Pain at bowsers fuels doubling of profits for SA’s OTR owners
Skyrocketing fuel prices are hitting businesses and drivers hard but the owner of hundreds of SA’s OTR servos has recorded an astonishing profit.
Viva Energy bought petrol station chain OTR in 2023 for $1.15 billion, and it now expects its earnings to more than double to at least $770 million in the first half of this financial year alone.
The result comes on the back of mass disruption to global energy markets, with the company’s latest trading update revealing it was production margins that drove its bumper result, while sales of petrol rose by 2.4 per cent.
Viva bought the South Australian petrol station chain OTR in 2023 for $1.15 billion from one of the state’s richest families, the Shahins, and now owns 153 across the state.
Today, it announced that its first half earnings before interest and tax, were expected to be between $770 million and $780 million, a huge increase from the $305 million recorded at the same time last year.
Viva’s profits were driven by demand for petrol and uncertainty in the market, the company’s CEO Scott Wyatt told the market in an announcement today.
“The first half of this year was shaped by geopolitical events which have caused significant disruption across the global energy markets,” Wyatt said, attributing substantial financial success to its Geelong petrol refinery’s output along with increased demand at the bowsers.
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“Our strong financial results reflect a substantially improved refining margin environment which has been driven by a regional shortage of oil supply and refining capacity, as well as improving retail sales growth and continuing strength of our commercial businesses.
“Domestic refining has reduced dependency on international refineries and will continue to play a critical role in maintaining fuel supply security into the future.”
Viva’s update comes after war in the Middle East shut down a key marine trading route for oil, the Strait of Hormuz, in the first half of the calendar year, sending petrol prices surging in Australia.
It also announced plans to open more service stations in the coming year and that it was planning to convert 25 to 30 stores to an unattended self-service format this year, following a “successful trial”.
Regular unleaded petrol spiked to as much as $2.30 per litre in late March and early April before the federal government extended relief on petrol taxes to calm the volatile market.
In early April, South Australian Premier Peter Malinauskas announced the state would be sacrificing around $40 million in state government GST revenue to further lower the fuel tax across the nation.
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The government also announced it would crack down on petrol price gouging with real-time price monitoring, imposing penalties on retailers failing to update prices appropriately online. It also tripled funding for compliance, allowing an additional 100 fuel inspections each month.
Earlier this month, the state government announced it had fined 29 unnamed petrol stations $20,000 in total for either failing to list fuel as being available or pricing it incorrectly.
In response to questions from InDaily, a government spokesperson said: “Financial results of private fuel operators are a matter for those companies”.
The spokesperson also said: “South Australia and all other state and territory governments supported the Australian federal government’s temporary fuel excise discount as a means to save consumers on fuel costs due to price shocks from the situation in the Middle East”.
Viva’s trading update today revealed it had sold more fuel and made more money from its own fuel refinery at Geelong from January this year until June 30 which is at the centre of its financial boom, with fuel now selling for a $US21.10 profit per barrel.
Its fuel sales increased by 2.4 per cent, a trading update to shareholders saying this reflected “competitive pricing” across the country’s service station networks.
The trading update also showed that “retail fuel margins were robust” throughout the first half of the year.
The trading update today showed the company is planning to open another 20 to 25 new OTR stores in 2026 and wanted to convert 10 to 15 Reddy Express stores to a mix of OTR and Liberty Convenience stores. It currently has 251 OTR stores nationally, up from 223 at the same time last year.
Its convenience sales inside stories (excluding tobacco) also increased by 1.3 per cent, boosted by more customers visiting stores as they bought petrol.
Shares in Viva Energy were up 4.71 per cent in early trading this morning.
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