Viva Energy Group Limited (ASX:VEA) operates the Geelong Refinery alongside fuel supply, commercial energy and convenience retail businesses across Australia. Its 1H26 result showed a material increase in Earnings across all three operating divisions, while net Debt declined. Refining conditions provided the largest year-on-year earnings change, making future refinery margins an important variable for the second half.

Replacement-Cost EBITDA Reaches A$774.4 Million

Group replacement-cost EBITDA increased to A$774.4 million for the six months ended 30 June 2026, compared with A$304.9 million in the prior corresponding period.

Replacement-cost accounting removes inventory gains and losses arising from movements in oil prices and provides a separate view of operating performance.

Replacement-cost NPAT increased to A$371.1 million from A$62.6 million, while historical-cost NPAT was A$452.0 million.

Refining Makes the Largest Contribution to Growth

Energy & Infrastructure EBITDA increased to A$353.7 million from A$18.4 million in 1H25.

The result reflected elevated regional refining margins, which more than offset the operational impact of the April incident at the Geelong Refinery.

Because refining margins are determined largely by regional supply, Demand and crude-product pricing, this part of Viva Energy’s earnings can vary materially between reporting periods.

Geelong Refinery Recovers From April Fire

A fire occurred in the Alkylation unit within the refinery’s Gasoline complex in April 2026.

No personnel were injured, and most major processing units were unaffected.

Viva Energy initially operated the refinery at reduced production rates and progressively restored capacity while investigating the incident.

The company maintained customer fuel Supply through refinery production and its Import network.

Commercial & Industrial EBITDA Rises 28%

Commercial & Industrial EBITDA increased 28% to A$305.4 million from A$237.9 million.

The result benefited from higher sales activity, favourable supply and hedging arrangements and contributions from strategic initiatives.

Management has indicated that some favourable supply arrangements will not provide the same contribution indefinitely, meaning future earnings should be considered separately from the 1H26 outcome.

Convenience & Mobility EBITDA Reaches A$138.7 Million

Convenience & Mobility EBITDA increased to A$138.7 million from A$74.4 million.

The improvement reflected fuel-margin performance, the full-period contribution from Liberty Convenience and changes across the retail network.

Viva Energy continues to integrate its convenience operations and develop the OTR format across suitable sites while retaining other retail formats where appropriate.

Retail Network Continues to Evolve

Viva Energy operates a national retail convenience and fuel network that includes OTR, Reddy Express and Liberty locations.

The company has been converting selected sites to OTR while also investing in food, beverage, loyalty and convenience offerings.

Execution remains relevant because the retail Business must generate returns on conversion expenditure while responding to changing fuel and tobacco sales patterns.

Supply-Chain Changes Remain Underway

Convenience operations are also being supported by changes to the retail supply chain.

Viva Energy has been establishing its own distribution arrangements as it transitions away from legacy product-supply structures.

The objective is to give the company greater control over product availability, assortment and retail execution across its convenience network.

The financial benefit will depend on implementation costs and operating performance.

Net Debt Declines to A$1.7 Billion

Net debt was approximately A$1.7 billion at 30 June 2026, down from A$2.1 billion at the end of 2025.

Net debt-to-EBITDA reduced to around 1.5 times.

The reduction reflected higher earnings and cash generation during the half.

Viva Energy has indicated that it intends to manage Leverage at around 2 times through the cycle rather than base Capital decisions solely on periods of elevated refining earnings.

Capital Expenditure Guidance Is Maintained

Viva Energy reaffirmed FY26 Capital Expenditure guidance of A$350 million to A$400 million.

Investment spans retail sites, commercial infrastructure, refinery requirements and other group projects.

Capital allocation therefore has to balance ongoing Investment with debt reduction and Shareholder distributions, particularly because refinery earnings can move materially between periods.

Interim Dividend Increases to 7.73 Cents

The Board declared a fully franked Interim Dividend of 7.73 cents per share, representing approximately A$126.9 million.

The distribution represented a 70% payout of replacement-cost NPAT from Convenience & Mobility and Commercial & Industrial, at the top of Viva Energy’s 50%–70% target range.

The dividend was paid on 30 September 2026.

Refining Dividend Is Assessed Separately

Viva Energy’s dividend policy treats refining earnings separately from the C&M and C&I businesses.

Any distribution associated with Refining replacement-cost NPAT will be considered at the full-year result and determined within the applicable policy range.

This structure means the higher first-half refinery earnings have not automatically translated into the interim dividend.

Fuel Security Remains Part of Refinery Strategy

Geelong is one of the remaining operating refineries in Australia and forms part of the national fuel-supply network.

During 2026, Viva Energy also entered arrangements supporting additional fuel supply into Australia during periods of international market disruption.

The refinery therefore has both commercial exposure to regional refining margins and a role within broader domestic fuel-supply arrangements.

Earnings Mix Matters for the Second Half

The first-half increase in earnings came from several businesses, but the largest change occurred within Energy & Infrastructure.

C&M and C&I provide different earnings characteristics because they are linked more closely to retail activity, commercial fuel volumes, margins and customer contracts.

The mix between these divisions will determine how much of the 1H26 earnings increase carries into subsequent periods.

Key Risks and Areas to Watch

Refining margins remain a significant earnings variable and can change with regional supply and product demand.

Operational incidents at Geelong can also affect production, while retail execution and supply-chain changes create implementation risk.

Commercial earnings may change as supply arrangements expire, while longer-term transport trends can affect fuel demand.

Net debt, refinery availability, C&M earnings and full-year capital returns will remain important measures.