Financial review

The landbased segment

WWL’s ambition is to substantially grow the landbased segment by expanding the core and transforming to full life cycle logistics.

Summary of 2017
Total income from the landbased segment for the full year of 2017 was USD 795 million, representing an increase of 13% compared with 2016. For 2017, EBITDA was USD 100 million, and EBITDA adjusted for extraordinary items ended at USD 98 million, up 18% from 2016. The solid result development was driven by improved performance across the board.

Technical services in North America experienced an increase in volumes as well as strong value-adding content work. In the second half of 2017, the positive effect of strong volumes was partly offset by operational inefficiencies and increased costs caused by congestions at certain facilities due to high inventory levels.

The terminal segment also delivered solid results in 2017 mainly due to increased volumes on the back of increased ocean volumes. The results within this segment are primarily driven by the terminals in Zeebrugge, Port Hueneme, Baltimore, Pyeongtaek and Southampton. The overall result for the terminal segment was negatively impacted by planned low volumes as part of the start-up of the Melbourne terminal, which was fully operational from January 2018, coupled with continued low volumes into Kotka (Finland).

The technical services and inland distribution portfolio in Asia Pacific and Europe also experienced a positive development in 2017. Notably, the Chinese inland distribution and the Australian technical services entities showed improved performance, mostly due to a combination of higher volumes, improved efficiency and cost control.

Network development (acquisitions and investments)
WWL has a clear ambition to continue to grow and expand the landbased footprint. In 2017, WWL continued its expansion through a combination of smaller and larger developments. In the first half of 2017, WWL expanded its network with four new yard management contracts, two in Mexico, and two in Europe, marking the re-entry into Europe following the sale of Vehicle Services Europe (VSE) in 2016. Furthermore, the Oxnard Vehicle Processing Center (“VPC”) in US was expanded to facilitate growth with new and existing customers. In the first part of 2017, 25% of the business in South Africa was sold to a new local partner to improve the company’s competitive position.

In early December, WWL acquired Keen from Platinum Equity for USD 64 million. The acquisition is a good fit strategically and operationally, allowing synergies with the existing operations in North America. The increased footprint represents a good opportunity to capitalise on the improving fundamentals in the mining and construction sector in the US, as well as to substantiate a trend where more advanced work and services are performed at equipment processing centres (EPC), outsourced from original equipment manufacturer (OEM) factories. The transaction was financed through existing credit facilities.

In late December, WWL became part of an investment consortium responsible for developing over 1,130,000 m2 of dedicated land in Pyeongtaek, South Korea. Once the construction is completed in 2022/2023, WWL has committed to purchasing 66,000 m2 of land, and the intention is to develop a VPC and “inland port” extension of the group’s PIRT terminal, to capitalise on the growing market of import vehicles to South Korea. The investment will be about USD 30 million, mainly related to acquisition of land in 2022/2023, when construction is completed.