This article first appeared on GuruFocus.

Release Date: February 24, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Viva Energy Group Ltd (ASX:VEA) reported a strong finish to the year with a final dividend of $0.94 per share, representing 60% of C&I and CNM impact. The company successfully completed a multi-year investment program at Geelong, including the ultra-low sulfur gasoline project, which was completed on schedule and largely within budget. Commercial sales reached a record 11.8 billion liters, driven by growth in aviation and strong performances across all business units. Refining margins rebounded in the final quarter, lifting the GRM to $9.60 per barrel for the year. The company opened 35 new OTR stores, expanding its retail footprint and enhancing its convenience offerings.

Negative Points

The first half of the year was challenging, with significant impacts from planned maintenance and a site-wide power outage affecting refining operations. Convenience sales were negatively impacted by illicit tobacco, affecting overall gross margins. The transition to new ERP systems and supply chains was complex and challenging, impacting operational efficiency. The company incurred $97.5 million in transition, integration, and restructuring costs, reflecting the final stages of a multi-year integration program. Refining margins were below break-even in January, indicating a challenging start to the year from a refining margin perspective.

Q & A Highlights

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Q: Can you clarify the outlook for convenience retail growth in FY26 and FY27? Is the expected growth modest compared to FY25 or relative to the second half of FY25? A: Scott Wyatt, CEO: The focus is on the second half of FY25 as a baseline because the first half was an outlier due to market challenges and transitions. The second half provides a cleaner comparison, reflecting stabilized tobacco sales and improved retail fuel margins. However, adjustments should be made for seasonal variations when considering FY26 projections.

Q: How has the tobacco mix shift affected shop margins, and can the lost margin be recovered? A: Scott Wyatt, CEO: The company left money on the table due to visibility issues and high inflation impacting margins. Improvements have been made, and the transition of supply chains will allow better leverage with suppliers, potentially improving margins and top-line sales.

Story Continues

Q: Regarding the significant item around capitalized inventory, does it mean the earnings base was overstated when OTR was acquired? A: Carolyn Pett, CFO: The $29 million adjustment relates to prior periods and should not be viewed as a simple annual overstatement. The pre-completion number was about $180 million, reflecting a multi-year impact.

Q: Have there been changes to the pricing strategy for fuel, and can the benefits seen in the second half of FY25 be sustained? A: Jen Gray, CEO of Convenience and Mobility: The market has supported increased fuel margins, and the pricing strategy remains competitive. The team is managing fuel pricing dynamically, considering market conditions and cost pressures.

Q: Can you provide more detail on the supply chain and system transitions, and when can we expect to see the benefits? A: Scott Wyatt, CEO: The ERP transition was significant, and the supply chain transition is ongoing. The focus is on supporting these changes seamlessly to improve operations and leverage synergies, with benefits expected to materialize as the transitions are completed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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