Viva Energy flags up to $60m earnings hit on Geelong refinery troubles
Viva Energy’s earnings will be crunched by costs and production challenges linked to prolonged maintenance at its troubled flagship Geelong refinery.
The company faces a $20 million hit to its half-year earnings before interest, tax, depreciation and amortisation because of problems plaguing its refinery in Victoria, unaudited financial results disclosed to the ASX on Thursday revealed.
Viva buys crude oil from all over the world and turns it into petrol at the refinery in Geelong.
Viva, which supplies about a quarter of Australia’s liquid fossil fuels, said investors should also expect a further earnings hit of up to $40 million over July and August.
Viva shares were flat at $2.91 Thursday.
On June 6, a crane at the Geelong refinery dropped equipment during planned maintenance work that was supposed to be completed by the end of that month. Repairs are now expected to be completed by the end of September.
But Viva said strong sales and high fuel prices had mitigated the full hit to interim earnings. Overall sales volumes increased by 11.5 per cent over the half, driven by high prices and demand from retail and commercial customers, the company said.
The trading update shows earnings in the six months to June 30 are expected to be $360 million, down from the highs of $611.7 million in the previous corresponding period, which was marked by surging margins thanks to increased fossil fuel prices following Russia’s invasion of Ukraine.
Viva supplies Shell-branded petrol stations across the country and in addition to owning and operating the Geelong refinery, it runs bulk fuels, aviation, bitumen, marine, chemicals, polymers and lubricants businesses at more than 20 terminals and 60 airports around Australia.
The results
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