African fuel retailer Vivo Energy reported a 2% rise in 2018 gross profit on higher volumes and forecast low to mid double-digit percentage volume growth for the current year despite tough market conditions in Morocco.
The company, which distributes and markets Shell-branded fuels and lubricants in Africa, said gross profit rose to $624 million last year from $614 million a year earlier.
Vivo energy, a result of a partnership between energy trader Vitol Group and Africa-focused private equity firm Helios Investment, said adjusted core earnings rose by 6% to $400 million on volumes up 4% at 9.351 billion litres of fuel.
That helped offset supply disruptions and thinner retail margins in its largest market, Morocco.
The company expects volumes to hit around 10 billion litres this year following the completion of its acquisition of a subsidiary of South African retail firm Engen on March 1. That expanded its network by 230 stations in 8 new countries outside South Africa.
Last year, Vivo’s chief executive said the firm still eyed entry into the Nigerian and South African markets.
Its gross cash unit margin last year dipped 1% to $74 per thousand litres, which Vivo Energy blamed on consumer activism in Morocco. It forecast a gross cash unit margin in the high $60s per thousand litres for 2019.
The FTSE-250 company, which also has a secondary listing on the Johannesburg Stock Exchange, added that the core earnings contribution from the Moroccan retail unit was lower in 2018 at 18% versus 29% in 2017, and that it expected the metric to fall further this year.
“Pressure on Moroccan retail pushed down our unit margin there by 4 percent starting towards the middle of the third quarter. There is speculation of re-regulation but we’re assuming that does not happen,” Chief Financial Officer Johan Depraetere said on a call.
Vivo Energy on Wednesday stuck to its plan to open between 80 to 100 new retail service stations across 23 countries in which it operates.
It said its board had recommended a final dividend of 1.3 dollar cents per share, bringing the full year dividend to 1.9 dollar cents per share or about 30% of attributable net income.