Key Highlights

  • Replacement-cost net profit after tax was A$371.1 million, up from A$62.6 million.
  • The Interim Dividend was 7.73 cents per share, fully franked, costing about A$126.9 million.
  • Net Debt fell to A$1,720.0 million at 30 June 2026 from A$2,074.8 million at 31 December 2025.
  • Convenience and Mobility Earnings rose 86 per cent.

Viva Energy Group Ltd (ASX:VEA) reported first-half earnings that more than doubled, driven mainly by its Geelong refinery. Why did Viva Energy's earnings more than double in the first half of 2026? The main reason is the Geelong refinery. The Geelong Refining Margin averaged US$21.1 per barrel in the six months to 30 June 2026, up from US$8.2 per barrel a year earlier, lifting group EBITDA on a replacement-cost basis by 154% to A$774.4 million. Viva is a fuel supplier, refiner and convenience retailer, and the half showed how much its earnings can swing when global refining conditions change, even though parts of the Business performed well on their own.

The result in detail

On a replacement-cost basis, which strips out the effect of crude price movements on inventory, net profit after tax was A$371.1 million, up from A$62.6 million. The interim dividend is 7.73 cents per share, fully franked and costing about A$126.9 million, against 3.83 cents a year earlier. It was paid on 30 September 2026 to holders on the register at 7 September 2026, with a 1.5% discount on the Dividend reinvestment plan. The company says the dividend sits at the top of its policy range, equal to 70% of replacement-cost profit from the Convenience and Mobility and Commercial and Industrial segments combined, and that any extra distribution from refining earnings will be assessed at year end.

Net debt fell to A$1,720.0 million at 30 June 2026 from A$2,074.8 million at 31 December 2025. Net Capital Expenditure was A$123.0 million in the half, and full-year capex guidance of roughly A$350 million to A$400 million was reaffirmed.

Three segments, one driver

Energy and Infrastructure, which includes the Geelong refinery and fuel terminals, generated EBITDA of A$353.7 million. Refining intake was 19.7 million barrels, up from 18.8 million. A fire at the refinery on 15 April 2026 reduced margin and crude intake in the second quarter. Viva says operations were restored safely, with the residue catalytic cracker and associated units restarting in June. The July margin was US$20.7 per barrel, indicating conditions stayed encouraging into the second half, though the company's own statement is the limit of what can be said.

Commercial and Industrial, which sells fuels, lubricants and other products to business customers including aviation, Mining and transport, delivered EBITDA of A$305.4 million, up 28%. Fuel volumes rose 1.0% to 5,865 million litres. Convenience and Mobility, which includes the retail network and the OTR convenience brand, delivered EBITDA of A$138.7 million, up 86%. Fuel volumes rose 2.0% to 2,626 million litres. Group volumes rose 1.3% to 8,490 million litres.

Not everything improved. Tobacco sales fell 16.8%, and Middle East conflict disrupted Supply and affected aviation volumes. No federal fuel security services payment was made in the half because the refining margin marker stayed above the A$15.9 per barrel threshold. That payment is a form of downside protection, and its absence is a sign of how encouraging margins were.

Two features of the result deserve emphasis. First, the improvement in Convenience and Mobility, up 86%, shows the retail side is not simply riding the refining boom, although the company's materials do not break down how much came from fuel margin versus shop sales. Second, volumes grew only modestly, by 1.3% across the group, so the earnings surge came mostly from margin rather than activity. Investors comparing Viva with fuel retailers or pure refiners should therefore separate what is structural, such as network growth and supply-chain savings, from what is cyclical, namely the global refining margin.

Outlook and operations

Management expects refining margins to remain encouraging for the rest of FY26. Commercial and Industrial earnings are expected to moderate in the second half, but stay above the same period of 2025, as favourable term supply arrangements expire. That is the clearest sign in the company's own outlook that not all of the half's earnings are repeatable.

The supply chain transformation in the convenience business is on track for completion by the end of November 2026. Expected benefits include better range control, the return of private-label products and improved replenishment and supplier terms. Viva plans about 20 to 25 new OTR stores and the conversion of 10 to 15 Reddy Express stores to a mix of OTR and Liberty Convenience formats over the rest of 2026.

Sector position and policy backdrop

Geelong is Viva's strategic asset in a domestic refining sector that has shrunk over the past decade as imports have taken a larger share of supply. Refining margins globally are volatile, being driven by crude supply, product Demand and disruptions elsewhere in the world, which is why the company separates its dividend policy for the two more stable segments from refining profit. Government fuel security initiatives, including Australian Fuel Reserves and a Refinery Retention program, could support longer-term infrastructure at the Geelong Energy Hub, according to the company, though specifics were not detailed in the material reviewed. In the longer run, the energy transition is a structural challenge for fuel demand, while the convenience and infrastructure businesses give some diversification.

Risks and what to monitor

The key risk is margin reversion. A refining margin of US$21.1 per barrel is well above the US$8.2 of the prior corresponding period, and nothing guarantees it will last. The Geelong fire is a reminder of operational risk in complex refining units. The expiry of favourable supply terms will reduce Commercial and Industrial earnings. Tobacco, a historically large convenience category, is in decline, and Viva will need the supply chain and store roll-out to offset it.

Net debt, although lower by roughly A$355 million over six months, remains material against a business whose earnings are inherently cyclical. Items to watch include the full-year result, whether a refining-linked extra dividend is declared, margin levels in the fourth quarter, completion of the supply chain transformation, any policy support for Geelong, and the performance of the new stores. This is general information about reported results and guidance, not a prediction or advice.