Viva Energy Group’s first-half result met June guidance and Morgans’ forecasts as tough operating conditions persisted across retail, refining, and commercial.
Discounting on petrol prices across its Coles Alliance ((COL)) to recapture market share met strong competition, and higher oil prices did not help. The refining business took a big hit as regional margins contracted, a trend only slightly ameliorated by improved up-time.
The company doesn’t expect a recovery in the second half but believes it can leverage stronger margins once retail volumes regain momentum. Regional refining margins are showing signs of recovery.
Hold retained. Target price falls to $2.06 from $2.07.
Target price is $2.06.Current Price is $2.03. Difference: $0.03 – (brackets indicate current price is over target). If VEA meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).