Viva Energy Group Limited has provided an operating update for the three months ended 30 September 2024 (3Q2024) and Convenience & Mobility (C&M) EBITDA (RC) guidance for the 12 months ending 31 December 2024 (FY2024).
Highlights
- Total Group sales volumes were 4.2 billion litres (BL) in 3Q2024, up 3% compared to 3Q2023.
- Commercial & Industrial (C&I) sales grew 3.7%, driven by Defence, Aviation and Liberty Rural Group.
- Fuel sales in the C&M business grew by 1.4%, driven by network growth and improved trading conditions.
- Same-store convenience and quick-service restaurant (QSR) sales, excluding tobacco, were in line with the same period last year, with improved margins (up 2.5 ppts) helping offset declines in tobacco sales (same-store convenience sales including tobacco declined 7%).
- Despite a challenging refining environment during the quarter, the Geelong Refining Margin (GRM) was US$6.4/BBL on crude intake of 10.1MBBLs, supported by a strong operating performance.
- Viva Energy expects to receive approximately A$24 million of support from the Federal Government’s Fuel Security Services Payment (FSSP), effectively increasing the GRM by US$1.5/BBL to above EBITDA (RC) breakeven levels. Support in 3Q2024 remains subject to confirmation from the Federal Government.
- The Geelong Strategic Storage Facility was commissioned during the quarter, lifting total storage capacity by 90 million litres (ML) to support the company’s compliance with Minimum Stockholding Obligations and improve import capability.
- Bitumen export line was also commissioned, with first delivery of locally produced bitumen from Geelong to Sydney recently completed.
- Commenced final stage of Victorian environmental effects statement for establishment of the Gas Terminal at Geelong.
Outlook
Taking into account softer retail conditions, lower tobacco sales and higher overheads through this transitional period, C&M EBITDA (RC) is expected to be between $230 million and $260 million in FY2024. “The OTR business is more affected than the Express business due to illicit tobacco now impacting the South Australian market and higher overhead costs through the transition,” Viva Energy said.
The transition of fuel supply to Viva Energy (to be completed by end 1Q2025), together with the cessation of transitional services from Coles Group (during 2Q2025), early identification of convenience purchasing benefits and broader integration of Express and OTR, are expected to drive considerable cost reductions and earnings improvements from FY2025. Over $90 million per annum is expected to be delivered over the next three years (up from $60 million per annum previously guided).
“The conversion of Express stores to the OTR format is progressing in line with the updated
conversion schedule provided in August 2024, supporting stronger sales growth as retail conditions are expected to improve in FY2025,” the company said.
“While the refining environment is expected to remain challenging for the rest of FY2024, refining run-cuts and maintenance may help to rebalance global refining capacity and provide some support for margin improvement. The FSSP is expected to continue to provide base level support if current market conditions prevail.
“C&I is expected to continue to perform well through the rest of the year, in line with 1H2024.”
