Viva Energy Group Limited has issued its financial results for the half year ending 30 June 2023.
“Viva Energy delivered a strong result in the first half, with sales from our Convenience & Mobility and Commercial & Industrial segments growing by 11% and earnings from these segments increasing by approximately 40% compared to the last year,” Viva Energy CEO and Managing Director Scott Wyatt said.
The Convenience & Mobility (C&M) segment’s EBITDA achieved a 40% increase in the same period last year at $123.7M on 30 June 2023, supported by a continued 4% fuel sales growth across all channels. Viva Energy also expects further growth from the Liberty Convenience network’s extension, now at 95 stores nationwide.
The company advanced in growing its high-quality convenience earnings after the completion of the Coles Express acquisition, where it secured full control of over 700 stores and announced its acquisition of OTR Group.
“Our Commercial & Industrial businesses continue to deliver strong growth across all segment with our specialty markets continuing to support sustained and attractive long-term growth. The contract with Australian Defence Force was a particularly significant achievement and we look forward to supporting them to achieve their goals in the years ahead,” Wyatt stated.
Meanwhile, the Commercial & Industrial (C&I) segment saw a 15% increase in sales with a 41% increase in its EBITDA to $231.2 million on 30 June 2023, led by International Aviation’s continued recovery and steady demand from Wholesale and other C&I segments.
Viva Energy also accomplished its Skyfuel Australia acquisition to increase its presence in regional airports and signed two long-term contracts with the Australian Defence Force (ADF) and Royal Flying Doctors Service (RFDS) during the first half of the year.
Wyatt said, “Although the Energy and Infrastructure business was unfavourably impacted by extended major maintenance in the second quarter, refining margins have lifted considerably over recent months as a result of tightness in international markets, and we look forward to our refinery returning to full production at Geelong in September.”
The company’s Energy & Infrastructure (E&I) segment delivered EBITDA of $22.9 million in the first half of 2023, a 94% decrease from $370.8 million at the same time last year. The decrease can be attributed to the lower regional refining margins than last year and the extended major maintenance turnaround in the second quarter due to a compressor incident reported on 7 June 2023.
Meanwhile, the Geelong Refining Margin (GRM) saw a 46% decline at US$10.8/BBL. The company had an increase in shipping activity during the first half of the year to support significant maintenance turnaround and an unplanned extended outage of the Platformer and other associated units. Replacing crude oil with greater refined product imports also influenced the GRM in 2Q2023.
However, when full refining output returns in early September, the company said E&I will be well-positioned to capitalise on recent improvements in regional margins. Viva Energy anticipates that the environment will remain elevated compared to historical norms, with margins driven by constrained refining capacity, Chinese demand and export policies, and continued growth in global fuel demand. In July, Viva Energy and Vitol Asia agreed to extend the Fuel Supply Agreement (FSA) to waive two-year procurement fees.
Additionally, Viva Energy reported that the Ultra Low Sulphur Gasoline (ULSG) project is underway in terms of planning and investment; however, completion is not expected until the second half of 2025 due to delays in the recovery of vital components from suppliers affected by the pandemic and the intense international demand for their services. The company has submitted a waiver request to the Federal Government to cover the intervening period.
The ULSG project is expected to require a combined investment of around $350 million, with the potential for up to $26 million in Federal Government funding to offset additional capital spend related to fuel specifications. Currently, $84 million has been invested, with a net contribution of 67 million. This comes in addition to the $125 million already approved for the project.
“I am pleased with our performance and the progress we are making on strategic priorities. Our continued capital discipline and strong balance sheet supports investments and acquisitions to deliver long-term growth. The continued strength and relative stability of C&M and C&I supports an interim dividend at the top end of our policy range,” Wyatt added.
