Viva Energy delivered a striking 154% jump in EBITDA to $774.4 million and a 250% surge in net profit to $371.1 million in the first half of 2026, though management’s own outlook suggests investors should view these results within their regional context. Elevated global refining margins, which spiked to $21.1 per barrel from $18.8 in the prior year period, powered much of the earnings growth. The company attributes these margins to supply disruption from Middle East conflicts and reduced regional refining capacity, dynamics that management expects to normalise through the second half of the year.
The strength was broad-based across operating segments. The Energy and Infrastructure division posted $353.7 million in EBITDA as the refinery captured those elevated margins, though output was partially constrained by the April fire at the Geelong alkylation unit. Viva has restored production to above 90% of normal capacity with the alkylation unit expected to remain offline beyond 2027, a structural change management is working to optimise. Commercial and Industrial EBITDA grew 28% to $305.4 million on robust sales volume despite disruption to aviation supply chains, underpinned by advantaged term supply agreements that provided price protection through volatile markets. Convenience and Mobility delivered 86% EBITDA growth to $138.7 million, reflecting higher fuel sales, improved retail margins partly offset by a $6 million inventory write-down, and a full-period contribution from the Liberty acquisition.
Cash conversion was disciplined. Operating free cash flow reached $603.9 million, flowing directly into balance sheet improvement. Net debt fell $355 million to $1.7 billion, pushing gearing down to 1.5 times EBITDA on a trailing basis. The company targets approximately 2 times through the cycle, reflecting confidence in sustainable earnings power once margins normalise. Management declared an interim dividend of 7.73 cents per share, fully franked, representing a 70% payout ratio of Commercial and Industrial earnings and sitting at the top of the company’s stated 50-70% policy range.
The Convenience division transformation is emerging as a key long-term lever. A new independent supply chain rollout across the eastern seaboard is on track for completion by end of November 2026, replacing dependence on Coles Group arrangements. Early results show inventory reduction of approximately $300 million, margin improvement, and enhanced control over product ranging. Store format trials of unattended self-service outlets have generated strong customer acceptance and 25 to 30 conversions are planned for FY26, reducing operating costs by an estimated $10 million annually from FY27 onwards. A new retail CEO appointment signals management’s commitment to execution.
The Federal Government’s fuel security program creates structural tailwinds. Viva is engaging on refining retention policy, a strategic fuel reserve, and minimum stockholding obligations that together could add approximately 300 million litres of inventory demand. These are multi-year commitments providing demand visibility independent of cyclical margin movements. The critical question for investors is whether the company’s transformation initiatives in retail execution and supply chain efficiency can sustain earnings once refining margins revert to historical levels. Watch the second-half trading update for refining margin trends and the November investor day presentation for deeper insight into government policy impacts and long-term cash generation guidance.
A rules-based approach to leveraged ETFs
See how our quantitative strategy works and who it suits.
Explore the strategyBecome an authorised representative
Advise your clients under an established AFSL without building your own. Choose AR or CAR.
Become an AR or CARView the full ASX announcement (PDF)
About Viva Energy Group Limited (ASX: VEA)
Viva Energy Group Limited is an energy company operating in Australia, Singapore, and Papua New Guinea with three main business segments: Convenience & Mobility, which operates fuel and convenience retail under brands including Shell and Coles Express; Commercial & Industrial, which supplies fuel and lubricants; and Energy & Infrastructure, which includes refining and pipeline operations. The company is Australia’s second-largest vertically integrated refined transport fuel supplier with a significant refining operation in Geelong.
If you would like to discuss this announcement or how it might affect your portfolio, request a callback or call us on 1300 889 603.
Learn to trade with a plan
Our free 5-day course covers entries, exits and risk management.
Start the free courseBecome an authorised representative
Advise your clients under an established AFSL without building your own. Choose AR or CAR.
Become an AR or CAR