Viva Energy Group (VEA) H1 2024 earnings summary

Executive summary

• Group sales and EBITDA (RC) grew by 6% and 25% respectively in 1H2024, reaching $452 million, driven by strong commercial, refining performance, and the return to full production at Geelong Refinery after maintenance in the prior year.

• Completed OTR Group acquisition, expanding the workforce to nearly 15,000 and advancing plans to double Convenience & Mobility EBITDA by 2028.

• Integration of OTR and Coles Express is underway, targeting over AUD 60 million in annual synergies within three years post-acquisition.

• Interim fully-franked dividend of AUD 0.067 per share declared, representing a 70% payout ratio for convenience and commercial businesses.

Financial highlights

• EBITDA (RC) increased by 25% to AUD 451.7 million; NPAT (RC) up 10% to AUD 192.1 million; EBIT (RC) up 22.7% to AUD 338.3 million.

• Underlying free cash flow was AUD 220.4 million, up 85.5%, exceeding net profit.

• Net debt rose to AUD 1.45 billion, mainly due to the OTR acquisition funded by a new AUD 1 billion term loan.

• Capital expenditure guidance for 2024 was revised down by 10% to around AUD 500 million, with spend skewed to the second half.

Outlook and guidance

• Over AUD 60 million in synergies and cost reductions are targeted over the next three years, with most benefits expected from late 2025 onward.

• CapEx for 2025 is expected to be similar to 2024, reflecting project phasing and capital discipline.

• The commercial and industrial business is on track to reach AUD 500 million EBITDA within five years, supported by new contracts and market diversification.

• Refining margins have weakened in Q3, but the business is supported by the Fuel Security Services Package.

• Consumer market expected to remain challenging for the rest of 2024 due to cost of living and illegal tobacco trade.