Fuel company Viva Energy is expecting a 34 per cent earnings lift
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Viva Energy (ASX:VEA) rose today after reporting a financial boost, as the Australian economy continues to recover from COVID-19.
The company supplies approximately a quarter of Australia’s fuel requirements, including petrol to a network of 1,290 stations and also for fuel dependant sectors such as aviation.
It copped a hit last year with the downturn in travel, both aviation and road transport but has just shown things have improved in recent months even though lockdowns have resulted in a temporary dips.
Today Viva Energy reported that demand for petrol has jumped above pre-COVID levels leading to a 34 per cent jump in earnings.
In the first half of FY21 it is expecting earnings between $390 million and $410 million, comparing to $269.3 million in the first half of FY20 and $297.4 million in the first half of FY19.
Viva Energy saw demand for diesel fuels grow 16 per cent and petrol grow 4 per cent compared to the first half of FY19. Demand for jet fuel remained 60 per cent below pre-COVID levels.
Also helping Viva Energy was an improved performance of its Geelong refinery.
It achieved a Refining Margin of US$6.60 per barrel compared with US$2.90 per barrel in the prior corresponding period, and US$5.10 per barrel in the first half of FY19.
The company also said it expects to benefit from the Morrison government’s Fuel Security Package (FSP) and its service payment.
As the FSP’s name implies helps with Australia’s fuel security but is also designed to mitigate some of the downside risk to refining margins.
Viva Energy told shareholders the FSP would let it undertake major maintenance activity that had been deferred from last year.
CEO Scott Wyatt hailed the results.
“Our recovery program remains on track, and I am very pleased with the performance of the business,” he said.
Shares in the company rose by as much as 10 per cent this morning but remain below pre-COVID highs.