The Viva Energy Group Ltd (ASX: VEA) share price is having a very tough session on Tuesday.
At the time of writing, the ASX 200 energy stock is down 24% to $1.82.
This follows the release of the fuel retailer's FY 2024 results.
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ASX 200 energy stock crashes on full year results
- Group fuel sales up 4% to 16.8 billion litres
- Group EBITDA on a replacement cost (RC) basis up 5% to $748.6 million
- Net profit after tax down 20.1% to $254.2 million
- Full year dividend cut by 32.1% to 10.6 cents per share
What happened during the year?
For the 12 months ended 31 December, Viva Energy reported a 5% increase in group EBITDA to $748.6 million.
One standout performer was Viva Energy's Commercial & Industrial (C&I) division, which posted a record EBITDA (RC) of $469.9 million. This was up 5% year-on-year. Management revealed that this was driven by a 5% increase in sales volumes to 11.7 billion litres, with strong demand from Aviation, Resources, Agriculture, and Defence. Key new business wins, including a major Defence contract, also contributed to growth.
However, Convenience & Mobility (C&M) earnings were flat at $231.2 million, as fuel sales remained steady, but cost-of-living pressures and the rise of illicit tobacco sales hit convenience store sales. Excluding tobacco, convenience and quick-service restaurant (QSR) sales were up 2%, while total convenience sales, including tobacco, fell 4%.
Another standout was Viva Energy's Energy & Infrastructure (E&I) division, which delivered a 44% jump in EBITDA (RC) to $94.3 million. It benefited from lower maintenance activity following a major turnaround in 2023. However, weak refining margins in the second half impacted earnings.
Management commentary
Commenting on the result, the ASX 200 energy stock's CEO, Scott Wyatt, said:
Viva Energy delivered approximately $750 million of EBITDA during FY2024. This was up 5% on FY2023, supported by strong sales growth in our Commercial business and higher crude intake due to lower levels of maintenance and improved operating performance in our Refinery.
Group performance was negatively impacted by lower demand within our convenience business due to cost-of-living pressures and illicit tobacco trade, coupled with high inflation lifting the cost of doing business. Regional refining margins also declined in the second half of the year, triggering federal government support in the third quarter.
Wyatt also spoke about the company's transformation. He said:
Notwithstanding these challenges, I am pleased with progress we have made on transforming our business over the last year. Since completing the acquisition of OTR Group, we have begun consolidating our retail operations and are standing up retail systems which in turn will allow us to improve efficiencies and begin to drive down operating and overhead costs over the next two years.
Outlook
The main reason for the weakness today appears to have been its outlook for the first half of FY 2025.
On a combined basis, C&M and C&I is expected to deliver EBITDA (RC) of between $270 million and $330 million. This is run-rating well below FY 2024's earnings.
Management notes that challenging retail trading conditions and weak retail fuel margins during the first two months of the year are driving lower earnings expectations for the C&M business.
