Viva Energy’s Geelong refinery faced challenges with outages and reduced refining margins, impacting the company’s financial performance. Nonetheless, CEO Scott Wyatt is optimistic about the refinery’s future due to substantial upgrades underway, amounting to $350 million.
With the support of $150 million in federal funding, Viva aims to complete these upgrades by the latter half of next year, aligning with the government’s upcoming fuel standards changes. These changes, effective from December 2025, are expected to boost demand for electric vehicles in Australia. Despite this trend, Wyatt emphasised the refinery’s significance in ensuring Australian fuel supply, with 80% currently imported. He highlighted the enduring importance of refining amid evolving energy dynamics and geopolitical factors.
Despite the challenges faced by the Geelong refinery, Viva Energy reported resilient earnings in its Commercial and Industrial unit, which saw a notable 33% increase to $447.5 million. However, the Convenience and Mobility division experienced a 7% decline to $232.2 million due to consumer spending constraints driven by cost-of-living pressures.
Looking ahead, Viva aims to bolster its Convenience and Mobility division, targeting a revenue lift to $500 million over the next five years. This ambition follows strategic acquisitions, including the Coles Express network and the pending takeover of OTR, expected to be finalised in the first half of this year.
Despite acknowledging ongoing cost-of-living pressures, Wyatt emphasised the company’s commitment to expanding its convenience retail offerings. Viva is rebranding its Coles Express outlets as Reddy Express and plans to identify sites for rebranding to OTR following the acquisition’s completion.
Wyatt described this as the beginning of a significant transformation in the fuel and convenience sector, anticipating heightened competition with traditional retailers. He emphasised the shift towards convenience-oriented service stations and the need to adapt to evolving consumer preferences.
Despite lower earnings across its refinery and petrol station network, Viva reported a 33.7% decrease in group earnings, amounting to $712.8 million. Net profit after tax also saw a decline of 46.7% to $318.2 million. However, the company remains committed to shareholders, announcing a fully franked final dividend of 7.1 cents, resulting in a full-year dividend of 15.6 cents per share, at the upper end of its target range.
Viva’s capital expenditure guidance for 2024 remains unchanged, ranging from $440 million to $475 million. Despite these financial indicators, Viva shares experienced a 6.6% decrease in trading, closing at $3.42 on Wednesday.
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