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Vivo Energy reports rise in first-half core profit

Company to add 80 fuel retail outlets this year.
Vivo distributes and markets Shell-branded fuels and lubricants to retail and commercial customers in Africa. Picture: Tomohiro Ohsumi, Bloomberg

Vivo Energy, Vitol’s Africa fuel retail venture, said half-year core profit rose 8% on higher sales volumes although net income slipped, in its first set of results since it listed in May.

Investors were cautious on the results, and Vivo‘s shares were down 3.5% at 150.52 pence by 07:47 GMT on Thursday.

The company, which distributes and markets Shell-branded fuels and lubricants to retail and commercial customers in Africa, said it was on track to open its targeted number of service stations and non-fuel retail outlets for the year.

Adjusted earnings before interest, tax, depreciation and amortisation rose to $204 million in January-June, from $189 million a year earlier.

Net income, however, slipped 1% year-on-year to $71 million.

The company said it continued to expect annual growth in sales volume to be within its target mid-single digit percentage range, with broadly stable gross cash unit margins.

Vivo has a network of over 1 800 filling stations in 15 African countries, which is set to increase.

Chief executive Christian Chammas said that 80 retail stations would be added along with 100 accompanying convenience and food outlets. The firm has a joint venture with Kentucky Fried Chicken in Ivory Coast and Botswana.

Further ahead, the company is in the process of completing a deal to buy 300 filling stations from South Africa’s Engen International Holdings, which will expand its business to nine additional African countries.

“When we announced the IPO, we said that there was one country moving slowly, the Democratic Republic of Congo, but it’s progressing,” Vivochief executive Christian Chammas said.

“When it will close is difficult to say.”

The deal to buy the filling stations was originally expected to complete in the third quarter.

Vivo‘s sales volumes rose 4% year-on-year to 4 628 million litres, compared with 4 462 million litres in the first half of 2017.

Morocco remains Vivo‘s largest source of revenue and accounted for about 29% of its ebitda. Chammas said that this share would fall to about 22% for the full year.

There has been growing social tension in the North African country over fuel prices and the government is considering re-introducing some price regulation. Fuel price rules were lifted at the end of 2015.

“The industry last met the general affairs minister in mid-June but with the (fuel) price remaining stable … there is less pressure now,” Chammas said.

Vivo was created in 2011 through the carve-out of Shell’s African downstream business. Following an initial public offering in May, major oil trader Vitol cut its stake to 38% from 55% and Africa-focused private equity firm Helios reduced its stake to 31% from 44%.

Vivo‘s IPO on the London Stock Exchange was one of the largest this year at 1.8 billion pounds ($2.7 billion) as well as the largest Africa-focused IPO since 2005.

In its results statement, it said that it had approved an interim dividend of around $0.01 per share, amounting to approximately $8 million. 

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Finally some numbers. Was waiting for this. Very disappointing dividend

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