Vivo Energy to pour $150m capex into fuelling growth
VIVO Energy, the pan-African retailer and distributor of Shell and Engenbranded fuels and lubricants, is planning to spend between $150 million (R2.32 billion) and $160m in capital expenditure in the year ahead to grow its business.
The group said this expenditure would surpass last year’s spend as it now wanted to grow its retail network across all 23 countries it operates in.
Chief executive Christian Chammas said the group had entered the year on good momentum and was looking ahead to another strong performance next year.
“We expect to deliver mid-single digit gross cash profit percentage growth in 2020, driven by improved volume growth in the Shell-branded markets, organic growth in the Engenbranded markets and two months of additional Engen contribution in the first quarter due to the timing of the Engen transaction in 2019, together with broadly stable gross cash unit margins,” Chammas said.
The group has targeted between 80 and 100 new sites for the year following the successful integration of Engen. Last year, Vivo Energy concluded a transaction with Engen Holdings to restructure the acquisition of Engen International Holdings by issuing 63.2 million new shares and $62.1m in cash.
The restructured transaction added operations in eight new countries and more than 225 Engen-branded service stations to Vivo Energy’s network, taking its presence to more than 2 000 service stations across 23 African markets.
Vivo Energy delivered an 8 percent increase in adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) to $431m for the year to end December, boosted by an 11 percent increase in sales volumes to 10 417 million litres.
The group said its revenue surged 10 percent to $8.30bn.
It said adjusted diluted earnings per share, however, declined 14 percent to 12 US cents a share.
The group more than doubled its final dividend to 2.7c a share, from 1.3c compared to last year, taking the full year dividend to 3.8c.
Chammas said the group delivered another strong set of results in 2019, with adjusted Ebitda rising by 8 percent to $431m as they build on the platform for future growth.
“In line with our objectives, volumes rose 11 percent, driven by the smooth integration of the new Engenbranded markets, which together with gross cash unit margins of $71 per thousand litres led to record gross cash profit of $743m,” Chammas said.
He added that these results demonstrated the strength and resilience of their business model and their disciplined approach as they delivered strong adjusted free cash flow in the year, and have recommended a final dividend of 2.7c a share.
“We have built momentum into 2020 and are excited about the 12 months ahead, as we look forward to delivering another year of strong growth,” he said.
Vivo Energy shares closed unchanged at R20.50 on the JSE yesterday.
VIVO ERNEGY HAS delivered strong adjusted free cash flow in the year, and recommended a final dividend of 2.7 cents a share.