Africa-focused fuel distributor Vivo Energy (VVO) expects to top full year expectations for 2020 as recovery kicks-in.

The FTSE 250 company, which sells Shell and Engen branded fuels and lubricants from an estate of 2,500 service stations across Africa, said full year adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) will come in above the top end of the $331 million-to-$354 million consensus range.

The earnings upgrade results from the ongoing recovery in Vivo’s higher margin retail business which drove positive trading in the fourth quarter of a Covid-impacted 2020.

The trading update saw investors pile in to the stock, sending the share price racing more than 7% higher to 83.7p, topping the FTSE 350 leaderboard and pushing the company’s valuation beyond £1 billion (£1.06 billion).

Operational ‘momentum’ built in the third quarter continued into the final quarter, the company reported, helped by ‘limited’ mobility restrictions across the continent.


Vivo Energy reported a 7% drop in fuel volumes to 9.6 billion litres during a pandemic-impacted 2020, in line with consensus expectations. The resilient performance was also supported by the ‘unit margin tailwinds’ experienced in the third quarter continuing through to the final quarter.

As a result, adjusted EBITDA for 2020 is expected to exceed the top end of the $331 million-to-$354 million consensus range.


Back in October, Vivo Energy reinstated the dividend it had withdrawn at the onset of the pandemic, drawing confidence from an uptick in economic activity and higher unit margins in the third quarter.

Despite prevailing Covid uncertainties, Vivo Energy intends to recommend a dividend of 3.8 cents per share for 2020, flat on the 2019 payout and in line with its stated dividend policy.

Chief executive Christian Chammas commented: ‘The Covid-19 pandemic had a significant adverse impact on our business in the first half of 2020. Since then the group has recovered strongly, with the second half in line with the comparable period in 2019, and this positive performance has continued into 2021.

‘As a result, we are cautiously optimistic, and believe that we are well positioned for the future due to our leading positions in structural growth markets, together with our diversified and resilient business model.’


‘Despite management noting that this positive performance has continued in 2021, we expect outer year consensus forecasts to remain broadly unchanged given the early stage in the year and ongoing risk of further mobility restrictions,’ cautioned Numis Securities.

‘Nevertheless, the recovery in second half profitability and ability to sustain its progressive dividend policy demonstrates the resilience of its model and African fuel demand. And with 2020 successfully navigated, we expect focus to turn back to the growth potential of the business,’ added the broker.


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Issue Date: 12 Feb 2021