Viva Energy has announced the Group’s financial results for the full year ended 31 December 2023, recording EBITDA (RC) of $712.8 million.
“Viva Energy delivered a strong performance in 2023, with exceptional results across the Commercial & Industrial (C&I) business and significant progress on the development of our Convenience and Mobility (C&M) business,” says Viva Energy CEO and Managing Director Scott Wyatt.
“While our Energy & Infrastructure (E&I) business was impacted by extended maintenance, the underlying refining fundamentals were supportive and this continues into 2024.
“In terms of our strategic agenda, 2023 was a transformational year for our company. The acquisition of Coles Express and OTR Group provide the platforms to establish Viva Energy as the leading convenience retailer in Australia.
“Together with the continued diversification of our C&I business and development of new energy opportunities in hydrogen, lower carbon fuels and recycled waste, we are establishing foundations to maintain growth and successfully manage the energy transition.
“I am pleased with the progress we are making on our strategic priorities, and in pursuing our objectives as we set out at the Investor Day in November 2023.
“As always, we remain focused on balancing our growth aspirations with capital discipline and delivering returns to our shareholders. The continued strength of our marketing businesses has supported a final dividend at the top end of our policy range.”
Convenience and mobility
C&M EBITDA (RC) was $232.2 million in 2023.
Viva Energy says resilient fuel and convenience sales together with a strong margin environment supported underlying growth of $35 million. This offset the unwinding of advantaged purchasing benefits achieved in FY2022 and short-term higher supply costs resulting from the Geelong Refinery disruptions during FY2023.
Convenience sales excluding tobacco increased by 8% over the year, with margins expanding to 35.7% by the fourth quarter of 2023. This, according to Viva Energy, was driven by changes in margin mix, price management, and expansion of the food-to-go category.
Fuel sales volumes grew 0.9% to 4,556 million litres (ML), with the company-operated network achieving weekly fuel volumes of 58ML, in line with the prior year.
Acquisitions
The Coles Express business was successfully transitioned to Viva Energy in May. Work is underway to progressively exit the Coles Group transitional services arrangements and reduce higher overhead costs associated with these arrangements. The short-term contribution from this acquisition, says Viva Energy, was also impacted by lower than expected top-line growth driven by cost-of-living pressures and impacts from the illicit tobacco trade, coupled with annual rent and award wage increases. Price optimisation and operational improvements are expected to drive earnings growth in 2024.
The acquisition of the OTR Group, which was announced in April, provides “sophisticated” systems and digital capabilities and a “leading” convenience and QSR restaurant offer, according to Viva, generating $3.9 million of sales per store on average versus the Coles Express network at $1.6 million. The ACCC approved the acquisition in December, subject to divesting 25 sites in South Australia. Viva expects to complete in the first half of 2024, subject to Foreign Investment Review Board approval.
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