Australian fuel supplier Viva Energy expects ongoing lockdowns to continue hammering petrol, diesel and jet fuel demand for the rest of the year, but the vaccine rollout is lifting its confidence about the path to a more normal 2022.
Viva, which runs Australia’s Shell-branded petrol stations, on Tuesday reported its profit had jumped 87 per cent in the June half as the country started emerging from the harsh lockdowns of 2020 that wiped out sales and pushed its Geelong oil refinery to the brink of closure.
While the reintroduction of mobility restrictions across large parts of Australia including Sydney and Melbourne have again clouded the outlook for the company, Viva chief executive Scott Wyatt said the business was now better-positioned than last year to manage the near-term impacts.
“Going into lockdowns … has an effect on retail volumes and, obviously, it’s snuffed out what recovery we’d started to see in aviation,” he said.
“But we know the retail business is resilient through a drop in demand. And the positive now is you can see there is a developing pathway out of COVID, a lot of talk about how we get to ‘COVID normal’ and we are getting to a point where there will be a lot more certainty going forward.”
As governments discuss plans to ease lockdowns once vaccinations hit 70-80 per cent, Mr Wyatt said he could now “see a pathway” to a more certain 2022 for Viva’s petrol and diesel demand, while a recovery in international aviation fuel demand was anticipated by 2023.
Viva, which runs Australia’s network of Shell-branded petrol stations, on Tuesday reported core earnings for the period of $112 million, up from just $24 million at the same time last year.
Its 120,000-barrel-a-day Geelong oil refinery had also returned to profitability, with $43 million in earnings up from a $67 million loss.
Spiralling losses last year had prompted Viva to launch a review and considering permanently shutting the refinery, which processes crude oil into refined fuel products and employs hundreds of workers in the region.
Two other oil refineries – ExxonMobil’s Altona plant and BP’s in Perth – both closed their doors last year amid the unprecedented collapse in demand for petrol, diesel and jet fuel.
After reaching a rescue deal with the Morrison government, Viva Energy and ASX-listed rival Ampol have agreed to keep Australia’s two remaining refineries open until at least mid-2027.
Viva’s board declared an interim dividend of 4.1¢ a share, to be paid on September 23. It also announced the company would pay a further 6.2¢ a share to investors and conduct a $40 million on-market share buyback to return the proceeds of a real-estate investment trust divestment.
Extracted from The Sydney Morning Herald