The good luck of COVID-19 refining took some of Viva Energy’s first half-year profits, and the gas and diesel supplier warned that the long-term loss-making Geelong plant is uninsured.
The Victoria refinery fell to a loss of $49.4 million in the June portion, resulting in a 32.6% drop in Viva’s net source of non-recurring parts revenue compared to the first part of last year to $34.3 million.
The long term of Viva’s Geelong refinery is very uncertain. Fairfax Media
Chief executive Scott Wyatt said the losses were “unsustainable” and gave customers grim refining margins in Asia amid declining demand for transportation fuels due to the pandemic and new capacity remaining in service despite market weakness.
Struggling Australian refineries are turning to the federal government’s Strategic Petroleum Reserves initiative to ensure a new profit stream, while a broader review of the sector is also underway in Canberra, which needs to maintain domestic manufacturing.
“Viva Energy works strongly with the government and believes it is possible to improve the long-term sustainability of the refining business,” Wyatt said. “However, we recognize that these operational losses are not sustainable and continually assess the short- and long-term viability of this component of our business.”
The Geelong plant’s refining margin fell in the first half to just $2.90 a barrel from $5.10 a barrel in June 2019, June 2019, chief financial officer Jevan Bouzo said.
Viva, owner of Shell’s former network of fuel and refinery stations in Australia, has welcomed investors with the news of a special dividend of $530 million, financed from the remaining revenue from its previous sale this year from its stake in a genuine real estate split, which had been delayed during the pandemic.
Profits on the unrefined portion of the business, which includes fuels and retail stores, increased 14.2% to $318.7 million. The refining loss compared to a profit of $18.4 million for the first part of 2019 and came here despite the steps taken to close some production sets and anticipate a maintenance closure.
Viva said retail fuel margins had “significantly improved” in the six-month era compared to last year, offsetting the effect of declining sales volumes in the retail and retail sectors.
Total sales volume decreased by 10.5% in the first part of 2019, as sales of jet fuel fell 75% after the border closed. The alliance’s sales with Coles had fallen to 40 million litres according to the week at house height remain restrictions, but had returned to 53 million litres according to the week until the end of June, said chief executive Scott Wyatt.
Viva’s shares, which declared a 0.8 cent dividend consistent with the stock, fell 1 cent to ¢1.80 in a time before closing.
Viva plans to revitalize its Geelong refinery and turn it into a low-carbon energy supply center, starting with herbal gas.
The principal’s refund will come with a principal refund of $415.1 million and an uns purchased special dividend of approximately $114.9 million. The market percentage repurchase programme, which first covered up to $50 million, must continue after the special dividend.
Viva said it would return the rest of the profits from the sale of REIT, about $100 million, to shareholders as a component of a final component of the capital control initiative, which has yet to be determined.
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