Viva Energy (ASX:VEA) Sets Ambitious Target to Achieve AUD 90Mn in Annual Savings Over Three Years

Highlights

• In 1HFY24, VEA’s group fuel sales surged by 5.7% YoY to 8.3 billion litres on a pro forma basis.
• Total sales volume grew by 5.74% YoY, reaching 8,277 million litres in 1HFY24.
• In FY24, the company expects capital expenditure to reach AUD 500 million.
• Over the next three years, annual savings are projected to exceed AUD 90 million, significantly above the previous estimate of AUD 60 million.

Viva Energy (ASX:VEA) is an ASX-listed company specialising in convenience retail, commercial services, and energy infrastructure. Operating nearly 900 retail convenience and fuel outlets, the company supplies fuels and lubricants to approximately 1,500 service stations across the country.

In the first half of the financial year 2024 (1HFY24), Viva Energy reported a 5.7% YoY surge in group fuel sales on a pro forma basis to 8.3 billion litres. Total sales volume in 1HFY24 grew by 5.74% YoY, reaching 8,277 million litres, compared to 7,828 million litres in H1 FY23.

During the reported period, the company achieved a 24.81% YoY increase in EBITDA (RC), reaching AUD 451.7 million. This growth was largely driven by the Commercial & Industrial (C&I) and Energy & Infrastructure (E&I) segments. Meanwhile, net profit after tax (RC) rose to AUD 192.1 million, a 10.34% increase compared to AUD 174.1 million in the previous year.

Furthermore, the company maintained its dividend of 6.7 cents per share, representing a 70% payout target based on cash flows from C&I and Convenience & Mobility (C&M) segments.

Strategic Acquisition of Liberty Convenience

In a significant business update dated 12 December 2024, the company notified that the ACCC would not oppose its proposed acquisition of the remaining 50% stake in Liberty Convenience. This joint venture with New World Corporation (NWC) operates 105 retail fuel and convenience sites across Australia.

Following the completion of the acquisition, VEA will take full ownership of 88 active Liberty Convenience sites and 10 planned locations. The transaction is expected to be finalised in Q1 FY25, pending Foreign Investment Review Board (FIRB) approval.

FY24 Outlook and Future Prospects

In FY24, the company’s Convenience & Mobility (C&M) EBITDA is projected to range between AUD 230 million and 260 million, reflecting the impact of softer retail conditions and reduced tobacco sales. Capital expenditure of AUD 500 million is anticipated in FY24.

Over the next three years, Viva Energy expects annual savings exceeding AUD 90 million, significantly higher than the earlier forecast of AUD 60 million.

Share performance of VEA

VEA shares closed 0.74% higher at AUD 2.74 per share on 8 January 2024. Over the past year, VEA’s share price has dropped by almost 21.49%, and in the last one month, it has increased by nearly 4.18%.

52-week high of VEA is AUD 3.865, recorded on 5 April 2024 and 52-week low is AUD 2.47, recorded on 19 December 2024.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 08 January 2025. The reference data in this report has been partly sourced from REFINITIV.

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