Viva Energy’s EBITDA Falls 32.5% as Commercial Strength Offsets Retail and Refining

Half-Year Financial Overview

Viva Energy Group Limited reported a challenging first half for the 2025 financial year, with overall earnings pressured by subdued refining margins and a transitional retail environment. The company’s EBITDA on a replacement cost basis fell by 32.5% to $304.9 million, while net profit after tax declined 67.4% to $62.6 million. Despite these headwinds, the Commercial & Industrial segment maintained solid performance, underpinning the group’s resilience.

Capital expenditure remained elevated at $225.4 million for the half, reflecting ongoing investments in compliance projects, retail integration, and refinery upgrades. The full-year capex is expected to reach approximately $500 million, before tapering to $350–450 million annually from 2026 onwards.

Retail Transformation and Integration Progress

Viva Energy is deep into a major retail transformation, following acquisitions of Coles Express, OTR Group, and Liberty Oil Convenience. The company has rebranded the majority of Coles Express sites to Reddy Express and is actively converting stores to the OTR brand, aiming to deliver 20 to 25 store conversions per quarter. These efforts are designed to shift the business towards a convenience-led model, with over 50% of gross profit expected from convenience and quick service restaurants (QSRs) in the near future.

While the retail segment faced margin pressures from tobacco legislation changes, increased costs, and integration expenses, the second quarter showed signs of recovery. Fuel margins improved, and convenience margins rose from 38.2% to 39.2%, supported by early synergy realisations and cost reductions. The company targets $90 million in annual synergies post-integration, with $65 million expected within Convenience & Mobility in FY2025.

Refining and Energy Infrastructure Challenges

The refining business contended with an unplanned outage in January and elevated energy costs, which weighed on earnings despite strong operational performance. Refining margins strengthened towards the end of the half, supported by tight regional distillate stocks, with a Geelong Refinery margin of US$8.2 per barrel. The company is progressing its Ultra Low Sulphur Gasoline (ULSG) and Aromatics project, expected to be completed by October 2025, aligning with new regulatory requirements.

Major maintenance on the Residue Catalytic Cracking Unit (RCCU) is scheduled for the second half, anticipated to temporarily reduce refining margins but support longer-term operational reliability. Viva Energy also continues to engage with the Federal Government on the Fuel Security Services Payment methodology, critical for refining economics.

Balance Sheet and Dividend

Net debt increased to $1.95 billion, with gearing peaking at 1.66 times EBITDA, slightly above the target range. The company remains focused on reducing leverage towards approximately 2.0 times by the end of FY2027 as capital intensity eases and earnings improve. Viva Energy declared an interim fully franked dividend of 2.83 cents per share, reflecting a 50% payout ratio of Convenience & Mobility and Commercial & Industrial net profit after tax.

Strategic Outlook

Looking ahead, Viva Energy aims to accelerate retail earnings growth through continued store conversions, supply chain independence, and integration synergies. The company plans to open around 40 OTR stores in FY2025 and is advancing plans for an LNG import facility, targeting a final investment decision by early 2026. Refinery upgrades and operational improvements are expected to support margin recovery in the second half of the year.

Overall, Viva Energy is navigating a complex transition, balancing short-term pressures with strategic investments to position itself as Australia’s leading convenience and energy supplier in a changing market landscape.