Viva Energy (ASX: VEA) has kicked off the year with a steady performance, reiterating confidence in hitting its 1H2025 EBITDA (RC) guidance of $270–330 million for its Convenience & Mobility (C&M) and Commercial & Industrial (C&I) divisions. While the first quarter brought some external headwinds, the company’s integration plans, cost reductions, and network expansion efforts remain well on course.
C&M Growth Steady, LOC Acquisition Completed
Fuel volumes in the C&M business grew 1.1% compared to 1Q2024, supported by stronger retail margins in March. Although convenience sales dipped 7.2% (mainly due to cycling a strong comparative and slight changes in promotional activity), margins remained stable at 38.2%. The company also wrapped up its acquisition of the remaining 50% of Liberty Convenience (LOC) on 31 March, which is expected to contribute $20–25 million to FY2025 EBITDA.
C&I Sales Soft but Margins Holding Up
C&I fuel volumes fell 6.0%, with weather disruptions in key mining regions and lower wholesale activity impacting sales. That said, the blow was softened by stronger margins across most segments.
Refining Slows, But Upgrade on Track
The Geelong Refining Margin came in at US$7.9/BBL—just above break-even—due to a site-wide shutdown in January and elevated energy costs. Despite that, the transition to Ultra Low Sulphur Gasoline (ULSG) is proceeding on schedule, with supply from August and compliance required by December.
Cost and Synergy Programs Powering Ahead
Viva is well underway in delivering on its $80 million synergy and cost-saving plans for 2H2025:
- The OTR network has now fully rebranded from BP to Shell, unlocking $10 million in savings for 2H.
- Systems have been implemented to exit the Coles transitional agreement by April-end, saving $1.7 million per month from May.
- OTR and Express operations are being integrated under a single umbrella, with $10 million in annualised savings from reduced overheads expected in the second half.
Combined, these initiatives are expected to contribute over $90 million in annualised EBITDA uplift by FY2026.
New OTR Sites on the Way
Viva remains on track to open 40–60 OTR-format stores this year, primarily via low-cost conversions. Around 10 conversions will begin in 2Q2025, mostly in NSW. The company also secured a key knockdown-rebuild opportunity at the high-traffic Glasshouse Mountains Express site in Queensland, set to reopen as an OTR store by year-end.
Macro View: Watching the US Tariffs
While US tariff impacts are still unfolding, Viva expects minimal direct impact. Falling oil prices and a softer AUD/USD typically support its earnings profile, while the Fuel Security Services Payment (FSSP) provides a financial buffer against low refining margins.
