The Viva Energy Group Ltd (ASX: VEA) share price is jumping today. At the time of writing, shares in the energy producer are selling for $2.07 – up 5.08%. Earlier in the day, shares were up even higher before retreating back to the current price.
The massive price rise comes after the company released a large increase in earnings.
Let’s take a closer look at today’s news.
The Viva share price is rising
In a statement to the ASX, Viva Energy revealed its unaudited earnings before interest, taxes, depreciation, and amortisation (EBITDA) of somewhere between $390 million and $410 million for the six months ending 30 June 2021. That represents an increase of 34% on H1 2019. 2019’s results were better for Viva than 2020 due to the shock of COVID-19.
This large increase in earnings comes despite drops in output across petrol, diesel, and a 60% fall in jet fuels production. The company says retail sale volumes were affected by sporadic lockdowns, with an average fall of roughly 58 million litres per week. 30% of all petrol sales are from premium fuels.
The margin of its Geelong refinery has improved from $5.10 per barrel in 2019 and $2.90 per barrel in 2020 to $6.60 per barrel for this reporting period. This is a 29% improvement on the 2019 figure.
Due to the introduction of federal government’s fuel security package (FSP), Viva says it can now proceed with “major maintenance activity” (and associated expenditures) at the plant.
Investors are enjoying today’s news, judging by the rise in the Viva share price.
Management commentary
Viva CEO and Managing Director, Scott Wyatt, said
Viva Energy has delivered very strong first half performance driven by strong sales growth in our non-aviation businesses, supportive margins, and an improved refining performance since returning to full production in late 2020.
While retail fuel sales continue to be impacted by periodic lockdowns, and aviation by ongoing border closures, overall growth across all retail and commercial channels has been very encouraging with total Petrol and Diesel sales volumes up 4% and 16% respectively on 1H2019, as a comparison to pre-COVID demand.
Refining remains challenging, but supported by strong production levels, receipt of the short-term production payment grant, and the long-term fuel security package commencing 1 July 2021 that minimises the downside volatility of refining margins. Our recovery program remains on track, and I am very pleased with the performance of the business.
Viva share price snapshot
Over the past 12 months, the Viva share price has increased by 1.29%. Since hitting its 52-week high of $2.27 a share – Viva’s value has dropped approximately 10%.
Viva Energy has a market capitalisation of approximately $3.4 billion.
The post Why the Viva (ASX:VEA) share price is 5% higher appeared first on The Motley Fool Australia.
Should you invest $1,000 in Viva Energy right now?
Before you consider Viva Energy, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Viva Energy wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
More reading
- Why Althea, Audinate, Perenti, & Viva Energy shares are pushing higher
- ASX 200 midday update: Afterpay & CBA sink, Viva Energy jumps
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/2VsOOTb
Leave a Reply