Viva Energy lifts Q3 sales but margins shrink

The news: Fuel refiner and retailer Viva Energy has delivered higher fuel sales, but a sharp rise in oil prices in the September quarter compressed its retail fuel margins.

The numbers: Fuel sales rose 4.7% to 3.8 billion litres, driven by strong commercial and industrial fuel volumes. However, its Geelong refining margin slid 35% to USD8.5 per barrel from USD13 per barrel a year ago. Sales at its convenience stores declined 2.5% to $277 million, although gross margin for the segment improved to 33.7%.

The context: Viva said the sharp rise in oil prices, from USD75 per barrel to USD95 per barrel in the September quarter, compressed retail fuel margins, with increased costs progressively reflected in pump prices. The drop in refining margins comes amid curtailed production from extended major maintenance. It said oil prices have since stabilised, which has in turn supported the recovery of retail fuel margins in the current quarter.