Vivo Energy plc, (LON:VVO) the pan-African retailer and distributor of Shell and Engen-branded fuels and lubricants with a growing non-fuel offering, has today announced its consolidated financial results for the twelve-months ended 31st December 2019.
Christian Chammas, CEO of Vivo Energy, commented:
“We have delivered another strong set of results in 2019, with adjusted EBITDA rising 8% to $431 million, as we built the platform for future growth. In line with our objectives, volumes rose 11%, driven by the smooth integration of the new Engen-branded markets, which together with gross cash unit margins of $71 per thousand litres led to record gross cash profit of $743 million. These results demonstrate the strength and resilience of our business model and our disciplined approach as we delivered strong adjusted free cash flow in the year, and have recommended a final dividend of 2.7 cents per share. We have built momentum into 2020 and are excited about the 12 months ahead, as we look forward to delivering another year of strong growth.”
Financial Highlights
· Sales volume increased 11%, mainly due to the contribution of the Engen-branded markets; with Shell-branded volumes increasing by 1%
· Gross profit increased 8% to $675 million
· Gross cash unit margin of $71/’000 litres (Shell-branded: $71), ahead of expectations but lower than 2018
· Adjusted EBITDA up 8% to $431 million, with EBITDA up 14% at $416 million
· Adjusted diluted EPS of 12 cents was impacted by higher net finance expenses and increased effective tax rate
· Diluted headline EPS of 11 cents, in line with 2018
· Recommended final dividend of 2.7 cents per share (2018: 1.3 cents), bringing the full year dividend to 3.8 cents, 15% higher than pro-forma full year 2018
Strategic and Operational Highlights
· Good HSSE performance, with Total Recordable Case Frequency of zero in our Shell-branded markets and 0.04 across the Group
· Further expanded our Retail network by opening a net total of 96 new retail service stations
· Opened 123 new non-fuel retail offerings and expanded our joint ventures with KFC franchisees to five countries
· Completed implementation of SAP S/4HANA across all of the Shell-branded markets which provides a platform for increased efficiencies and digital opportunities
· Successful integration of the Engen acquisition, with the 8 new markets delivering strong performance
Engen
Vivo Energy completed the transaction with Engen Holdings (Pty) Limited on 1 March 2019. The integration has gone smoothly and the new businesses are performing well under the Vivo Energy operational model and performance driven culture.
We believe there is an opportunity to significantly increase the retail network across the new markets. This growth, together with the upgrading of the existing network and the expansion of the non-fuel retail offering is expected to lead to significant growth in volumes and market share. During 2019, we launched our Shining Sites project with the aim of making the service stations more welcoming for our customers, with 83 sites refurbished by the end of the year. A net total of 15 new Engen-branded service stations were also opened during the year in the Engen-branded markets, excluding the 14 Engen-branded sites in Kenya that were re-branded to Shell in line with our plans.
We also believe there is a major opportunity to drive Commercial volumes in the markets through the expansion of value adding offerings to mining customers and a more strategic approach to large industrial customers. We have already won a significant supply contract in the Commercial sector, which has driven growth and will generate further benefits over the next six months.
The good progress we have made is demonstrated by the ten-months of contribution to the Group’s full-year results from the new Engen-branded markets, with volumes for the period of 987 million litres, gross cash profit of $75 million, adjusted EBITDA of $42 million and net income of $12 million.
Morocco Conseil de la Concurrence
In 2019, Vivo Energy announced that the Moroccan Conseil de la Concurrence were undertaking a review of the competitive dynamics of the fuel industry in Morocco. This review remains ongoing, and we will provide further updates as appropriate.
Outlook
The Group has entered 2020 with good momentum and we look forward to another year of strong performance. We expect to deliver mid-single digit gross cash profit percentage growth in 2020, driven by improved volume growth in the Shell-branded markets, organic growth in the Engen-branded markets and two months of additional Engen contribution in the first quarter due to the timing of the Engen transaction in 2019, together with broadly stable gross cash unit margins. Capital expenditure is expected to be slightly ahead of 2019 levels, at between $150-160 million as we invest in growing and upgrading the retail network across all 23 countries, with 80-100 net new sites targeted for the year. Following the successful integration of Engen, Vivo Energy has a stronger platform for growth and we are excited by the prospects ahead of us in 2020.
