Petrol and diesel supplier Viva Energy has further lowered expectations for earnings this June half, citing weak retailing margins, tough competition in the commercial sector and only a narrow profit at the Geelong refinery in Victoria.

Underlying net profit for the first half is expected to be about $60 million-$80 million, Viva said on Monday, adding that underlying earnings in refining would be between zero and $20 million due to weak refining margins.

Group-wide earnings before interest, tax, depreciation and amortisation for the June half would be $150 million-$180 million, Viva advised.

Shares in Viva, which fell 8 per cent last Thursday when rival Caltex issued a profit warning, were down 1¢ at $2.02 on Monday morning.

Underlying EBITDA for the retail business is expected to be between $275 million and $290 million, lower than previous guidance in April of $286.9 million-$291.9 million. This range had already been reduced from the forecast in the prospectus for Viva’s $2.65 billion initial public offer last July.

The retailing result would be about 8 per cent down on the $308 million recorded in the first half of 2018.

In the commercial business, underlying EBITDA is expected to be $150 million-$160 million, compared with previous guidance of $164.5 million, Viva said.

“Competitive pressures and higher than expected supply chain costs in some segments have impacted these results,” Viva said of the commercial division.

“The company will focus on improving margin performance through cost and supply chain efficiencies together with minimising exposure to low margin business.”

In refining, Viva said soft regional demand was weighing heavily on margins despite “some modest improvement” in  March and April. But the company said it was pleased with “strong” production performance at the Geelong plant this half, with 17.8 million barrels of crude oil processed in the first five months of 2019.

After revising its retail alliance with Coles in February, Viva said it had successfully stabilised sales volumes.

“Although there has not yet been a material increase in sales volumes, the company remains confident that growth will be restored following the period of continued investment over the course of this year,” it said.

Extracted from AFR