Viva Energy Group Limited (ASX: VEA)
In 1H2024, Viva Energy Group Limited demonstrated strong growth and made significant strides in its strategic agenda.
Group fuel sales increased by 6% to 8.3 billion litres, while Group EBITDA (RC) rose 25% year-over-year to $452 million. The company’s net debt stands at $1,452 million, largely due to financing the OTR acquisition. It declared a dividend of 6.7 cents per share, reflecting a 70% payout ratio of Convenience & Mobility (C&M) and Commercial & Industrial (C&I) businesses.
Strategically, the OTR Group acquisition was completed, advancing the goal to grow C&M EBITDA above $500 million by 2028 and expanding the company’s commercial presence in regional areas. The integration of C&M is on track to deliver over $60 million in annual synergies within three years post-acquisition. Additionally, 90 million litres of strategic diesel storage were completed in Geelong, with commissioning set for 2H2024. The company also partnered with Cleanaway to explore circular solutions for soft plastics at the Geelong Refinery.
In 1H2024, the Convenience & Mobility (C&M) segment maintained stable EBITDA (RC) compared to 1H23, despite pre-integration overheads, with minor declines in fuel and convenience sales and a 5% drop in same-store sales. The Commercial & Industrial (C&I) segment saw robust growth, with an 8.7% increase in pro-forma sales (10% actual) and a 2.9% rise in EBITDA (RC) to $238 million, driven by new business wins and Defence contract implementation. The Energy & Infrastructure (E&I) segment operated near full capacity, achieving a 97% availability rate, though GRM was impacted by a polypropylene plant outage, costing approximately A$10M. Operating costs declined to A$9.7/BBL due to full production and reduced coastal shipping costs.
ASX investors are getting attracted to Viva Energy for Long Term Holding as it is set to navigate a challenging environment with promising opportunities. In Convenience & Mobility, the focus will be on integrating the newly acquired businesses to capture cost synergies from FY25, with anticipated improvements in sales during the traditionally stronger second half of the year. The Commercial & Industrial segment is expected to see continued growth from recent acquisitions and new business wins, bolstered by enhanced supply chain capabilities and credit risk management. In the Energy & Infrastructure segment, refining margins are projected to remain below historical averages due to geopolitical factors and high energy prices, though moderating shipping costs offer some relief.
Investing in Viva Energy offers a compelling opportunity given its leading role in Australia's largest company-operated fuel and convenience network and its explicit expansion plans. The company’s Strategic Acquisitions and Investments in low carbon energy—such as EV charging stations and hydrogen refueling infrastructure—underscore its commitment to future growth and sustainability. Despite a challenging market, Viva Energy’s strong position and disciplined investments make it an attractive profile.
Source: Company’s Report
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