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 acquisition completed, contributing $1,084.4M in revenue since acquisition and advancing plans to more than double Convenience & Mobility EBITDA by 2028.

• Integration of OTR and Express progressing, targeting over $60M annual synergies within three years post-acquisition.

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

• Strong performance in commercial businesses and 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; NPAT (RC) up 10.3% to $192.1M.

• Underlying free cash flow rose 85.5% to $220.4M; capex reduced by 51.1% to $101M.

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

• Capital expenditure for 1H2024 was $114.9M, with FY2024 guidance at ~$500M, about 10% below original guidance.

• Net tangible asset per share fell to $0.36, down 63.3% year-over-year due to increased intangibles from OTR acquisition.

Outlook and guidance

• Consumer market expected to remain challenging for the rest of 2024, with focus on integrating retail businesses and realizing cost and earnings improvements over the next 18 months.

• Over $60M in synergies targeted from integration, with most benefits realized from late 2025 onward.

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

• Commercial and industrial EBITDA target of $500M within five years remains on track.

• No significant post-balance sheet events affecting future operations.