Shares in Vivo Energy (VVO) rallied 2.9% to 106p on Thursday after the Africa-focused fuel distributor reported encouraging third quarter volume growth supported by improving mobility trends.

And with its site rollout continuing at pace, the FTSE 250 company also fuelled investor enthusiasm by raising guidance for net new sites for both this year and next.


Vivo Energy, which sells Shell and Engen branded fuels and lubricants from a network of service stations spanning 23 countries across Africa, reported 3% year-on-year growth in group volumes to 2,576 million litres for the third quarter to September.

Broadly in-line with consensus, this volume growth performance reflected the continent’s continuing business recovery from the impact of Covid, with mobility restrictions easing in the latter part of the period following more severe lockdowns in July.

Vivo’s unit margins remained strong, as the business continued to benefit from a favourable fuel supply and pricing environment, not to mention a rise in lubricant price increases and a higher margin product mix.

CEO Christian Chammas said he was ‘delighted to deliver another strong quarter with the business maintaining its momentum. Volumes continued to improve, and together with strong unit margins, led to gross cash profit of $195 million, ahead of both Q3 2020 and Q3 2019.’

Vivo’s third quarter performance was driven by the retail business and with its accelerated site rollout supporting volume recovery. Having delivered 114 net new sites so far this year, Vivo now expects to ‘exceed the top of our previous guidance range by more than 20%, by adding between 130-140 net new sites in 2021’, and is ‘aiming to maintain this new level of site openings in 2022’.

Investors also welcomed the confident tone of the outlook statement, where Vivo insisted: ‘Fuel will continue to be integral to the development and growth of our African markets and we believe we are well placed to meet this growing demand, whilst broadening our product mix to provide long-term benefits to our customers and broader stakeholders.’


Following the positive update, Numis Securities reiterated its ‘buy’ rating on Vivo with a target price of 130p, implying more than 20% share price upside from current levels.

The broker nudged up its 2021 earnings estimate to reflect Vivo’s stronger third quarter margin, although it left outer year forecasts unchanged ‘given ongoing mobility restrictions. While the recovery might be taking longer than hoped, the accelerated site roll-out should underpin market share gains and potentially a higher level of recovered earnings offering upside to a medium-term forecast agenda which already looks too cheap’, said Numis.


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Issue Date: 21 Oct 2021