Vivo Energy ends the first six months ‘cautiously optimistic’

edward.west@inl.co.,za

PAN AFRICAN Shell and Engen branded fuel retailer and marketer Vivo Energy ended the six months to June 30 “cautiously optimistic” following a rebound in volumes and margins in June from their April lows, chairperson Christian Chammas said yesterday.

“We are a resilient business, our business model remains unchanged and we continue to position ourselves for future growth,” he said.

In the six-month period volumes fell 7 percent to 4 618 million litres as Covid-19 related restrictions reduced demand. Revenues decreased by 14 percent to $3.38 billion (R55.73bn). Gross cash profit was lower at $300 million from $351m at the same time in 2019, due to the impact of Covid-19 on both volumes and margins. Net income decreased to $13m ($72m). Earnings per share fell to 1 US cent from 5c.

To mitigate the impact of Covid19, discretionary marketing spend was reduced, uncommitted capex was paused and the supply of fuels was temporarily reduced. Given the uncertainty surrounding the pandemic, Vivo’s board did not provide a forecast on financial performance for the second half.

In the six months under review, the retail footprint was expanded by 30 new service stations and 23 non-fuel retail offerings.

To date the reported health impact from Covid-19 in Africa had been limited, with around 5 percent of global cases reported on the continent. The majority of confirmed cases were in African countries where Vivo did not have operations.

Restrictions on movement by host governments were slowly being relaxed.

“The near-term impact continues to be unclear as it is likely that case numbers will rise over the coming months, which may lead to further restrictions on mobility, but the longterm macro-economic growth drivers on the continent remain unchanged. Our markets are resilient, and already have experience of living through health crises such as HIV and Ebola,” the group said.

There had been a strong recovery in June following the easing of restrictions, with gross cash profit for the month down only 5 percent. June volumes were less than 5 percent lower than the previous year, but still well behind expectations. Margins recovered to the same level as a year before.

The group continued to maintain sufficient headroom under its financial covenants attached to its long-term debt.

Credit exposures were closely managed during the period and rapid action was taken early in the pandemic to identify and monitor key risks, such as in the aviation sector.

Vivo’s share price closed 1.61 percent higher at R15.75 on the JSE yesterday.