Vivo reports earnings decline, but sees strong recovery

Vivo reports earnings decline, but sees strong recovery

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Vivo Energy yesterday reported a 16 percent decline in annual earnings, but said it was encouraged by its strong recovery in the second half of the financial year.

The leading pan-African retailer and distributor of Shell- and Engenbranded fuels and lubricants reported that its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) declined to $360 million (R5.4 billion) for the year to the end of December, down from $431m last year.

The firm declared a final dividend of 3.8 US cents per share.

However, its second-half performance was slightly ahead of the performance in 2019, and it achieved an adjusted Ebitda of $220m.

Chief executive Christian Chammas said although 2020 was a year like no other, they managed to see a strong recovery in the second half and continued to deliver against their strategy.

“The recovery would not have been possible without the actions we took to support our stakeholders, which meant that, as demand recovered, we were ready and able to supply our customers and keep the continent moving.

“The strong recovery has reinforced our confidence in the future, and the board has recommended a final dividend of 3.8 US cents a share, in line with our progressive dividend policy,” Chammas said.

The group’s sales volume declined 7 percent to 9 637 million litres, due to the impact of Covid-19 on mobility in its markets.

Revenue fell 17 percent to $6.92bn, reflecting the significant decline in crude oil prices and the contraction in demand due to Covid-19-related mobility restrictions.

Its diluted earnings per share declined 45 percent to 6 US cents a share, down from 11 US cents a year earlier.

The group operates and markets its products in countries across North, West, East and Southern Africa.

It has a network of more than 2 300 service stations in 23 countries and exports lubricants to a number of other African countries.

Its retail fuel segment saw volumes declining 8 percent as strong trading at the beginning of the year was offset by Covid-19-related mobility restrictions imposed across its portfolio late in the first quarter.

The non-fuel retail segment reported a 21 percent decline in profits to $26m, with financial performance impacted by Covid-19-related restrictions.

“The mobility restrictions led to lower traffic at our sites, affected store opening hours and, in some cases, led to store closures for periods during the year.

“We noted strong improvement in most markets in the second half. However, in certain markets, such as Morocco, ongoing restrictions on travel between regions have impacted sales at large motorway sites, which are traditionally large contributors,” the group said.

Vivo Energy said it expected the positive second-half trends to continue into the 2021 financial year.

“We have started 2021 well and are confident we can continue to successfully navigate future challenges and deliver long-term growth and returns for all of our stakeholders,” Chammas said.

Vivo shares closed 0.54 percent higher at R18.69 on the JSE yesterday.

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