Viva Energy profit slips 41pc as it launches share buyback
A tough refining market has taken a toll on Viva Energy’s annual profit, as it launched a $680m share buyback.
Petrol producer and retailer Viva Energy has posted annual profit at the bottom end of guidance due to a tough refining market and launched a $680m share buyback after selling out of its property trust.
Viva’s full-year underlying profit after tax for the year ending December 31 fell 41 per cent to $135.8m from $293m a year ago, just scraping in ahead of its $135m to $165m guidance issued in December.
Its retail fuel margins were hit by oil price volatility and tougher competition in the market, although margins improved in the fourth quarter.
Earnings at its core retail, fuels and marketing division fell 8 per cent to $861m from $938m while refining earnings slipped 6 per cent to $117m.
It flagged a major maintenance turnaround at its Geelong refinery in the third quarter of 2020 at a cost of $110m to $140m which will take two months and impact its refining intake by one million to 1.5 million barrels.
A $680m off-market share buyback will be launched after Viva last week sold its 35.5 per cent stake in its petrol station property trust it floated four years ago, raising $734m and resulting in a $113m pre-tax profit on the sales.
Viva, which owns Shell-branded petrol stations and the former Shell refinery in Geelong, listed at $2.50 in 2018 in a $4.9bn float.
However, volatile refining conditions and a tough retail market have seen the stock struggle, with its shares now 24 per cent lower from the IPO price.
Swiss commodities giant Vitol, Viva’s parent company, bought the business for $2.9bn from Shell in 2014. Its assets include the Geelong refinery, one of only four refineries in Australia, and a network of more than 20 fuel import terminals through which it supplies a quarter of the nation’s refined fuel needs.
It supplies fuel to 50 airports around Australia and operates 1260 petrol stations throughout the country.
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