeah. Just in terms of I'm assuming that it does a little bit in the continuing EBITDA. Is there a contribution from the U.K., excluding, obviously, the gain that you split out?
Yes. Let's put it this way. With whatever assumption you make, you are hardly able to make any significant, let's say, errors in your allocation mechanism, because when we are going to report Q2, you will immediately see what the actual impact has been of the U.K. It will solve itself immediately when we report the H1 numbers.
Okay. Fantastic.
Your approach seems to be fair and could be maybe too conservative or whatever. You can adjust it very easily once we report the H1 numbers.
Thanks so much.
On Asia, indeed, chemicals. If you look at the role of Singapore, it has, of course, we have the Vopak Terminal Sakra, which is, of course, extremely stable business, supported with long-term contracts. We also have some distribution terminals. These are serving the surrounding areas in the Southeast Asia region, but we are also quite dependent on what I would say, throughput deliveries to China. That is exactly the answer, what should change. The current decline in the growth in China and the uncertainties around that has absolutely affected the chemical storage developments in the short term in that particular location. Of course, there is a timing difference because we are absolutely sure that step by step That will change over time, but in the short term, you are spot on. It is the chemical storage which is affected.
The main driver behind that effect is, I will say, the China economic developments, as a result of which also certain traders might not take any positions. The supply chains have been disrupted. That will take before that would normalize.
Okay. Thank you very much.
Next question, Mr. David Kerstens, Jefferies International. Go ahead, please.
Good morning, Jack. Two questions, please. First of all, can you explain a little bit further what's driving the much stronger net profit and EPS momentum, where you had double-digit growth compared to your 4% EBITDA growth? I think you mentioned some one-off tax items in the first quarter, or is it also to do with lower financing charges? The second question, your net profit from joint ventures was up 10%, largely driven by EMEA. Is that mainly explained by your expansion in Saudi Arabia, or are also other joint ventures in EMEA performing relatively better, perhaps in Estonia? Thank you.
Okay. Indeed, if you look at the net profit development, there are always two drivers which affect that. There is any changes, of course, in the financial expenses. In the financial expenses, you also have all kind of IFRS developments with respect to the calculation, market to market of all kind of hedge instruments, swap instruments, that could have an impact on that number as well. We are not talking about huge numbers, but in this situation, that was a positive impact in combination with a non-recurring one-off impact on the taxation. That is the main reason why you have a slightly higher net profit development than you would normally expect when you look at the EBITDA development.
With respect to the joint ventures, of course, by having this top-down approach, before we know it, we are going to address almost individual terminals with respect to the current developments and with respect to the outlook. You should assume that indeed, and that's the reason why I would like to elaborate on, you might recall that we organized an analyst meeting in Fujairah, and also what were the drivers behind the storage and handling in Fujairah. This terminal is absolutely spot on and is benefiting from expansions, et cetera. The main driver of the improved joint venture development, you should absolutely assume that it's more resulting from Fujairah than from any other joint venture.
Thank you very much.
Next question, Mr. Thijs Berkelder, ABN AMRO. Go ahead please, sir.
Congratulations, gentlemen. The associates in EMEA, you said it's primarily driven the improvement by Fujairah. Does it explain, let's say, associate result EMEA going up from EUR 5 to EUR 8.8 million? Is there also an effect regarding Tallinn or maybe your new chemical terminal activities or new extra terminal activities around Jubail?
If you nail it down further, of course, Jubail has also a positive contribution.
In Tallinn?
I thought that I said that. I want to avoid that we are nailing down to each terminal. The answer for EMEA is indeed, in let's say, sequence of importance, that Fujairah has made a positive development in that respect. Secondly, that Jubail has made also a very significant contribution because of the startup of new activities and because of the Sadara acquisition.
That means that, let's say the EUR 9 million associate results we're seeing in EMEA, you should be able to maintain that level for the remainder of the year, roughly.
Let's put it this way, that is your analysis. I'm not going to provide any further, let's say, analysis on any of those individual results. Your analysis is absolutely spot on, also of David, that you have a few very critical joint ventures in the EMEA division. One is, of course, our landmark terminal in Fujairah. The other, as you know, is the expansion of Jubail, and that starts positively. One of the uncertain elements in our network is E.O.S., and that remains uncertain.
Okay. No, very good.
Okay.
The next question is from Mr. Andre Mulder, Kepler Cheuvreux . Go ahead, sir.
Good morning. Two questions. Firstly, looking at the whole setup and development, what is keeping you from giving a bit more detailed guidance on, for example, group EBITDA? Second question, in view of this huge extraordinary gain, how will that affect your dividend or dividend policy?
What we said is our dividend policy remains the same. We want to distribute a consistent dividend in line with our result development where we exclude any exceptional items. We take into account, of course, the senior net debt EBITDA ratio development going forward in line with our objectives to have a very strong balance sheet providing sufficient flexibility to maintain our growth strategy. We will look at going forward in the next 12 to 18 months, what is the level of flexibility we feel is fit for purpose for executing that strategy. If that flexibility is becoming so huge that it would be instrumental to let's say, distribute some additional dividends on top of the ordinary dividends, then we will absolutely consider that at that particular moment, but certainly not at this particular moment.
With respect to guidance, I think we gave a very critical guidance on a very critical element of our business model. It is as said that we came out of a period where we were operating at an occupancy rate of 88%. A lot of people were wondering when we were entering 2016, it is a one-off benefit from Contango, what is driving the higher occupancy rate here at total network. That's the reason why we feel that we already provide quite a detailed guidance, to use that word, with respect to 2016, by stipulating that we are well-positioned to continue operating above 90%.
Translating that into EBITDA numbers and let's say, take into account all kind of effects of divestments, we don't see the added value from that, particularly not if we are starting to report already in three months time the actual first half year numbers as a result of which such a short-term outlook, the functionality of that, we don't see any added value for that.
Okay. I assume that the Q3 reporting will be at the same kind of setup as you provided today?
Yeah, absolutely. What we confirm is that we will have a comprehensive report half year, comprehensive reporting for the whole year, an interim update with all the relevant KPIs in Q1 and Q3, fully aligned with what we have been doing today.
Yeah. Last question on the dividend. What role plays this 400 anniversary?
Could you repeat that again?
What role does the 400 anniversary of Vopak play in the dividend? Is it an item that you take into account?
Not at all. What we do is we have a long-term view where we like to avoid any one-off situations. We feel that the 400 anniversary of Vopak is, let's say, substantiated by the fact that we, even after 400 years, are a healthy company with a solid balance sheet, with a good outlook for 2016, and with an 11% increase of our dividends. We feel that is in fact the milestone we would like to celebrate and without having any special or one-off other propositions.
Okay, thanks.
There is room for one last question before we would like to close off this conference call at the latest at 9:30 so that we can accommodate our AGM, which starts in 30 minutes.
There is a question from Mr. Quirijn Mulder, ING. Go ahead, sir.
Yeah, Quirijn Mulder from ING. Jack. We have two questions. One is about, can you maybe elaborate somewhat more about the situation in Europe with regard to the chemicals? Do you see any improvement? Do you see anything happening in that market? My second question is about the, on page 11 of your presentation, your acquisition greenfield, the pre-OPEX, contributed about EUR 4 million to your better results in the first quarter. Is that purely related to lower development cost, or is there anything to add to that EUR 4.3 million?
Okay. Starting with the last question, that is a combination of let's say many effects like if you start up a greenfield, in order to give you a kind of autonomous growth development in the different regions, we separate the greenfield in that particular box. We also include the movements between pre-OPEX in one situation and the other situation. It's a combination of all these factors. It's not only pre-OPEX, it's a combination of the positive contribution of greenfields, it's a change of pre-OPEX, it's a combination of all these factors. You cannot isolate any conclusion to any of those individual components.
Okay. For example, Singapore LPG might have an impact on this result?
Yes, it might be twofold. For instance, the moment you are constructing the project, it doesn't contribute. Secondly, you might have to incur pre-operating expenses. One period later, it starts contributing, and you don't have any pre-operating expenses anymore. You have a double positive, let's say, development compared to the previous reporting periods. That's the reason why we combine that, so that at least you have a bit of an impression. Are we talking about significant amounts? Because it's not whether it's 4.3, 4.2, 5.0. It's more, is there any factor which has a significant impact and what has been the autonomous growth, which we have been able to realize, supported by higher occupancy rate, better pricing, cost management, et cetera, and that is allocated to the different regions.
Okay, perfect.
In chemicals in general, what we have seen in, let's say, the chemical terminals in Western Europe, is also positive occupancy rate development. We've seen a steady demand for supply chain deliveries in the chemical chain.
Okay.
Okay?
Yeah. That will continue probably.
If you are, let's say, optimistic about the step-by-step economic growth in different parts of the world, then normally there would be no reason to believe why chemical production would become under pressure other than, let's say, competitive differences between different continents. At this moment, as you know, the European chemical industry is benefiting from the low naphtha prices. Also the production in the European chemical industry is doing quite well. In the total outlook for 2016, we have taken into account all these elements, and we believe that we are well-positioned if you take all these developments into account, that we are well-positioned to execute our business model, again, above 90% for our overall network, including the different product market combinations.
Okay, thank you. Good luck at the AGM.
Thank you. With that, I would like to refer to the moderator. If you have any additional questions, please do not hesitate to contact Anu of investor relations. He might not be reachable in the next two hours. We apologize for that. We hope you understand that. Of course, he's available in the remainder of the afternoon. With that, I would like to ask the moderator to close off this interim update. Looking forward to meet you again at the presentation of the half-year numbers.
This concludes the Royal Vopak conference call. Thank you for attending, and you may disconnect your line now.