Viva Energy Group Ltd (ASX: VEA) reported its half-year FY20 results today, with shares finishing slightly lower.
Viva Energy is one of Australia’s leading energy companies and supplies approximately a quarter of the country’s liquid fuel requirements. It is the exclusive licensee of the Shell brand and also owns and operates the Geelong refinery in Victoria.
Viva Energy’s 1H20 report
|
1H FY20 |
Change (year over year) |
|
| Sales volumes |
6,381 ML |
-10.5% |
| Revenue |
$6,667 million |
-15.6% |
| Underlying EBITDA |
$269.3 million |
-9.4% |
| Underlying NPAT |
$34.3 million |
-32.6% |
Viva Energy previously provided a guidance update back in June, so investors had a fair idea of what to expect from today’s result.
For the half-year, the group pointed to $41 million of direct COVID-19 impacts on its underlying EBITDA. Viva experienced volume loss predominantly in the retail and aviation business, while refining was impacted by lower intake and demurrage costs. The Geelong refinery recorded a $49.4 million loss in 1H20.
Pleasingly, the group managed to offset around 48% of these COVID-19 impacts through a combination of cost savings, supply chain costs and lower volume.
During 1H20, sales of jet fuel fell by as much as 75%, while sales in the group’s retail Alliance business declined to 40 million litres per week at the peak of stay at home restrictions across the country. Viva said diesel sales have been less affected due to continued economic activity and a strong agricultural season.
In positive news, the group noted that fuel sales began to improve as restrictions were eased during May and June. Viva exited 1H20 with average June fuel sales of 53 million litres per week.
Viva Energy’s dividend
Viva declared an 0.8 cents per share (cps) interim dividend, fully franked, down 62% from 2.1 cps in 1H19.
Additionally, the company confirmed its intention to return all of the remaining proceeds from its recent divestment of Viva Energy REIT, which is now Waypoint REIT Ltd (ASX:WPR).
Subject to shareholder approval, these proceeds will be returned via a combination of a capital return of around $415 million (~$0.21 per share) and a special dividend of roughly $115 million (~$0.06 per share). The method to distribute the remaining $100 million of proceeds is yet to be confirmed.
What next?
Looking forward, Viva expects refining margins to remain uncertain and challenging as regional and local demand recovers over the remainder of 2020 and 2021.
More broadly, the company said it will continue to progress several key projects as part of its recently announced Geelong Energy Hub.
For a 2-minute guide on a few other ASX shares that reported today, check out this article: 3 reports out today: BlueScope, Argo Investments & GWA
If you’re interested in the ASX growth space, we also heard from Altium Limited (ASX: ALU) and Kogan.com Ltd (ASX: KGN) today:
- FY20 result: Altium (ASX:ALU) announces mixed report
- Kogan (ASX:KGN) share price on watch FY20 result
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