Vivo Energy Plc, an African fuel retailer, reported a 2 percent rise in 2018 gross profit on higher volumes and forecast low to mid double-digit percentage volume growth for the current year despite tough market conditions in Morocco.
The company revealed that its gross profit rose to $624 million last year from $614 million a year earlier.
Vivo Energy, which distributes and markets Shell-branded fuels and lubricants in Africa, is the result of a partnership between energy trader Vitol Group and Africa-focused private equity firm Helios Investment. The fuel retailer adjusted core earnings rose by 6 percent to $400 million on volumes up 4 percent at 9.351 billion litres of fuel.
The development helped offset supply disruptions and thinner retail margins in Morocco, which is the company’s largest market.
Following the completion of its acquisition of a subsidiary of South African retail firm Engen Ltd on March 1, 2019, the company expects volumes to hit around 10 billion litres this year. The acquisition expanded its network by 230 stations in 8 new countries outside South Africa.
The company’s gross cash unit margin last year dipped 1 percent to $74 per thousand litres, which Vivo Energy blamed on consumer activism in Morocco. It forecast a gross cash unit margin in the high $60s per thousand litres for 2019.
The company noted that the core earnings contribution from the Moroccan retail unit was lower in 2018 at 18 percent versus 29 percent in 2017, and that it expected the metric to fall further this year.
The Chief Financial Officer of Vivo Energy, Johan Depraetere said “pressure on Moroccan retail pushed down our unit margin there by 4 percent starting towards the middle of the third quarter. There is speculation of re-regulation but we’re assuming that does not happen”.
The company, which also has a secondary listing on the Johannesburg Stock Exchange, stuck to its plan to open between 80 to 100 new retail service stations across 23 countries in which it operates.