Viva Energy (ASX:VEA) expects to report unaudited group earnings before interest, taxes, depreciation, and amortisation (EBITDA) of approximately $300 million for the first half of the year. This positive outlook is attributed to stronger fuel margins and successful cost reduction strategies, which have effectively counterbalanced weaker performance in convenience sales and refining operations.
The company reported that EBITDA from its convenience & mobility and commercial & industrial sectors reached around $310 million. This figure exceeds the midpoint of previous guidance. Notably, commercial & industrial earnings remained largely consistent with the corresponding period last year. Viva Energy is an Australian company involved in refining, importing, and distributing fuels and lubricants. It also operates a network of service stations across the country.
However, convenience sales experienced a 10 per cent decline. This drop was largely influenced by a 27 per cent decrease in tobacco sales following the introduction of new packaging regulations and ongoing illicit trade activities. Excluding tobacco, convenience sales saw a 2 per cent decrease for the half-year, although they remained stable in the June quarter. Gross margins improved to 39.2 per cent in the quarter, supported by shifts in product mix and advantageous supplier agreements.
Refining earnings were affected by an unforeseen outage in January, scheduled turnaround activities, and increased energy expenses. The refining margin at Geelong averaged $US8.20 per barrel, based on an intake of 18.8 million barrels, a decrease from the $US10.80 reported in the previous year. Viva also noted that the integration of the OTR Group is advancing, with the transitional services agreement with Coles finalised in the second quarter, and the opening of nine new OTR stores. An additional eleven stores are currently under construction or undergoing conversion.
