Cash profit growth outran the increase in Vivo Energy’s (VVO) volume and gross cash unit margins in the first half, as the Engen acquisition quickly proved its worth.
Vivo’s main business is selling Shell-branded fuels and lubricants in Africa. It measures performance on the margin from each 1,000 litres of product sold, and was expecting this to drop below $70 (£54) in the first six months of 2019. While the Shell-branded products, which make up 94 per cent of volumes, fell to $69/1,000L, overall the company made it to $70/1,000L. This was a 5 per cent fall on a year ago but still better than expected. Overall volume grew 8 per cent to 5bn litres. Engen drove volume increases in the commercial side of the business, knocking the division into growth territory after becoming part of Vivo in March and helping boost group adjusted cash profits by 13 per cent year on year to $200m.
Negatives for the period include tougher conditions in Morocco, Tunisia and Uganda, through a mix of economic slowdowns, competition and unrest. Vivo also struggled with finance costs, which almost doubled to $32m on the back of interest rate swap losses and bills related to borrowing the $62.1m cash portion of the Engen payment.
Bloomberg consensus forecasts are for full-year adjusted cash profits of $426m, a 6 per cent increase on 2018.
| VIVO ENERGY (VVO) | ||||
| ORD PRICE: | 117p | MARKET VALUE: | £1.48bn | |
| TOUCH: | 116.6-117.4p | 12-MONTH HIGH: | 161p | LOW: 94p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 54¢* | NET DEBT: | 62% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018** | 3.67 | 114 | 5.0 | 0.665 |
| 2019 | 3.90 | 118 | 5.0 | 1.11 |
| % change | +6 | +4 | - | +67 |
| Ex-div: | 22 Aug | |||
| Payment: | 23 Sep | |||
| £1=$1.21 *Includes intangible assets of $230m, or 18¢ a share **IPO in May 2018 | ||||
