Viva insists it can accelerate its own transition and revive earnings

The company is in the midst of drastically reshaping its business following the $1.215bn acquisition of OTR Group, which will result in it refitting its Coles Express stores to run under the On the Run brand, with higher-end convenience ­offerings designed to lure consumers to spend more time and money at the stores. The refit is the centrepiece of its strategy to broaden its revenues.

Viva disappointed investors with a 67 per cent plunge in interim profit to $62.6m for the six months to June 30. Viva shares fell 1.87 per cent to $2.10.

UBS analyst Tom Allen said Viva included a downward revision to the previous guidance, which he said would be front and centre in the minds of investors.

“Viva is a growth story and investor focus will be dictated by whether Viva can successfully accelerate its network conversion program to 25 sites per quarter,” he said.

“It had guided 40-60 conversions over 2025, but now guides to 45 for the financial year.”

However, Viva chief executive Scott Wyatt insisted the company had significant momentum and it would soon hit its target – just as economic conditions offered the company the chance to capture the additional discretionary spending. “We want to create enough breadth of an offering that people will visit us as often as possible and not just for that regular refuelling, which may get you to our stores every two or three weeks,” Mr Wyatt said.

“We are well placed to do the conversions and we are doing it at a good time as conditions are starting to improve. Interest rates are coming down and cost-of-living pressures are easing, and we expect to see people a bit freer with their discretionary spend.”

Viva’s results indicate the necessity of the challenge. Viva in recent years has profited from strong refining margins, but with market conditions souring and consuming spending constrained, the company said earnings fell substantially.

Earnings from the core fuel and retail network fell 39 per cent, while refining earnings slumped 84 per cent. The Geelong refinery saw higher margins in July, but is expected to post a small loss in the third quarter of 2025.

But with refining margins under sustained pressure, there are calls from the likes of rival Ampol to tweak the government support program. The then Morrison government in 2021 introduced the so-called Fuel Security Services Payment – designed to guarantee refining capacity by providing a safety net when margins collapse – and warned the program needed recalibration.

Mr Wyatt also called for changes said he was confident an agreement would be reached.

Extracted in full from:  https://www.theaustralian.com.au/business/companies/viva-insists-it-can-accelerate-its-own-transition-and-revive-earnings/news-story/27473669b4fbbac40234e76469751f50