Vivo Energy retains earnings momentum with strong 1st quarter
DURBAN - VIVO Energy maintained the positive momentum achieved in the second half of 2020 by reporting a strong first quarter to end March, with gross cash profit up by 9 percent in the first quarter of the 2021 financial year.
The first quarter gross cash profit rose to $195 million (R2.79 billion), up from $179m compared with the first quarter of 2020.
The group’s unit margins increased by 14 percent during the first quarter of 2021 compared with the first quarter of 2020, which was knocked by Covid19 inventory impacts.
Vivo Energy, a Pan-African retailer and distributor of Shell and Engen branded fuels and lubricants, said its performance was aided by the positive supply and pricing environment from the second half of 2020 continuing through the first quarter and the mix effect from a smaller contribution from the lower margin aviation and marine businesses and supply contract volumes.
Chief executive Christian Chammas said the group delivered a strong start to 2021 and it was pleasing to see the retail segment return to volume growth despite trading restrictions.
Its retail volumes increased by 4 percent during the quarter, but group volumes fell by 5 percent to 2 483 million litres, primarily reflecting the continued volume drag from the aviation and marine businesses and the end of a material supply contract in the third quarter of 2020.
The group said, excluding these factors, volumes were up by 2 percent compared with last year.
“We have already made good progress towards our target of opening 90 to 110 net new sites this year and continue to develop our customer offerings while protecting the health and safety of our people and customers.
“As we move through the year, we expect the recovery to continue, although subject to potential impacts from the prevailing mobility restrictions, with the strong first quarter reinforcing our confidence,” Chammas said. Its commercial volumes declined by 15 percent, primarily impacted by weaker aviation and marine volumes, which have remained subdued due to the continuing restrictions on international travel and the end of a material supply contract in one market while lubricant volumes increased by 9 percent, driven by strong performance in retail and B2C channels.
Vivo Energy said the Covid-19 related curbs on movement within its operating countries had remained in place and continued to have an impact on mobility levels during the quarter.
Looking ahead, the group said the strong start to 2021 gave it confidence in the business, boosted by its strong balance sheet and cash generation.
The group wants to continue to “invest in the growth and enhancement of its network to capture the structural growth opportunities in our markets across Africa and create value for all of our stakeholders”.
Vivo’s shares fell 2.85 percent to close at R20.11 on the JSE yesterday.