Viva Energy shares fall on softer retail conditions
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The news: Shares in Viva Energy dived at market open on the ASX after the fuel refiner and retailer flagged softer retail conditions, lower tobacco sales and higher overheads across its convenience and mobility (C&M) business.
The numbers: Viva shares were down 3.2% to $2.76 by 10:45pm AEDT, having shed more than 20% since January.
Viva said it expects full-year C&M EBITDA to fall between $230 million to $260 million, flagging softer retail conditions, lower tobacco sales and higher overheads. C&M EBITDA totalled $232.2 million in FY23.
Viva posted total group sales volumes of 4.2 billion litres in the September quarter, up 3% year on year. Commercial and industrial sales grew 3.7% while fuel sales in Viva's C&M business rose 1.4%.
Same-store convenience and quick-service restaurant sales declined 7% compared with the previous corresponding period, with improved margins, up 2.5 percentage points, helping to offset declines in tobacco sales.
The context: Viva noted that its OTR business — acquired earlier this year — is more affected than its Coles Express sites due to illicit tobacco now impacting the South Australian market and overhead costs.
However, Viva said that the transition of fuel supply to Viva, the cessation of transitional services from Coles Group, early identification of convenience purchasing benefits and broader integration of Express and OTR, are expected to drive "considerable" cost reductions and earnings improvements from FY25.
Over $90 million per year is expected to be delivered over the next three years, up from $60 million per year previously guided, the company said.
Viva also noted that the refining environment is expected to remain "challenging" for the rest of 2024, though refining run-cuts and maintenance may help to rebalance global refining capacity and provide some support for margin improvement.
The source: ASX announcement
