Viva Energy 1H26 EBITDA Nearly Doubles on Strong Refining Margins and Sales Growth
Viva Energy’s 1H26 EBITDA surged to an estimated $770-$780 million, more than doubling from 1H25, driven by elevated refining margins amid Middle East supply disruptions and robust retail and commercial sales.
- Group EBITDA nearly doubles to $770-$780 million
- Geelong Refinery margins hit US$21.1/bbl despite Alkylation unit fire
- Commercial & Industrial fuel volumes up 1%, retail fuel sales rise 2.4%
- Net debt falls to $1.7 billion on strong cash conversion
- Convenience network expands with new stores and loyalty integration
Surging Refining Margins Offset Refinery Fire Impact
Viva Energy Group Limited (ASX:VEA) reported a striking rebound in profitability for the first half of 2026, with unaudited Group EBITDA expected between $770 million and $780 million, more than double the $305 million recorded in the same period last year. This leap is largely attributed to a regional shortage of oil supply and refining capacity triggered by geopolitical tensions in the Middle East, which lifted the Geelong Refinery's margin (GRM) to an impressive US$21.1 per barrel on crude intake of 19.7 million barrels.
However, the refinery faced operational headwinds following a fire in the Alkylation unit in April, which temporarily curtailed production. Viva Energy has since restored over 90% of normal capacity with the Residue Catalytic Cracking Unit restart in June, mitigating some of the disruption. Despite this, the Alkylation unit remains offline, and the company expects regional refining margins to stay above long-term averages for the rest of the fiscal year.
Commercial and Retail Sales Provide Further Momentum
Commercial and Industrial (C&I) fuel sales volumes edged up 1.0% on 1H25, buoyed by strength in the resource sector and increased marine spot sales. Notably, the second quarter saw a slight dip in volumes due to demand pull-forward in the first quarter and aviation fuel disruptions linked to Middle East conflicts. Favorable hedging and supply contracts cushioned the impact in 1H26, although these benefits are expected to wane in the second half.
Meanwhile, Convenience & Mobility (C&M) fuel sales volumes grew 2.4%, supported by retail fuel availability and competitive pricing. Convenience sales, excluding tobacco, rose 1.3%, driven by higher customer visits and expanded third-party delivery partnerships with Uber Eats and DoorDash. Tobacco sales declined 16.8% year-on-year but stabilized compared to the second half of 2025.
Network Expansion and Loyalty Integration Progress
Viva Energy continues to integrate its OTR and Reddy Express networks, extending the FlyBuys loyalty program to the OTR branded stores in the second quarter, creating a unified loyalty offer across its Shell-branded company-owned network. The company has also established new convenience supply distribution centres in Victoria and Queensland, with New South Wales set to follow shortly. The rollout aims to be completed by the end of FY26, facilitating the exit from the Coles PSA.
Looking ahead, Viva Energy plans to open 20 to 25 new OTR stores and convert 10 to 15 Reddy Express stores to a mix of OTR and Liberty Convenience formats. After successful trials, 25 to 30 stores are expected to transition to unattended self-service models, reflecting a strategic shift towards operational efficiency and customer convenience.
Balance Sheet Strength and Outlook
Net debt at 30 June 2026 fell to approximately $1.7 billion from $2.1 billion at the end of 2025, driven by strong cash conversion of earnings. Energy & Infrastructure (E&I) EBITDA is forecast at around $353 million, while C&I and C&M EBITDA are expected to contribute approximately $305 million and $138 million respectively.
CEO commentary highlighted the challenges posed by global energy market disruptions but emphasised Viva Energy’s integrated supply chain as a key enabler of continued production and supply. The company reaffirmed the critical role of domestic refining in Australia’s fuel security, especially amid ongoing geopolitical uncertainties.
Bottom Line?
Viva Energy’s robust first-half performance underscores the resilience of its integrated refinery and retail model, but sustaining elevated margins and navigating refinery repairs will be key to maintaining momentum.
Questions in the middle?
- How will the Alkylation unit’s extended downtime through 2027 affect refining margins and output?
- Can the company sustain commercial and retail sales growth amid evolving geopolitical risks?
- What impact will the rollout of unattended self-service stores have on convenience network profitability?
