Viva Energy Group (VEA) H1 2024 earnings summary

Executive summary

• Group revenue rose 13% year-over-year to $14,380.6M, with EBITDA (RC) up 25% to $451.7M and net profit after tax (RC) up 10.3% to $192.1M, driven by strong commercial, refining performance, and the OTR Group acquisition.

• OTR Group and Coles Express acquisitions expanded the workforce to nearly 15,000 and contributed $1,084.4M in revenue since acquisition, with integration progressing and targeted synergies of over $60M per annum within three years.

• Interim fully-franked dividend of 6.7 cents per share declared, representing a 70% payout ratio for convenience and commercial businesses.

• Strong commercial and industrial performance and near full capacity at Geelong Refinery offset challenges in consumer demand due to cost of living and illegal tobacco trade.

Financial highlights

• Group EBITDA (RC) increased 25% to $451.7M, EBIT (RC) up 23% to $338.3M, and NPAT (RC) up 10% to $192.1M; underlying free cash flow was $220.4M, and capex guidance for 2024 was revised down by 10% to ~$500M.

• Net debt rose to $1,452.4M, mainly due to the OTR acquisition funded by a new A$1BN term loan facility.

• Capital expenditure for 1H2024 was $114.9M–$123M, with major spend on Energy Hub and integration costs.

• Net tangible asset per share fell to $0.36 due to increased intangibles from the OTR acquisition.

Outlook and guidance

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

• Capex for FY2024 forecast at ~$500M, about 10% lower than previous guidance; 2025 expected to be similar.

• Commercial and industrial business is on track to reach $500M EBITDA within five years, supported by new contracts and market diversification.

• Consumer market expected to remain challenging for the rest of 2024, with cost-of-living and tobacco trends impacting demand.

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