Investors seem to be fairly relaxed by the threat from Viva Energy to shut its Geelong oil refinery. Demand for petrol, distillates, and especially jet fuel have been cut by the lockdowns, with the latter likely to be a long term concern.
Read MoreThe share price of Viva Energy, Australia’s other listed oil refiner and marketer jumped more than 15% in yesterday’s big market surge but there hasn’t been a surge in demand for oil, petrol, jet fuel or chemicals.
Read MoreThe downturn in demand for energy, especially petrol and jet fuel is hitting the Australian refining and distribution sector with Viva Energy saying it’s Geelong refinery would be shutting down major processing units and scaling back output as the coronavirus crisis cuts demand for fuel.
Read MoreThe company will delay its on-market buyback to assess the longer-term impact of the coronavirus crisis. Capital expenditure will be reduced to preserve cash flow.
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In more normal times – and nothing is normal at the moment – low oil prices benefit the global economy and stocks such as manufacturers and transport companies. Tim Boreham outlines those Australian companies which stand to benefit from significantly lower energy prices.
Read MoreViva Energy’s result was in line with recently downgraded guidance, although overall quality was better than expected, the broker notes. An announced $680m off-market buyback is a clear positive. The broker suspects earnings may have bottomed.
Read More2019 guidance for operating earnings (EBITDA) of $371-401m is -15% below UBS estimates. The broker notes the business is, by its nature, volatile and that is reflected in the high PE discount to the market.
Read MoreDespite higher refining margins, the focus is on Viva Energy’s retail fuel offering, which is likely to remain pressured by competition.
Read MoreViva Energy’s Sep Q update revealed refiner margins ahead of forecasts but retail margins remaining soft. This comes out as a net positive, with UBS suggesting 9% upside to consensus forecasts on better refiner margins with some offset from weak retail.
Read MoreViva Energy Group’s first-half result met June guidance and Morgans’ forecasts as tough operating conditions persisted across retail, refining, and commercial.
Read MoreViva’s update confirmed refinery earnings are even worse than the broker had feared, but there are signs of strength in Fuels & Marketing relative to the weak update provided by Caltex ((CTX)) last week. The broker doesn’t believe refining margins can get much worse, and retail margins are showing signs of improvement.
Read MoreThe company reported an improved gross refining margin in March of US$6.50 a barrel. Crude intake was also higher in March. Morgans notes the rise in oil prices has hurt retail fuel margins.
Read MoreOil refiner and retailer Viva Energy has been bitten by rising global oil prices – not only have earnings taken a $35 million because of the sharp rise in oil prices so far this year but that it expects more pain to come.
Read MoreRefining is behind the company’s downgrade to estimates, although Deutsche Bank suggests this should be largely cyclical. The drag from declining Coles volumes is small in comparison but remains more important in the long-term.
Read MoreDeutsche Bank found the August refinery performance much better than feared, given the unplanned outage.
Read MoreFirst half results were mixed as cash flow in refining missed estimates, while retail outperformed stronger volumes and cost control. UBS believes the market is not pricing in the upside from the retail and commercial divisions.
Read MoreDeutsche Bank initiates coverage of Viva Energy with a Buy rating and $2.65 price target. The broker considers the company a well run, solid retail model at a discount to its peer.
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