Vivo Energy doubles dividend

Still a relative newcomer to life as a public company, the Africa-focused fuel retailer has seen its valuation fall steadily from its 165p listing price in May 2018 to the current level around 100p. 

While the acquisition boosted revenue and volumes (up 10 and 11 per cent, respectively), margins did not follow. One of the company’s key performance trackers, the gross cash unit margin, saw another fall in the retail space, from $75 (£58) per thousand litres of fuel sold in 2018 to $71 in 2019, although the second half brought this up above the $70 mark after a poor start to the year.

The company says 2020 will see a similar level. Retail is Vivo’s largest division, bringing in more than half of the company’s adjusted cash profits. Including the commercial and lubricants figures, the margin decline narrows to $2 per thousand litres sold. 

While not an oil and gas producer, it is valued on a similar price/forward earnings ratio of around 10 times to BP (BP.) Royal Dutch Shell (RDSB) and Total (Fr:FP), which also have retail arms. Vivo runs Shell outlets in Africa, and expanded into new countries last year through the $204m purchase of Engen. 

Consensus forecasts compiled by Bloomberg see cash profits climbing 7 per cent to $462m in 2020, with earnings per share up 18 per cent to 13ȼ.