Viva Energy share price: where next following H1 guidance update?

Viva Energy share price gains on update

The Viva Energy (ASX: VEA) share price opened 7.6% higher on Friday after the energy company provided the market with solid first-half (H1) FY21 profit and volume guidance.

Helpfully, the company gave a relatively granular breakdown of its expected first-half performance, providing guidance across earning (EBITDA) as well as expected volume level performance on a division-by-division basis.

Guidance at a glance

On the bottom-line, Viva Energy said it expected first half group earnings (EBITDA) to come in at between $390 million to $410 million, implying a growth rate of 34% against first-half FY19 levels.

For reference, management noted that FY19 comps were used due to these representing more normalised, pre-covid operational performance levels.

This came even as the company said it expected mixed volume growth across its divisions. Compared to H1 FY19 levels, Viva said it expects to book petrol volumes of 1,634 ML, implying a growth rate of 4%; diesel volumes of 3,799 ML, implying a growth rate of 16%; while jet volumes are expected to drop 60% to 666 ML; and other volumes are set to fall 8% to 551 ML.

Taken together, Viva expects to see its total volumes decline 7% in the first-half of FY21 (against first-half levels in FY19) and report total group volumes of 6,650 ML.

By noon VEA was trading at $2.06 per share, up 4.57% for the session. At those levels, the stock is up 8.99% since January and just 1.98% over the last year.

Soft mid-term share price performance aside, analysts remain overwhelmingly optimistic on the name, with Viva Energy carrying a Buy rating on average, according to Market Index. That consensus is made up of 10 Buy ratings, 2 Hold ratings and 0 Sell ratings.

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Management commentary

The company said growth across its transport fuels segments, including gasoline and diesel, was 'supported by network additions in the Liberty Convenience channel and Commercial sales growth within Agriculture, Resources and Transport sectors in particular.'

In commenting on the company's performance update, Viva Managing Director and Chief Executive Officer Scott Wyatt said:

'While retail fuel sales continue to be impacted by periodic lockdowns, and aviation by ongoing border closures, overall growth across all retail and commercial channels has been very encouraging.'

'Our recovery program remains on track, and I am very pleased with the performance of the business,’ Mr Wyatt added.

Looking ahead, management noted that the company would provide quarterly operational updates to the market.