Vopak turns strong profits into $2 Billion in investor returns

Vopak, a tank storage company, announced on Wednesday that it will return 1.7 billion Euros ($2.0 billion) in dividends to shareholders over the course of the next five-year period. Profits surged by 61% on the back a strong cash flow last year.

The company's shares rose by?around 10% after the announcement of earnings in early Amsterdam trading.

The Dutch company that provides storage and handling services to the energy and manufacturing markets said it would distribute dividends and share purchases?throughout 2030.

Vopak stated that the plan includes an annual increase of at least 5 percent in the dividend per share and a multiyear buyback program of up to 500 millions euros.

The Rotterdam company, based on its 604 million euro profit last year and 823 millions euros of operating cash flow records, will propose an increase in the annual dividend by 12.5% to 1.80 euros.

The target for long-term cash returns has also been raised to 13% to 17%. Previously, it had set a target of more than 13%.

Michiel Gilsing, finance chief at the Ministry of Finance, said that an improved cash flow was due to replacing outdated infrastructure with modern storage areas which require less maintenance.

Vopak plans to invest in new infrastructure worth 4 billion Euros by 2030. Half of this amount has already been committed as early as 2025.

Tariffs are forcing chemical customers to pay more.

Gilsing stated that the 'chemical storage business' of Vopak has been under pressure due to the global trade tensions.

He said: "All these tariffs (don't help) the economy grow... and that's also where you see some of our customers who are chemical?really having challenges." He added that the impact on Vopak's business would be minimal, because long-term agreements will mitigate any damage. The U.S. has imposed a 10% tariff on all goods that are not exempted, which is the rate announced first by President Donald Trump Friday. This is lower than the 15% that he had promised the day after.

(source: Reuters)