Koninklijke Vopak NV

AEX:VPK

Earnings Call Transcript 2019-Q4

[Operator]

Hello, everyone, and welcome to the Vopak Analyst Presentation of Full Year 2019. [Operator Instructions] Now I hand the call over to Laurens de Graaf, Head of Investor Relations. Please begin.

[Laurens de Graaf, Head of Investor Relations]

Good morning, and welcome to Vopak's Q4 and Full Year 2019 Results. My name is Laurens de Graaf, Head of Investor Relations.Today, our COO -- CEO, sorry, Eelco Hoekstra; and CFO, Gerard Paulides, will guide you to our latest results. Our COO, Frits Eulderink is here as well and will be available for questions during the Q&A. We will refer to the full year 2019 analyst presentation, which you can follow on stream and download from our website. After the presentation, we will have the opportunity for Q&A, first, by the analysts with us in the room and thereafter by the analysts that are dialed in. A replay of the call will be made available on our website. So before we start, I would like to remind you of our safe harbor for any forward-looking statements. This disclaimer is applicable to the entire conference call, including Q&A. So with that, I would like to hand over to Eelco.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Thank you, Laurens. A very good morning to those who joined us here in Rotterdam, and a very good morning for all of you joining us on the call. It is my pleasure to share with you our fourth quarter and full year results for the year 2019. I will give a short introduction on the results and the execution of our strategy, and then I'll hand it over to Gerard who will elaborate on the financial performance. So let's begin with Slide 4 and review of the highlights. We continued the delivery of short-term performance and long-term value creation. We realized strong results and significantly increased earnings per share. We made important steps in the execution of our strategy, both in our portfolio and digital capabilities. We will start a share buyback program to return EUR 100 million to our shareholders. And with our strong competitive position and a global diversified portfolio, we are very well positioned for future opportunities to create value for stakeholders. EBITDA in 2019 was EUR 830 million, reflecting good performance of new assets and solid business performance in today's market conditions. Earnings per share significantly increased. Our occupancy rate was 84%, and this lower number reflects IMO 2020 capacity conversions during the year and ongoing tougher market conditions at oil hub terminals as other market segments remain solid.Our resilient portfolio and continuous focus on safety, service and costs has proven to be an advantage across a range of business climates. [Technical Difficulty]

[Laurens de Graaf, Head of Investor Relations]

Hello, everybody. I think we had a slight interruption in the call. We are going to rejoin the call again. What we will do, Eelco will restart his opening saying, which might be quite doubling. Again, here comes our CEO, Eelco Hoekstra. Please go ahead.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Thank you, Laurens. So as I said, let's begin with Slide 4 and review the highlights. We continued the delivery of short-term performance and long-term value creation. We realized strong results and significantly increased earnings per share. We made important steps in the execution of our strategy both in our portfolio and digital capabilities. We will start a share buyback program to return EUR 100 million to our shareholders. And with our strong competitive position and global diversified portfolio, we are very well positioned for future opportunities to create value for all stakeholders. EBITDA in 2019 was EUR 830 million, reflecting good performance of new assets and solid business performance in today's market conditions. Earnings per share significantly increased. Our occupancy rate was 84%. This lower number reflects IMO 2020 capacity conversions during the year and ongoing tougher market conditions at oil hub terminals as market segments -- as other market segments remain solid. Our resilient portfolio and continuous focus on safety, service and costs has proven to be an advantage across a range of business climates. As for the execution of our strategy, during the years 2017 to 2019, we have been transforming our portfolio through EUR 700 million of divestments and EUR 1 billion of investments in new growth projects. Allow me to place that in context. We successfully divested almost 5 million cubic meters of oil capacity, mainly in Europe, and bolstered our hub positions. We prepared our oil hub terminals for IMO 2020 and expanded storage capacity in future growth markets. We've expanded our LNG business in Pakistan and Colombia and started the construction of new industrial terminals in China and the U.S. We also made progress with our new energy focus. We made our first investments both in hydrogen and solar. Looking at 2019, we've added 1.8 million cubic meters of new capacity to our portfolio with expansion projects in Pengerang, Singapore, Mexico and Brazil, and new terminal locations in Panama, Colombia and Canada. At the start of 2020, another 1.5 million cubic meter of capacity is currently under construction globally. Similarly, the delivery of our digital strategy has progressed well last year. We continued the rollout of our new cloud-based system for our terminals. Growing Vopak's digital capability and using data are key to our position as the leading independent tank storage company. We believe our portfolio is well positioned for future opportunities, and we're committed to the delivery of results with constant attention for safety and service. For 2020 and beyond, we continue the course we set in previous years, which is focus on performance and value. Let me recap our view on the business environment and product markets in which we operated in 2019. Starting with chemicals. The recent slowdown in global economic growth has not affected our earnings in 2019. We experienced generally solid occupancy rates at our chemical terminals. Conditions for our customers in the chemical industry are currently more challenging, but we remain positive for the amount of chemicals in the long term. In the coming decades, we see growing global demand, driven by increased industrial needs and manufacturing of business and consumer goods. The chemical market announced in the last few years sizable new investments in chemical production globally. U.S. chemical investors continue to take advantage of cheap shale ethane feedstock, and new petrochemical projects take shape providing industrial terminal opportunities for Vopak, such as our project in Corpus Christi in the United States. In Asia, long-term outlook supports developments of petrochemical projects close to these growing end markets, enabling, for instance, our industrial terminal expansion in Caojing in Shanghai. So looking forward, operational performance on safety, service and cost is crucial to keep earning the trust of our chemical customers. I believe it's the joint responsibility of the industry and service providers like Vopak to keep investing and lift the sustainability performance as a sector. We remain focused on daily service delivery and improving our infrastructure. The sentiment in the oil market has been negative through 2018 and 2019 with a backwardated pricing structure. More recently, the oil markets have been oversupplied as geopolitical tensions and mostly the coronavirus impact demand. Our earnings were impacted by IMO 2020 and weaker market conditions in oil and particularly in Southeast Asia. So during the year, we have adopted our infrastructure in the key hub locations, Rotterdam, Singapore and Fujairah, and signed long-term contracts with our customers. This conversion caused higher-than-normal out-of-service capacity. I believe Vopak did make the right choices throughout the conversion program. Our IMO capacity is now fully operational and customer feedback has been positive. The fuel market has not experienced any unexpected disruptions and low-sulfur fuel has been the dominant bunker fuel early 2020. Blending capacity and segregation of fuels and supply and demand of low-sulfur fuel will impact the fuel market dynamics in 2020 and the years onwards. At our import and distribution terminals for clean petroleum products in major deficit markets, we continued to see a strong business performance. In the gas markets, we experienced strong growth. Global LNG trade has more than doubled in the last decade, and 2019 was another record supplier year for LNG. LNG supply has further grown, and imports in China and Europe increased substantially on the back of this surge for end markets. This is also demonstrated by the record volumes our Gate terminal in Rotterdam handled last year. Our earnings were not affected with capacity rented under long-term contracts. The LPG market also continues to grow, mainly driven by the U.S. shale production. As a consequence, LPG is increasingly being used as a chemical feedstock. Despite higher seasonal propane prices, European crackers have continued to favor LPG over naphtha even throughout the winter. And residential fuel of LNG in emerging markets like India has absorbed part of the excess LPG supply. Our earnings benefited from new LPG export from our RIPET terminal in Canada that started operations in 2019. So we see the segment of gas showing structural growth and more infrastructure is needed to cater for this growth. We target to expand our portfolio with new investments in gas in the coming years. Now moving on to new energy. We see a sharp rise in production of renewable energy globally, and opportunities for Vopak will emerge for storage of electricity in either liquid or gas. Our new energy strategy, therefore, focuses on hydrogen, solar and flow batteries. In 2019, we made our first investments in hydrogen and solar to develop and understand the logistics value chain, and we continue to look for investment opportunities. We currently have no earnings coming from the segment, but we are investing in capabilities. In 2020, we aim to take an FID on a pilot hygiene investment in Europe. So to sum up, we delivered short-term results despite several market challenges in a competitive environment. On to strategy execution. Allow me to recap the deliverables of our strategy execution for the period 2017-2019 and you are familiar with these strategic objectives. We have delivered significant growth and invested EUR 1 billion in growth CapEx in the last 3 years. Our sustaining and service improvement CapEx is managed within the spending limits with a total spend of around EUR 750 million. And in the last 3 years, we've spent more than EUR 90 million in IT, and we have driven costs down and delivered on the efficiency program as promised. Our cost level of 2009 amounted to EUR 633 million. Our strategy is unchanged, and we continue the course we set in the previous years with focus on performance and value. For 2020 and beyond, we will further strengthen our cost culture and expect to compensate for annual inflation. Our sustaining and service improvement CapEx approach is unchanged, and we may spend EUR 750 million to EUR 850 million for the coming 3 years, subject to policy changes, discretionary spending decisions and the regulatory environment. We will manage IT CapEx with an annual spend between EUR 30 million and EUR 50 million to complete the build and global rollout of Vopak's digital terminal management system. Our growth investment outlook for 2020 is unchanged and could amount to EUR 300 million to EUR 500 million. So let me summarize our key messages before I hand over to Gerard. This year, we delivered strong financial results and we've executed our strategy with a clear transformation of our portfolio. We continue the course we set in previous years. And we are committed to keep storing vital products with care to make a meaningful contribution to a more sustainable society, enabled by our financial performance. So moving on to the next part of this presentation, I'd like to hand over to Gerard who will explain more about our financial results.

[Gerard B. Paulides, CFO & Member of the Executive Board]

Yes. Thank you, Eelco, and a very good morning to everyone. I will update you now on the financial performance and financial framework. And for more details, I refer to our 2019 annual report as we published this morning. The annual report reflects our integrated approach reporting on financial sustainability and governance performance, including our strategy and value model. Now let's turn to the next slide and look at some of the financial performance details. In 2019, we realized a strong EBITDA and significantly increased earnings per share and showed momentum with our portfolio transformation. Our cash performance and balance sheet support continued growth investment and increased distributions to shareholders by growing our dividend with 5% and a share buyback program. This results from our discipline to execute our strategy. Earnings measured as EBITDA, excluding exceptional items, came in at EUR 830 million, an increase of almost EUR 100 million, reflecting good performance from new assets but also revised accounting for land lease commitments as per IFRS 16. The net profit was EUR 358 million with an earnings of EUR 2.80, a significant increase of 23% compared to last year. In addition, net profit from exceptional items was EUR 213 million. Our financial framework and priorities for cash are unchanged, and we have flexible access to the debt markets. For 2020, we will continue to invest and allocate the majority of cash from recent strategic divestments to growing our portfolio. To increase our distribution to shareholders, we start EUR 100 million buyback program and we increased our dividend. Let's go to the next slide. Let me take you through some of the '19 results. As of January 1, we started to apply IFRS 16 accounting for leases. And in 2019, in our results announcement, we've provided pro forma numbers that exclude IFRS 16 to allow a fair comparison of results compared to previous years. Furthermore, Q4 is the first quarter in which you will see EBITDA discontinued from our divested assets in Amsterdam and Hamburg. EBITDA was EUR 830 million, as already mentioned, and adjusted for IFRS 16 effects -- currency effects and divestments, the EBITDA grew by EUR 51 million compared to last year. Strong performance in Asia & the Middle East reflect contributions from new industrial terminals in Malaysia, PT2SB, and our oil hub terminal in Fujairah that performed well in the dynamic business environment in that region. Performance in the Americas was supported by the good business environment in the chemical storage and performance of the new assets in Deer Park as well as in Canada. In Rotterdam and Singapore, IMO 2020 capacity started to be delivered with contracts in place with new and existing customers. Subdued oil market conditions in Rotterdam and Singapore continued. We delivered a return on average capital employed of 12.4% in 2019. Continuing with our quarterly EBITDA comparison, Q4 versus Q3. EBITDA for the fourth quarter came in at EUR 205 million, explained mainly from positive effects from various commercial settlements, good performance from IMO 2020 capacity and growth projects replacing divested EBITDA. The strong performance in Asia & Middle East was primarily explained by Singapore as a result of IMO 2020 capacity contributions and other income from various settlements. The China & North Asia division includes resilient performance of our industrial terminals and the final settlement related to our terminal in Haiteng. In Europe & Africa, the contribution from IMO 2020 capacity in Rotterdam was partly offset by tank cleaning cost and by disposals. The reduction of the LNG division was mainly caused by one-off IFRS 16 effects coming into force in Q4 for the LNG part. Divisional segmentation next. Occupancy rate in Europe & Africa and Asia & Middle East reflect IMO conversion taken back into operations in Singapore and Rotterdam. EBITDA growth is partly cut back by the divestment effect of Amsterdam and Hamburg. Chemicals and gas occupancy rates have been stable, which is mostly noticeable in the EBITDA performance of our Americas and LNG divisions. Occupancy rate in the China & Northeast -- North Asia reflect the competitive pressure at chemical distribution terminals, mainly from local players. However, at the proportional level, the reported numbers in China & Northeast (sic) [ China & North Asia ] are much more stable. Let's look at occupancy rates further. In 2019, our occupancy reflects the execution of conversion activities and the current oil market conditions at oil hub terminals. In the fourth quarter, IMO capacity has been delivered back to the market with commercial contracts in place for practically all capacity. At the same time, adverse market conditions persist, and we have out-of-service capacity for maintenance and inspections, in particular, in Botlek, Europoort and Singapore. This has offset the positive occupancy of the utilization of IMO 2020. The occupancy rate is trending upwards during the fourth quarter. Let's have a further look at fuel oil. We've repositioned our fuel oil network and we're very satisfied with the current exposure. Our current portfolio covers the right locations, including the 3 major bunker ports in the world, Singapore, Fujairah and Rotterdam. Secondly, we've converted capacity at each terminal to be low-sulfur fuel oil oriented and less capacity in high-sulfur and marine gas oil, MGO. A large portion of capacity remains flexible to accommodate market dynamics with segregation and blending to service our customer. Viscosity of products also influenced options for shippers. Lastly, we have contracted the right group of customers consisting of major oil refiners, global shippers and some, but less fuel oil traders. Very low-sulfur fuel oil availability has been good in the market, but supply and demand needs more time to settle. We've not observed compliance disruptions. Our 3.5-million cubic meter capacity is well positioned to operate in the range of 85% to 95% occupancy for consolidated assets. Turning to the cash flow. This year, we delivered a good cash flow with more than EUR 700 million cash flow from operations. This resulted in almost EUR 350 million free cash flow before growth. Our investment momentum is clearly visible, and we invested EUR 0.5 billion in growth projects in line with our outlook. Our debt position at year-end decreased to EUR 1.7 billion, and the senior net debt-to-EBITDA ratio was 2.75 at the end of the year. With our portfolio performance and strong balance sheet, we are well positioned to support growth in 2020, fund the buyback and the increased dividend. Continuing with investments. We break down our investment in growth investments and other investments. In the period '17 to '19, we invested EUR 1 billion growth. These investments are done through CapEx in our subsidiaries or equity injections in joint ventures and associates and includes also acquisitions. For 2020, growth investment could amount to EUR 300 million to EUR 500 million, as previously communicated. Guidance for sustaining CapEx and service CapEx is in the range of EUR 750 million to EUR 850 million for the forthcoming period. The previous period was managed within the range of EUR 750 million, and we spent about EUR 715 million of that range in the last 3 years. Larger sustaining CapEx investments are subject to separate FIDs, and service improvement projects with a clear value proposition in the hub location may also impact our spending in the range. To complete the build and rollout of Vopak's digital terminal management system, we expect to spend annually EUR 30 million to EUR 50 million in IT CapEx over the next 3-year period. We are now at release 5 and implemented our digital terminal management system at 8 of our terminals. Earlier this month, our major location, Deer Park, was switched on and covered expanding functionality in the software. 2 of our terminals in Singapore are life, and the remainder of Singapore and also Rotterdam are planned for 2020 and 2021. Becoming more digital is key to create long-term value and keep our position as a leading independent tank storage company. Our balance sheet. Our financial framework and priorities for cash are unchanged. We aim to have a balance sheet with sufficient flexibility to execute strategy and manage market conditions. The senior net debt-to-EBITDA ratio was 2.75% and in the middle of our target leverage range of 2.5% to 3% and compared to 2.99% in the middle of the year. Value creation through growth CapEx of EUR 500 million in 2019 was well managed within this framework. Moving to shareholder distributions. End of January, we divested a terminal in Algeciras, which marked the completion of the transaction of the 3 European oil terminals in Amsterdam, Hamburg and Algeciras. The transaction led to an exceptional gain of EUR 200 million. The majority of the cash from these strategic divestments will be allocated to grow the portfolio. And to increase our distribution to shareholders, we start EUR 100 million share buyback program. Turning to some proportional data. We provide additional performance insights based on proportional consolidation, reflecting the economic interest of Vopak in our entities. 2019 proportional EBITDA was EUR 930 million, of which the proportional EBITDA from joint ventures is around EUR 400 million. Both these numbers, by the way, are before application of IFRS 16. This proportional EBITDA shows an increase of more than 10% or EUR 100 million, reflecting the performance of new joint venture assets, RIPET in Canada and PT2SB in Malaysia, as well as the acquired LNG terminals. Including IFRS 16, the proportional EBITDA for 2019 is EUR 980 million, and that compares to the IFRS consolidated EBITDA of EUR 830 million. Let me recap the financial messages. 2019 was successful. We delivered strong EBITDA and good cash flow and significantly increased earnings. Our financial framework and priorities for cash are unchanged, and we continued to invest. To increase distribution, we start a buyback program and increased our dividend with 5%. Our occupancy was low, but our results were good. Looking ahead, let me close out with some comments on what is going to happen going forward. We aim to grow EBITDA over time with new contributions from growth projects and IMO converted capacity. Gross investment could amount to EUR 300 million to EUR 500 million in 2020 alone. In 2019 and '20, we target 1 to 3 industrial terminal opportunities and 1 to 3 gas investment opportunities. Our views on sustaining and surface CapEx and IT CapEx and our approach has not changed, although policy changes, the regulatory environment and additional discretionary decision may impact the amount of CapEx that we allocate to these categories. We continue to focus on costs and further strengthened our cost culture also in 2020. In terms of new energy and innovative technologies, we aim to expand our capital allocation. In 2020, we will execute the share buyback program, and we continue to set the core strategically, as we set it in the past, with a focus on performance and value. Lastly, on June 10, we intend to have a Capital Markets Day and update on our strategic direction and business environment and choices available to us, opportunities. We will conduct the Capital Markets Day in Rotterdam and will include a visit to one of our facilities in the port. We will talk then about our views on the markets, portfolio development as well as the financial framework. During the day, we aim to give you more insights in our digital agenda and application thereof in our network of terminals. This ends the prepared remarks. We will now turn over to some questions, and I will hand back to Eelco for that.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Thanks, Gerard. Thank you very much. So that concludes our presentation. We will take questions. First, I would suggest that we allow people who are sitting in the room to ask some questions, and after that, we will facilitate the questions from the people that have dialed in. So who would like to take the first question.

[Luuk Van Beek, Analyst]

Luuk from Banque Degroof Petercam. Well, first, a question about IMO 2020. You mentioned that all your capacity is now available and covered by contracts. But really, in a market that there's been a very high level of activity with vessels bunkering at the start of 2020, is that something that also would give a boost to your Q1 contribution? Or is it spread out over the contract?

[Gerard B. Paulides, CFO & Member of the Executive Board]

First of all, let me say something about the numbers and then maybe Eelco can cover some of the market dynamics that we've seen in the early market in January. So in terms of our capacity, as you know, we have completed our activities. It's mostly contracted. We've created some room for operational flexibility. But in essence, the capacity that we've created, the 3.5 million cubic meters, is contracted out. The exception to that is Panama, which is, as you know, a greenfield facility, and there, we are still in the process of starting up and filling the capacity with customers, but we've reached a reasonable level of occupancy also for Panama. So in Q4, what you will see in the occupancy, we had an occupancy which came back from the lows that we've observed in Q3, but it was also still building up. And the commercial contribution is also still building up. The first customer experiences are good with the segregation of our facilities with the different streams. So we're getting settled into that new market and we will see a full contribution of that in 2020. Now maybe on the market dynamics, Eelco, if you could give a flavor of that?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

The dynamics on what we have experienced in the market is, first of all, I had to give a bit of clarity. First of all, compliance is high on IMO 2020. That's our first observation across the globe. So the larger Boards are complying and making sure that the rules and regulations are upheld. The second thing we see is that we have invested in capabilities, particularly to handle low-sulfur fuel. So we've made that available across the globe. And our initial assessment is that assessment or that insight has been the correct one because what we've seen is that there's been -- if you look at the study sort of 2 years ago, there was a consideration that marine gas will take a large part of the total bunker volume, and that is not taking place. The reality on the ground that we see in our terminals in Rotterdam, Fujairah and Singapore is that there is quite a high volume of low sulfur fuel oil that has been delivered to markets where refineries have taken care of that production. The third thing that we see is that there is a -- that the operations of the bunkering and the customer satisfaction, which Gerard mentioned, has been very high and has given us great confidence. So we feel, in today's environment, good about the choices that we've made. Obviously, and this is to the second remark, if you look at the price differential that we've seen happening in the market, we've seen the low-sulfur fuel has been priced at very high levels in the early stages dropping off a bit. And we see that those who had scrubbers have been able to make use of the cost advantage, at least in the early stages. I expect the market to settle for another 4 to 6 months to have sort of a final -- not equilibrium, but at least it will give us a sense of where supply and demand will fall. But early indications is that how the markets are moving and our customers are behaving is that we've made the right choice, and that's where the confidence comes from that Gerard just radiated on the, let's say, our fuel oil activity for the year 2020 and '21.

[Luuk Van Beek, Analyst]

And you would not expect any big swings from quarter to quarter depending on the amount of bunkering that's done by the global tanker fleet or the global fleet?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

I don't think -- well, obviously, we cannot judge how markets will respond. But I think, so far, the transition has been less disruptive. If you also look at the articles that were presented to us 2 years ago and if you look how the industry has adopted, how the refiners have adopted and the tank terminals have adopted and how the shipping industry has adopted, so far, the disruption has been a -- not a smooth process, but at least a process which has been gradual. So we haven't seen any major disruptions yet.

[Luuk Van Beek, Analyst]

Okay. And another question on your -- the impairment that you took in Canada on Québec City regarding the lease concession. Can you elaborate a bit on that and to what extent it will be a factor in operating the terminal in the future?

[Gerard B. Paulides, CFO & Member of the Executive Board]

Yes. We have a set of terminals and one of the terminals we're having a discussion about the longevity of the asset in terms of permitting and licensing discussions related to the asset. We've taken a few on that. The commercial discussions are ongoing. We felt it prudent to -- and this is just in line with standard accounting criteria to impair one of the assets and see how it plays out. But we fully impaired it in principle. It doesn't influence the day-to-day operations as we now see it.

[Luuk Van Beek, Analyst]

Okay. So it's unclear if the lease will expire and when and what would happen then?

[Gerard B. Paulides, CFO & Member of the Executive Board]

That is subject to ongoing discussion.

[Frits Eulderink, COO & Member of the Executive Board]

Yes. It's clear that the lease will expire. But indeed, the renewal is still subject of discussions between us and the Board.

[Juri Zanieri, Analyst]

Juri Zanieri, Kempen. Two questions on my side. You mentioned that you want to replace the EBITDA that you have missed from the divested terminal. I was -- I think we are talking about roughly EUR 70 million. I was just wondering what is the time frame before you're going to regain that EUR 70 million. Another thing about occupancy. If you can give us a bit of indication for 2020 and the years ahead, what is the expectation you have? I mean do we -- can we leave behind our days of low occupancy rates and be more positive for the years to come?

[Gerard B. Paulides, CFO & Member of the Executive Board]

First of all, we don't give guidance on the year on specific numbers, so -- but I will give you the direction of the sentiment that we have. I think we're well positioned for 2020. The income that we will generate from IMO 2020 and from new assets relative to 2019 gives us a very good position to replace the divested asset EBITDA. Our ambition is, as I said, over time, to grow EBITDA, and of course, we will also fight to do so for 2020. But that would be obvious as an ambition. It will depend on market conditions. The dominant factor is, indeed, the oil market conditions that influenced occupancy. Where we left occupancy, I think it's important how do we feel about that, at year-end 84%. Is that a good place to end 2019 and start 2020? And for us, the answer is yes. The IMO has come back in. So you would have expected perhaps that you would go over the 84%. However, we've also divested the assets and deconsolidated Amsterdam and Hamburg. Amsterdam and Hamburg, occupancy-wise, were high-occupancy assets. Value-wise, we thought there was better value elsewhere, which we've proven with, for us, from our perspective, not from the buyer's perspective, but from our perspective, by generating a very healthy profit on the assets and also relative to our business plans as we show them value-wise. But the effect of divesting Hamburg and Westpoort, you get a drop in your occupancy of about 1.5%. So you come back with IMO, but you reduce on account of the divestments, IMO also builds up in the quarter, and that leaves us with a sense of entering 2020 in a good position. Obviously, we will have to handle commercial occupancy and maintenance occupancy effects, which we've seen, particularly in Botlek, in Europoort and in Singapore. It's a combination of commercial occupancy and maintenance occupancy and we will work our way through that. But they are, in their own right, no reason for us being not optimistic about 2020. I think the dynamics are good. The new assets are coming in. We did experience a little bit of delay in the delivery of our asset in South Africa in '19, so we missed the contribution from South Africa that we could have seen in '19 that was pushed into 2020, a whole mix of reasons in itself. It doesn't influence the value to the shareholder other than a timing point. But EBITDA-wise, we missed that in '19, and some other assets are also coming into the play. So on balance, I would only directionally give you the moving parts. As I just explained to you, we feel good about 2020. We see opportunity to replace that EBITDA. And business-wise, I think we're well set up. If oil markets turn, that obviously helps. We've now been in this market for more than 2 years. And therefore, from that perspective, we continue to be at the low end of that earning potential that we've seen in '18 and '19.

[Laurens de Graaf, Head of Investor Relations]

Yes?

[Thijs Berkelder, Equity Research Analyst]

Thijs Berkelder, ABN AMRO. I think I have at least 15 questions. Let's start with 3. First, can you give indication of what coronavirus at this moment concretely means for you?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

That's an easy one, Thijs. You should look at this in fear -- 4 areas. And we consider, first of all, keep people out of harm's way out of the coronavirus. So we've taken measures, both in China and Asia, and even some measures globally, to ensure that we, first of all, can keep our terminals up and running 24/7 and to ensure that people are not affected. There are -- very pragmatic things that we've been doing, obviously, when it comes to travel policy, self-quarantine, et cetera, a few of those things. And maybe good to mention so far, no case is -- none affected, and we're open for business. Second of all, we do see that the virus might have an effect on demand of oil and chemicals in China. So you would expect that those products, which have been produced need to find home somewhere else. So we see possible changes in supply chains, and we expect that in the initial stages, people will try to use existing contracts globally and existing contractual arrangements with us and others to, let's say, take care of their immediate needs. If that sort of exceeds, if the burden becomes too stressful, then we expect that you might see new contractual discussions that take shape, where people say, I need to have a spillover of volume that I need to store somewhere. That's the third thing that you might consider. So that's -- that would suggest that in certain locations, you would find more volume being stored than less. But then the fourth element is long term. Obviously, we need to look at the long-term effects that if we see destruction of basically economic activity because of this in the long run, obviously the world economy will be affected. And it's really hard to judge how that will play out on Vopak as a whole. But those are simply the 4 things that you can consider in looking at the coronavirus.

[Gerard B. Paulides, CFO & Member of the Executive Board]

Maybe one additional angle, which is early days, but to keep in mind if this prolongs that obviously, China is very important in the supply chain of various goods. So for instance, for construction, we're obviously already with the prolonged holiday in China facing a little bit of delays in the projects there. But if that -- if this were to become a longer-term thing, then that could also affect projects abroad with, basically, for lack of project supplies.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

14 to go, Thijs?

[Thijs Berkelder, Equity Research Analyst]

The chemical sector, quite a lot of large IOCs complain about margins in the Singapore area in chemicals. What are you seeing in the chemical space?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

I made some comments on that in my presentation. No effects in 2019. We have seen no effects in the sort of immediate and present day. Obviously, our industrial terminals, and you know that is not dependent on typical cycles because this is a longer arrangement that we have, but it's to be seen on what the response will be in Asia, particularly. And then again, you have a short-term response is -- if demand falls, what will happen to the excess material, but what's the effect in the long run is hard to see, Thijs.

[Thijs Berkelder, Equity Research Analyst]

Do you see already slow down, say, throughput levels in the chemical chain?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Not considerably.

[Thijs Berkelder, Equity Research Analyst]

Okay, clear. Then third question, for the first time, let's say, ESG. You reported injury rates, let's say, all safety rates deteriorated versus '18. Is that primarily the cost of being more active on the construction front compared to 2018? Or were there other factors affecting your injury rate?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

I have my views, but let Frits...

[Frits Eulderink, COO & Member of the Executive Board]

I think we have seen, I would say, a period of very heightened construction activity actually for a number of years. So that in itself is not the reason. To be honest, I wish I was more clear as to what to re-infer. I would look at it for now more as a statistical sort of fluctuation that you have from time to time. If you look at our long-term trend, basically, you see that it -- it steadily decreases, but it has a year-to-year wiggle on -- that sort of accompanies it. And so this result was better than, for instance, the 2017 result, but it was less good than the 2018 result. And obviously, our aim -- our long-term aim is to bring down the number and first of all, remain the industry leader, which I strongly believe we still are, but also to be as good as our best of our clients, our safest clients in this regard, and that's where we still have some way to go. So we're working on actively involving management even stronger in safety to our Trust and Verify program, as we call it. We are also, I would say, very pleased on the other end of safety, we've completed our Assure 2016 program, which was basically very much aimed at doing those things that prevent major disasters from happening. And although on the personal safety side, we had, what I call, a major disaster and namely a fatality, one person at least. If you look back over the period, we have prevented any major disasters with any of the Vopak corporations on the process side.

[Thijs Berkelder, Equity Research Analyst]

Okay. And in addition, some questions may be on vapor recovery. Let's say a year ago, you announced a big -- quite big investments in vapor recovery units. You're not yet reporting on vapor recovery or maybe this year will be the first year. And now while your competitor is reporting on vapor emissions, when can we expect it? And what kind of investments are needed there still?

[Frits Eulderink, COO & Member of the Executive Board]

So I think we have announced that, first of all, quite a bit of our sustaining CapEx goes into environmental measures. Quite a few of which are also related to air emissions, in other words, vapor. On top of that, we have announced that we have a EUR 40 million program to do things that are over and beyond the tightening laws of the various locations. So we are in the process of executing that. But for instance, here in the Netherlands, we've also had some delays because of the difficulties with permitting due to nitrogen, et cetera. So that's a part of the program that we haven't been able -- where we're basically still waiting on permits to proceed. Also, I think we -- yes, we are keen there to progress. You should know that there is no, I would say, filled way of actually measuring vapor coming off of the process. So what we have standardized on is the use of a model for it because that's the best there is, but we have to keep in mind is about the model. So we want to be a little bit careful. Therefore, we've given ourselves a number of years to really, I would say, gain some confidence with the numbers we're getting out before we want to go external with publishing numbers coming out.

[Quirijn Mulder, Research Analyst]

Quirijn Mulder from ING. Couple of questions, cost savings, maybe Gerard would like to say something about it. EUR 40 million was aimed for 2019. So we would like to know what is the effect in 2020 still there and are there aims for more cost savings programs?Then about the LNG, LPG. Can you maybe update me on the LNG situation with regard to Brunsbuettel and maybe to China? And on LPG, it looks like that you have a lot of ambition. And if we look at the export from the U.S. to other parts of the world, there's still a lot of things are going on there. And are you looking also for the U.S. for export possibilities on LPG storage? Because it looks like to me that you have still land available there.And finally, on ITC, do you discuss with ITC the situation there for them with -- after the disaster in March last year with the fire during -- down there, in my view, about 15 terminals? And my last question is about dividend payout. Given the good year, I was a little bit surprised about the dividend payout going down from 48% to 41%. It was not a reason to raise your dividend certainly, if you have a margin, let me say, payout range between 25% and 75% and you are now only at 41% in a year where you created a lot of cash. These are my questions for this moment.

[Gerard B. Paulides, CFO & Member of the Executive Board]

Shall I take cost savings and dividend first?

[Frits Eulderink, COO & Member of the Executive Board]

Please do.

[Gerard B. Paulides, CFO & Member of the Executive Board]

So cost savings, we have stated in -- before we started '19 that we would aim to deliver a cost level to operate the company in '19 that was at expanded capacity equal to the footprint of cost in 2017. We achieved that. We actually over-delivered a little bit on it. But the buildup of that number, we can provide details on how you reconcile it to what is reported. So that is achieved. Now we discussed it further in our budget cycle on how to deal with it in 2020 and onwards. We think there's more to be gained in efficiency and effectiveness of our spending. And I think the way to look at '20 is that we aim to compensate inflation in our budgets and obviously, we allow for expanded operations that are just coming into the cost platform. But on the base cost level, we compensate in '20, at least inflation. In terms of dividend payout, the way I look at it is, yes, you're right. We have a dividend increase of 5%, bringing us to a certain payout ratio plus we have allocated EUR 100 million to the buyback. We think it's a good mix of tools that we'd like to use, and we're very satisfied with the fact that we've, for the first time, best I know, instigated the buyback program to distribute some of our good fortunes in 2019 to our shareholders. Now we are very acutely aware that we also have a strategic preference to invest and invest at attractive levels. So in 2020, we will invest EUR 300 million to EUR 500 million, that's relatively high in the history of the company. We feel good about that. It creates value in the long run. So the mix between the investment growth, the growth investment, sorry, the dividend distribution, plus 5%, and the buyback, I think, is a very healthy mix for shareholder distribution and shareholder value creation. So we feel good about that.

[Frits Eulderink, COO & Member of the Executive Board]

Maybe ITC, let me start there. So I think, first of all, we were very happy that our protection measures helped because ITC is a direct neighbor of us in Houston. So by cooling the tanks and basically 24/7 huge extra effort by our team, we managed to keep -- to contain the fire to basically outside our fence, although it was a literally way too close for comfort. I think in the aftermath of it, obviously, ITC lost the tank park, but our occupancy in Houston was already very high. And I think -- so I would say, the net result for us has been more, I would say, that we suffered more from the interruptions that were taking place as a result of combating the fire that we profited in the aftermath, the one, I think, on 2019. But all in all, obviously, very concerned that this happened. But the -- if -- given that it happened, I think we're very, very proud of the performance our team and our equipment to keep it to what it was as far as damage goes.

[Quirijn Mulder, Research Analyst]

Are you interested there -- to divest the position there because of Japanese ownership?

[Frits Eulderink, COO & Member of the Executive Board]

Yes. We have no indication that ITC would want to divest. But we always -- we obviously always monitor the market for opportunities that could have synergy.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

LNG, Frits?

[Frits Eulderink, COO & Member of the Executive Board]

Yes, LNG, -- I'm trying to remember what exactly you were asking.

[Quirijn Mulder, Research Analyst]

In Hamburg and China.

[Frits Eulderink, COO & Member of the Executive Board]

Yes. So the progress. Okay. Well, I think, first of all, let's start with Germany. We are, I would say, I would describe it as we're making steady but somewhat slow progress in Germany and the slowness comes from the very, I would say, yes, rigorous way in which the environmental permitting works in Germany. So we are going through a process that will lead -- that will last, we reckon at least until the end of this year in terms of the permit application. And obviously, even in the LNG world, where basically, people are patient, I think one of the things that we have to manage is the customer interest because people, they do have interest in the sort of -- if you can deliver within an acceptable time frame. But yes, we cannot be very specific about the time frame yet because we're still in the middle of this environmental process. And in China, it was the other one, I believe you asked, there, I would say, it's similar, but for a different reason. I think we are ready to go, but we wait for the final go ahead of the Chinese. Basically, national planning who are working on a master plan for LNG distribution in China, and they are looking at which locations would or would not fit into that. So there, we have basically contractually with our customer, everything agreed, but we need this final go ahead from the central authorities.

[Laurens de Graaf, Head of Investor Relations]

Mulder.

[Andre F. M. Mulder, Analyst]

Andre Mulder, Kepler. Two more questions. So first question on the utilization rates. You detailed that the disposals had a -- an effect of 1.5 points. If we look at Sheet 13, should I take it that the effect of IMO once all the terminals are operational, will be an additional 1 point or so compared to the 84% of Q4?

[Gerard B. Paulides, CFO & Member of the Executive Board]

What we said in Q3 is that we were then at 82%, right? We said IMO would have an effect of coming back into the fray of about 5%, right? So relative to Q3, which was at the bottom of taking out the majority of our capacity. Now that capacity has in terms of occupancy come back, but it was offset by, for instance, the divestment. The only one where you now have an occupancy point still is Panama, which is in its early phase of commercial startup. And obviously, on IMO itself, the commercial effect of the occupancy that started to come back in Q4 will be throughout '20. So the occupancy number, yes, pre-sheets, I guess, the full effect of the year.

[Andre F. M. Mulder, Analyst]

In press release, you're talking about various settlements in Asia, Middle East and China. Especially in China, the impact seems to be quite large in Q4. Can you give us a bit more detail about what the impact has been of these various settlements on results?

[Gerard B. Paulides, CFO & Member of the Executive Board]

Yes. It's a point that we indeed highlighted the settlement in Haiteng. We highlighted that not for reason of qualifying the results. We highlighted it for a reason that Haiteng has been a subject of long discussion in terms of it coming into our portfolio, then being idle for a while because of the incident at Haiteng, and it's now coming back. So we have settled the commercial discussion now with them and the effect that you see in Q4 of that whole backlog discussion was an EUR 8 million support in the number. However, if you look at the total number, the EUR 205 million that we reported, as many pluses and minuses in that number. And in aggregate, I'm not going to say the EUR 205 million was not solid because EUR 205 million is a good number. The only item we specifically highlighted was Haiteng. And it is a variety of many different moving parts in those numbers. Some, let's say, nonrecurring, if you use that term cost items some commercial settlements, some insurance settlements, either favorably or unfavorably. If I add that all up, it's not something that I would qualify the numbers on. So I think the EUR 205 million is just a good number to take in its own right.

[Andre F. M. Mulder, Analyst]

Then on the spending, 2020, you said EUR 300 million to EUR 500 million already in the second month. That seems to be quite a wide range. Possibly, it will not depend on building terminals. So should we assume acquisitions to reach that EUR 500 million?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

The simple answer there, Andre, is that we have 1.5 million cubic meters under construction still in 2020. So part of the capital contribution will go to completing the growth program that has already started. Then the second is -- the second thing if we announce growth projects throughout 2020 and commence the construction of fund equity for joint ventures to commence that project also. That will be included. And indeed, the last one, the last -- third bucket that you can consider is indeed acquisition. So it's a combination of all, and we've made our best assessment on where we think that number will fall throughout the year depending on how these business development activities will play out.

[Andre F. M. Mulder, Analyst]

What amount would then be left for '21 and '22?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

We haven't guided on that yet. I think it's too early to tell. We'll let you know in 12 months' time, Andre.

[Andre F. M. Mulder, Analyst]

But based on the current projects, the projects that you already have in hand, how much more would you have to spend in those years?

[Gerard B. Paulides, CFO & Member of the Executive Board]

Well, a typical project, Frits, correct me if I give the wrong time line, but typically, it's like 24 months for building a site. So if you take our commitments now, part of them, of course, started last year or even before that. And purely on committed numbers, the investment goes down in '21, '22. However, that's not necessarily what we expect. We have a very healthy list of what we call targeted or aspirational projects. And we would like to spend that level of money, if we can. In all fairness, 2019 and '20 relative to what we've seen in the past, were high CapEx numbers. So you would really have to be very successful to continue to repeat that. Now we hope to be successful, but I think -- well, that's as best as I can give you a flavor for the number.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Another way of looking at it, Andre, is that we have -- so we announced the shifts in our portfolio. We announced the investment in digital. We don't want to give a signal we're going to rest on our laurels. We believe that we can continue the strategy as is, and that's where we want to signal another EUR 300 million to EUR 500 million investments in growth, obviously. And I think that's the caveat subject, and that's why as a range subject to market conditions, depending on how the global economy will shape out or how the oil markets will develop, how the chemical markets will develop and how the gas activity will react to the current pricing environment, obviously, might change in the -- I mentioned, in business development. So I think it's not -- the way we see, we're not opportunity constrained. We just need to wait to see how things are developing. And we've been -- to echo what Gerard is saying, we've been very successful in the last few years in creating momentum in finding these business development opportunities for Vopak. So this is how you should read it in combination with end growth and redistribution. It's not either one of them. It's both.

[Andre F. M. Mulder, Analyst]

Can you give a bit more detail on your statement that you're looking at further hydrogen project in Europe for this year? Where? What?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Well, that's I mean, I said it in my presentation. I think we believe that if you look at logistics of liquids in the long run, so how ports will be used. Ultimately, you need to find an alternative to move or store electricity simply because we see a ramp-up of renewable electricity that will come into global markets. If you read literature, if you talk -- industry articles, you see several opportunities for electricity to be stored. Most of them, if you look at large scale industrial, it involves one way or another around hydrogen. I will take a hydrogen molecule with nitrogen and make it into ammonia, or the LOHC, which we informed you on recently. We want to build up capabilities as Vopak. I think the good thing is we have the site, so we have the locations. Mostly, it's within large industrial centers where a lot of hydrogen might be consumed. So what we need to understand is sort of what technologies are there and how do you develop skills and capabilities to either store and move that around.We have now made a few modest investments in understanding what the capabilities are in the technologies, and we are now attaching ourselves to certain partners in which we're developing, can you actually build a supply chain of hydrogen? Yes. So what we are considering is to see whether we can build the first hydrogen supply chain, so it means to produce hydrogen somewhere, not in the Netherlands, to either pack it or connect it, bring it to Rotterdam, unpack it and start using it. And this is an investment which will not be for industrial scale to be competitive with the conventional methods. But it will be to test and to show and demonstrate that the technology is viable at tariffs and rates, which are within the bandwidth of which are economically acceptable. So what you can expect is that, particularly, if you look at the focus here in the Netherlands and our capability in the Netherlands is that we will be looking for a small pipe investment to demonstrate you can bring hydrogen into the Netherlands. That's our thinking today.

[Andre F. M. Mulder, Analyst]

And any guesstimate of what -- how large that could be in time compared to your current scale?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Well, I mean, I'm -- this is far beyond the time horizon that you and I are sitting here at the...

[Andre F. M. Mulder, Analyst]

That's right. I'll be long retired.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

So -- but I mean, that's -- as I think most scientists and most people and also Vopak believe that ultimately, that there is huge potential, if you take a long enough time frame. I think if you take 30, 40 years down the road. Even then, if you at how long it's taken for oil to become the predominant fuel, there's such an infrastructure requirement that needs to put against it and such a change in supply chains that it will take long.

[Gerard B. Paulides, CFO & Member of the Executive Board]

I think it's also fair to say that Vopak has the capability and the mindset to be at the front foot on this and to explore that value chain and commit our resources. We've experienced that it's very easy to map to our existing skill sets, i.e., connecting supply and demand, finding the right commercial drivers to do so, selecting the location, using our existing infrastructure. From that point of view, conceptually, very nice to what we do. What you see with new energies, in particular, is they start very fragmented and then you -- the trick is can you scale them up? And we want to be at the forefront of that.

[Laurens de Graaf, Head of Investor Relations]

Okay. Let's see if there are any questions from the people that are dialed in. Mariela, could you check for us, please?

[Operator]

[Operator Instructions] So we do have a question from the line of David Kerstens from Jefferies.

[David Kerstens, Equity Analyst]

I've got 3 questions, please. First of all, on the occupancy rate in the fuel oil storage capacity. I think I heard you say you're well positioned to end up in a range of 85% to 95%. But with oil capacity fully contracted, we should not be towards the upper end of the range, maybe even at 95%, is that not fully contracted? Why would you still be potentially in 85% to 90% range? Then the second question is on the outlook on the markets. I think -- I don't think we've heard you so positive, Eelco, on the market outlook in recent years, but only a short-term impact on crude oil storage. Do you currently already see an improvement after the recent drop in the crude oil price and the flattening of the forward curve and maybe even a slight contango on your occupancy rates in the hub locations and crude oil storage? And then the third question is regarding the new digital capabilities. I understand your cost savings program has been realized. But how do you see the financial benefits of these investments? I think, EUR 90 million, you said over the last 3 years, another EUR 120 million going forward. How do you expect to monetize these investments? And where will we see the impact on the results?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Okay, David. Well, let's again go revisit occupancy rates. And then in my words, I think the 2 things we need to manage is out-of-service capacity and commercial occupancy. Those are the 2 things that have been visible on the radar screen of everyone in this company because that ultimately dictates our earnings capabilities. We had large or unusual high out-of-service capacity for fuel oil, and we've signaled to you that we have closed that gap in that all the out-of-service tanks for fuel that were destined for the low sulfur segment have been returned back to markets and have been rented out. Yes. Then the second thing is that we have obviously besides the fuel oil turnaround, we still have out-of-service tanks because we have our normal inspection programs and our normal maintenance programs. We have, however, a few larger programs. It was highlighted by Gerard. One is in Botlek, where we have taken 2 tank bits, 2 complete tank bits out of service to do it in one go. We have a normal out-of-service capacity for tank inspections in, for instance, the Europoort and we have tank inspection programs in Sebarok in Singapore. We have programs for all 3 to bring those large out-of-service projects back into business. So how you should visualize that is that throughout 2020, you'll see all the way at the back end of the year slowly, but gradually, those large programs coming back. So we are working to get that organized. Then at the back of that, the question is that when those tanks are coming back, is the market structure, such as the market capability is strong enough to actually fill it. If you bring back the out of service, but you don't fill it, then, obviously, your commercial occupancy is not contributing.As I said, "Why is there 85% to 95% guidance on fuel?" Simply low sulfur is, as I said, rented out, but there is still a question on how the high sulfur volumes will move. So that's where we are keeping a little bit restraint in giving clearly a signal saying, no, it's fully committed. There's still a bit of work left there. But the signals are looking strong. If you then look at the outlook of the markets, and that is, do you see any short term, let's say, positive sentiment there. And I think that was also signaled by Gerard. I think there's reason to believe that we can or there's a reason why we're confident about 2020, and that has to do with that coming from a situation whereby gas and chemicals have been very steady, the question always was, is there some activity happening in the oil markets. And the oil markets have been, from our perspective, exceptionally benign in the last 2 years. So now on the back of the fuel oil developments, but also on the back of now the drop in demand, we see indeed that activities are starting to show that the curve might change. It's very early indications that the structure might change. But to answer your question, David, no, we cannot say for sure, but we are hopeful that there might be some upside in the oil markets as we look at that, yes. And then if you look at new digital capabilities, I think, also in the interest of time, I think there, we are very supported by the rollout of the software, and that's what we've been radiating in the calls. We think that the adoption rate and implementation is working very well. I think the data that we're collecting from the terminals is assisting us. Also, it's been very supportive. But we always mentioned to you as well, David, is that do not assume any major contributions from this program until we've sort of completely rolled it out. I think Gerard mentioned that as well. We are now really investing in the capabilities. That's where -- if you look at the slides that Gerard presented, you see that there's a -- also in the head of the column that represents an increase in spend because we now are still in full rollout mode of that -- of those capabilities. If you look at our total cost base, I think that's a -- ambition there is that if you look at the efforts we've been doing in the last 3 years, maintaining where we are today, and if you look at the requirements that are being put on to Vopak, I think we see further tightening and better investments and capabilities in cybersecurity, better capabilities, as I said, in IT and data. We need to have better service for our customers to ensure that we heighten the efficiency. We expect governments to invest for us in further sustainability impairments. So in other words, the way that we conduct our business is also becoming much more complex and much more demanding. So for me, the -- to keep the cost already at par, I think, is already a good indication of how well we are at managing costs. And I think it's a dialogue that we need to entertain with the industry in that if demands are increased and where government is -- there needs to be a moment also for the industry to earn it back. So I think that's just a general remark that I think is applicable to the industry. So long story short, David, I think, new digital capabilities, positive about the capabilities, don't expect anything in the short-term because we're in full rollout. And if you look at the cost, I think that we're maintaining it, but we need to be signaling to our customers that profitability needs to be maintained. I hope that gives a perspective.

[Operator]

And it doesn't look like we have any further questions registered on the telephone lines. So I'll hand the call back to the speakers. Please go ahead.

[Thijs Berkelder, Equity Research Analyst]

Thijs Berkerlder again, ABN AMRO. Looking at your Slide 31, your portfolio transformation road map. It is logical to assume that you are looking at further divestments, especially in oil? And then probably thinking about Fujairah and now being at probably peak profitability, peak occupancy, why not?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

No. You should not draw conclusions from the slide that we are in the business of selling oil terminals. I think all the choices we've made, let's say, we're very purposeful on the geography that the business represents, but also the connectivity that it has to industrial states, for instance, we've made a clear choice in Europe to go back to Rotterdam and Antwerp and have the core of our activities there because we think that the integration with assets provides us with longevity to the business. I think what the slide represents is the direction in which we're thinking. And so you could assume is that the portfolio of projects that we entertain is tilted more towards the gas and industrial terminals than it is towards auto. So it's more the direction, Thijs, than it is already a plan cast in stone.

[Thijs Berkelder, Equity Research Analyst]

Looking at further divestments.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

I think it's a continuous project -- process, Thijs. I think we started that in 2014, as you might recall when we announced our first divestments, I think that we've taken a look that you need to continuously look at your portfolio and update your view on where markets are heading. So I'm not excluding divestments nor is the goal in itself. We continue to look at that.

[Gerard B. Paulides, CFO & Member of the Executive Board]

Thijs, I think it's fair to say that Vopak has a very realistic view of its assets. If we intervene on the portfolio of assets, it will be because of very clear, indicate a strategic direction, value performance, execution capability. And we've proven, I think, also in '19 with the divestment of some assets that I don't think many parties in the market would have expected that we would execute those. I think we are perfectly positioned to take the decision if we feel we need to. So we will not shy away from divestments if we think strategically and value-wise, it makes sense. If there's no, however, targeted divestment to free up cash or something like that, that is not the case. It's strategically driven.

[Laurens de Graaf, Head of Investor Relations]

Good. That wraps the questions. Eelco, do you have anything to further add?

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

I would like to give one last one because I see that Quirijn, do you still have a question? You were so anxious, I want to give you the opportunity, and then we'll round it up.

[Quirijn Mulder, Research Analyst]

Yes, Quirijn again. On the EUR 275 million -- let me see, EUR 750 million, EUR 850 million maintenance CapEx. If I compare that with the EUR 275 million in the last couple of years, and I also compare that with, let me say, an extra EUR 40 million for IMO 2020 CapEx, and we also take into account that the number of older terminals were sold, why is there still that amount in the range of 2, let me say, EUR 750 million, EUR 850 million? In my view, the new terminals should not contribute that much. And also, I would like to come back on my question on LPG because there's a nice area. No, I'm sorry, but I asked this question already about a nice area in Houston where you have some land available. And maybe you can something -- say about this purpose of that land.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Yes. I think on account of the indication we gave on sustain and service, first of all, of course, on the divestments, Westpoort and Algeciras weren't old at all. They were relatively new assets so the service sustained burden, if you wish, our commitment, if you phrase it as we look at it is relatively light on those assets. It is fair to say that we are bringing in a fair bit of new assets into the portfolio. So I do see your point. What we also see is increased requirements in terms of, let's call it, license to operate, expectations of society or port authorities or government in terms of whole combination of factors ranging from environmental to personal safety to process safety to emission management, et cetera. So that does put pressure on the assets. But the way we look at it is we'd like to discuss service and sustain in its own merit. So we say, is this what we want? Is this what is needed? We want to even surpass expectations because we know best in the industry. Then we also look at is that in balance with what the asset actually can generate. Now if, let's say, that would be out of balance and it would be a demand of society to position assets this way, then at a certain moment, there will also be a revenue stream that is attached to that expectation because we're not going to last very long if we ignore that. If we can't work our way through that, then we will intervene in the asset, not -- we will not cut back service and sustain because we think it's too much. Now you then have to decide, I'm going to intervene in the asset. Now that uncertainty of that whole discussion, I think, is fair for us to signal to you that it's EUR 750 million to EUR 850 million. We will have discretionary decisions and debate in the company on how to best spend that -- our reality is that in '17 to '19, we had a budget of EUR 750 million and we spent EUR 711 million. It's a fair indication. It's a good indication. It highlights some trends in the industry. I think we do have a way of earning it back in our business model, and we'll see where it ends.

[Laurens de Graaf, Head of Investor Relations]

Question over LNG export in the states?

[Frits Eulderink, COO & Member of the Executive Board]

LPG or LNG?

[Laurens de Graaf, Head of Investor Relations]

LNG.

[Frits Eulderink, COO & Member of the Executive Board]

LPG.

[Quirijn Mulder, Research Analyst]

Despite the news, you still export [ more amounts of ] LPG to China and India. It's growing rapidly. You have still some land available so -- since 2014, I think. So I'm interested to know what your plans are there. Or whether there -- is LPG an opportunity?

[Frits Eulderink, COO & Member of the Executive Board]

You want me to? Yes? I think in principle, yes, LPG is an opportunity. In practice, though, it depends on a lot more than just having a prop of land available. And one of the key things there is there's an extensive pipeline grid in Houston for distribution. So we need to basically be able to get agreement with the various owners of that grid in order to make something work. And also, I would say, at this stage, there is, of course, existing infrastructure that is working fairly well already in Houston. So yes, it's a possibility, but it's not a slam dunk to get this done.

[Gerard B. Paulides, CFO & Member of the Executive Board]

I think worldwide, though, we are looking at how that abundance of LPG in supply and demand connect. So it might also be an import market. So we're trying to create opportunities. It might be an export market. We've established a Canadian export. Houston, Frits has explained, sounds logical, but may be not always that easy. And there are import markets where I think we are focusing on as well to connect that supply. It might even be in a way easier at the import side than at the export side certainly in the U.S.

[Eelco M. Hoekstra, Chairman of the Executive Board & CEO]

Thank you. Then in closing, 2019, as we mentioned, was a successful year for Vopak. And we informed you that we've made great strides in the execution of our strategy, realized a strong EBITDA for the year with significant growth in earnings per share. What you can expect with us is that we will continue to hold this course for the coming years, which you can expect that we will maintain our focus on the short-term financial performance and similarly, work very hard to set ourselves up for long-term value creation. So thank you for attending the call. Very much appreciate it. Thank you for those who are here, and I wish you a fantastic remainder of the day.

[Gerard B. Paulides, CFO & Member of the Executive Board]

Thank you.