Viva Energy Maps Retail Growth and Refining Support Beyond 2030

Retail growth and refining support anchor Viva Energy strategy

Viva Energy Group Limited (ASX:VEA) has set out a three-horizon strategy that asks two different businesses to do two different jobs: the Geelong refinery and wider infrastructure should deliver more consistent returns, while convenience retail is expected to provide the clearer growth engine. The company is targeting convenience sales growth of 2% to 3% above CPI from FY26 to FY30, with convenience gross margin above 40%.

The strategy is not a promise of smooth earnings. Viva Energy says it will seek new arrangements with the Federal Government to support refining beyond 2030, when the current Fuel Security Services Payment program ends. The company has received $37.4 million under the payment since it began in 2021, and its existing commitment to continue refining runs to 30 June 2028, with an option to extend to 2030.

Geelong refinery faces a policy decision beyond 2030

Viva Energy is negotiating what it calls a potential “Refining Retention” agreement designed to provide investment and cash-flow certainty through to the end of the next decade. The proposed framework would support replacement of the refinery’s Alkylation unit, the next major maintenance cycle in 2030-31 and the preservation of domestic refining capability, while leaving future lower-carbon fuel production as an option subject to policy support and risk-adjusted returns.

That longer-term ambition comes after a disruptive year at Geelong. The refinery’s Residue Catalytic Cracking Unit was restarted after the April fire, while the Alkylation unit remains offline through 2027, as reported in the Geelong refinery unit restart. The strategy presentation does not turn the future support discussions into a settled agreement, and its medium-term capital plan explicitly excludes future minimum-stockholding investments, Australian Fuel Security Reserve spending and Alkylation replacement costs until the policy outcome is clearer.

Unattended stores and sharper ranges target retail productivity

Convenience & Mobility is where the presentation offers its most concrete operational playbook. Viva Energy plans to match each format and level of capital to site economics, including a proposed rollout of about 100 unattended stores, subject to regulatory approval. The company says three early conversions delivered average monthly fuel-volume uplift of more than four times, with average labour savings of about $200,000 per store before tax and estimated conversion capex of $300,000 to $350,000. Those results come from fewer than three months of early trading and are expressly not necessarily representative of the wider rollout.

The company also plans roughly 40 to 50 new OTR stores and about 250 potential conversions of prime sites to OTR, with each project dependent on appropriate risk-adjusted returns. In the shop network, Viva Energy says 18% of its range was underperforming and a further 27% could be replaced with alternatives, creating room for new products, services and innovation. A Brighton trial removing 800 product lines produced a 42% reduction in waste, a 17% increase in gross margin dollars and a 4% increase in sales over the 12 weeks disclosed, although the results remain trial-level evidence.

Capital spending stays within a leverage anchor

Viva Energy expects annual capital expenditure of $350 million to $450 million from 2027 to 2029, comprising $250 million to $300 million of sustaining capital and $100 million to $150 million of growth capital. Sustaining spending includes Geelong maintenance turnarounds but excludes the major policy-dependent projects. Growth capital is earmarked for store conversions, new stores, commercial infrastructure and lower-carbon fuel opportunities.

The capital framework targets total net debt at about 2.0 times EBITDA through the cycle, with term debt-to-EBITDA targeted at 1.0 to 1.5 times. Viva Energy retains a 50% to 70% NPAT replacement dividend payout framework, but says the framework will be reviewed once the renewed fuel-security arrangements and associated investment requirements are clearer. That leaves the strategy balancing retail investment and shareholder distributions against a refining asset whose next phase depends partly on government policy.