The news: Fuel refiner and retailer Viva Energy has posted a drop in first-quarter fuel sales volumes, but it says falling oil prices and a lower Australian dollar exchange rate due to the US tariff turmoil will be supportive for earnings.
The numbers: Refining volumes in the March quarter were down 6% from a year ago, while refining margin slumped 34% to US$7.9 per barrel, due to a site-wide shutdown at its Geelong refinery in January.
Overall fuel sales volumes for the quarter were down 4.2% to 4.1 billion litres, dragged down by a fall in commercial & industrial segment volumes.
The context: Viva said despite the weaker performance, it remains on track to deliver full-year earnings guidance of between $270 million and $330 million across its non-refining business. Second-half earnings are expected to benefit from previously announced synergies and cost cuts, as well as the acquisition of the balance 50% interest in Liberty Convenience.
The group is monitoring the evolving imposition of US tariffs but said falling oil prices typically support retail margins in the short term and also tend to stimulate consumer demand for fuel. It also expects a weaker Aussie dollar exchange rate to the US dollar to be supportive for group earnings, given its exposure to US-based refining margins.