Viva Energy Group Ltd. · ASX:VEA
Viva Energy — Investor Day (November 2023)
60 slides from Viva Energy's investor day presentation, Nov 9, 2023
Slide 1: Investor Day Briefing Presentation
9 November 2023 Market Announcements Office Australian Securities Exchange Electonic lodgement For personal use only Investor Day Briefing Presentation The attached presentation will be presented today at Viva Energy’s Investor Day Briefing. Authorised for release by: the Company Secretary Julia Kag
Slide 2: Viva Energy Investor Day 2023
For personal use only Viva Energy Investor Day 2023
Slide 3: Acknowledgment of Country
For personal use only Acknowledgment of Country We acknowledge and pay respect to the past, present and future Traditional Custodians and Elders of this nation and the continuation of cultural, spiritual and educational practices of Aboriginal and Torres Strait Islander people. We particularly pay r
Slide 4: Important notice and disclaimer
Important notice and disclaimer This presentation has been prepared by Viva Energy Group Limited, in preparing the information and assumptions contained in this known and unknown risks, uncertainties and other factors that may ACN 626 661 032 (“Company” or “Viva Energy”). presentation, however no re
Slide 5: Executive Leadership Team
Executive Leadership Team Experienced and diverse leadership team to drive transformation agenda For personal use only Natasha Dale Cooper Carolyn Lachlan Pfeiffer Scott Wyatt Jevan Bouzo Amanda Denis Jennifer Gray Cuthbert Executive Pedic Chief Business Chief Chief Executive Fleming Urtizberea Exec
Slide 6: Investor Day Strategy Agenda
Investor Day Strategy Agenda Time Topic Presenter For personal use only 8:30 am Registration 9:15 am Welcome and Group Strategy Scott Wyatt 9:30 am Convenience & Mobility Jevan Bouzo 10:00 am Q&A 10:30 am Morning tea 10:50 am Commercial & Industrial Denis Urtizberea 11:10 am Energy & Infrastructure
Slide 7: Group Overview
For personal use only Group Overview Scott Wyatt Viva Energy Group Limited Investor Day 2023
Slide 8: Our History of over 100 Years Operating in Australia
Our History of over 120 Years Operating in Australia Established reputation and capability reaching more than 25% of the Australian market1 For personal use only 1901: 1954: 2014: 2016: 2018: 2021: Shell Opened the Shell Waypoint Viva Energy Federal begins Geelong Australia REIT3 listed Australia Go
Slide 9: Company Overview
Company Overview Three distinct and diversified businesses supported by renowned and respected brands For personal use only Convenience Commercial Energy and and Mobility and Industrial Infrastructure Reddy Aviation Refining Express Liberty Strategic Nationwide Flybuys Transport Marine Convenience S
Slide 10: Group Strategic Objective
Group Strategic Objective Build on strategic positions to grow sustainable earnings beyond traditional fuels Gross profit by source post For personal use only acquisitions1 Gross profit by source (3-yr avg. to FY2022) Key strategic positions Refining 21% • Largest single-branded, company operated R
Slide 11: Transformation and Growth Strategy
Transformation and Growth Strategy Three businesses with unique positions and growth pathways, resilient to energy transition Today Pathway Future For personal use only Strategic Position Transformative Strategies Objectives • Directly capture convenience earnings • Grow convenience network to over
Slide 12: Emissions Reduction Ambition
Emissions Reduction Ambition (Scope 1 and 2 Emissions) Individual pathways to net zero for our businesses For personal use only Group emissions1 2023 2030 2050 Scope 1 + 2 tCO2e (‘000) 1,356 CO2e emissions 9% 1,250 Convenience ~70 kt & Mobility CO2-e1 2030 net zero target Largely direct abatement 1,
Slide 13: Sustainability Performance
Sustainability Performance Continued progress on our broader sustainability agenda Energy Transition Environment Our People Our Community For personal use only Committed to Net Zero Announced plans for first >7,000 employees following On track to deliver 80% emissions reduction targets: commercial p
Slide 14: Investment Case
Investment Case Strong track record of delivering superior returns Cumulative total return, past three years (%)1 Strategic value drivers For personal use only • Three distinct businesses provide resilience to sector downturns and offer unique growth pathways • Acquisition of Coles Express and OTR G
Slide 15: Convenience & Mobility
For personal use only Convenience & Mobility Jevan Bouzo Viva Energy Group Limited Investor Day 2023
Slide 16: Convenience Market
Convenience Market Convenience offers significant and consistent sales growth, with untapped potential Convenience sales ($BN)1 “On the go” share of occasions by channel2 Addressable market by category ($BN)3 Food and General Merchandise CAGR of 6.9% since 2014 Australian service stations currently
Slide 17: Retail Fuels
Retail Fuels A resilient fuels business and strong convenience offering supports long-term growth Australian retail fuel margins (CPL) and fuel volumes (ML)1 Strategic implications For personal use only (ML) 18.0 30,000 • Fuel margins resilient to changes in 16.0 13.7 14.6 17.1 demand and operating
Slide 18: On-the-Go Electric Vehicle Recharging
On-the-Go Electric Vehicle Recharging Evolving market offers opportunities for differentiation and supporting Convenience business For personal use only Significant opportunity to Reliability and differentiate total experience are more Strategic implications important Longer dwell • Reliable and dep
Slide 19: Transformation and Growth Strategy
Transformation and Growth Strategy Three steps to achieving our ambitions and becoming a leading convenience retailer For personal use only Retail branded network and fuel supplier 1. Take control of the shop 2. Extend the network 3. Transform the offering Leading Convenience & • Existing $45M+ EBIT
Slide 20: Customer and People Led Strategy
Customer and People Led Strategy Driving a culture of customer focus and growth ambition, with four key priorities For personal use only Rolled out across all 6,000 team members, in preparation for OTR completion1 1. Subject to regulatory approval. Viva Energy Group Limited Investor Day 2023 19
Slide 21: Our Ambition – Grow customer interactions and non-fuels earnings
Our Ambition – Grow customer interactions and non-fuels earnings Deliver >250m transactions per year and lift non-fuel earnings to more than 50% of total earnings For personal use only Gross profit by source post acquisitions1 Gross profit by source FY2023 (June-end) pro forma (FY2022) Shop OTR Grou
Slide 22: Our Ambition – Lift EBITDA to over $500M
Our Ambition – Lift EBITDA to over $500M Three steps to delivering substantial earnings uplift from acquisitions over five years1 Convenience & Mobility 5-year EBITDA bridge ($M) 3 For personal use only 500+ 2 50 + + • ~80% of network OTR + branded in 5 years • Liberty Convenience • Total overheads
Slide 23: Step 1: Integration of Coles Express
Step 1: Integration of Coles Express EBITDA uplift from improved sales performance and better integration of fuel and convenience strategies For personal use only Pricing and +$45M-70M Increase sales Operating cost Fit-for-purpose Vacant sub- category EBITDA performance improvements systems tenancie
Slide 24: Step 2: Integration of OTR Group
Step 2: Integration of OTR Group1 EBITDA uplift from acquisition, above store cost, and purchasing synergies For personal use only OTR acquisition update • Regulatory process continuing. • Ongoing and open dialogue with ACCC. • Now expect to complete in 1H2024 (subject to regulatory approvals). OTR
Slide 25: Step 3: Extend and Transform Network
Step 3: Extend and Transform Network Acquisitions deliver ~1,000 store fuel and convenience network, with a pathway to almost 2,000 outlets1 Viva Energy company-operated network Fuel and convenience network A pathway to almost 2,000 outlets1 For personal use only Majority of sites assembled between
Slide 26: Step 3: Extend and Transform the Network
Step 3: Extend and Transform the Network We expect ~80% of the network to be OTR branded by 20291 Brand transition (# stores) Our network is well suited to the OTR offer For personal use only Preliminary schedule based on current network (23 divested)1 Brand Dec-2023 Dec-2024 Dec-2025 Dec-2026 Dec-2
Slide 27: Step 3: Extend and Transform the Network
Step 3: Extend and Transform the Network OTR delivers a world-class convenience offering with significant uplift opportunity OTR competitive advantages For personal use only OTR shop metrics are world-leading • Leads market innovation in Food (#1 growth category) Aus Mature Existing OTR through ri
Slide 28: Uplift Potential and Valuation Opportunity
Uplift Potential and Valuation Opportunity We aim to grow EBITDA to $500M, with >50% of gross margin from convenience sales For personal use only VEA vs. mature fuel & convenience C&M EBITDA ($M) over time2 retailers (EV/EBITDA)1 500+ 15.0x 10.0x 235 250 188 5.0x 149 0.0x 2019 2020 2021 2022 5-yr ta
Slide 29: Commercial & Industrial
For personal use only Commercial & Industrial Denis Urtizberea Viva Energy Group Limited Investor Day 2023
Slide 30: Sustainable Earnings Growth
Sustainable Earnings Growth Our focus on value and building on competitive strengths is delivering strong results For personal use only 400 EBITDA performance vs. sales volumes1 15 Key drivers of earnings growth 350 13 • Retained capability and invested in 335 customers during COVID years 300 11.1
Slide 31: Transformation and Growth Strategy
Transformation and Growth Strategy Deliver reliable and attractive cash flow through unique competitive positions For personal use only 1. Build on unique 2. Expand Specialty 3. Acquire adjacent positions Products & Services businesses • Value led, high touch • Take advantage of surplus • Other adja
Slide 32: Unique and Diversified Portfolio
Unique and Diversified Portfolio Viva Energy participates in more segments and products than any of our competitors Exposure by product/service & sector Strategies For personal use only Resources Aviation Marine Transport Agriculture1 Industrial Construction Defence Diesel ✓ ✓ ✓ ✓ ✓ ✓ ✓ Support tran
Slide 33: Unique Specialties Portfolio
Unique Specialties Portfolio Specialty Products are resilient to the energy transition and provide long-term growth opportunities Polymers Lubricants For personal use only • Recycling bio-waste and recycled plastics opportunity • Exclusive distributor of Shell • Partnering with local packaging custo
Slide 34: Extensive National Coverage
Extensive National Coverage Unique specialties businesses supported by hard to replicate local manufacturing and supply chains Cocos Islands Competitive advantages For personal use only • Leading, high-touch customer service (always available) supported by national network • Presence at 54 regional
Slide 35: High Quality Customer Base
High Quality Customer Base Top 50 customers comprise ~70% of EBITDA, with an average tenure of more than 15 years For personal use only Customer by EBITDA1 contribution (%) Segment and economic drivers 20yr+ relationships with top 10 customers 20 100% International Domestic Government / (Exports/Tou
Slide 36: Well Positioned for Energy Transition
Well Positioned for Energy Transition Supporting customers’ transition to low-carbon fuels across our industry exposure Resources Transport Agriculture Industry Aviation Defence Shipping For personal use only • Jet fuel • Diesel • Marine diesel Current fuel • Diesel • Avgas • Military grade • MFO, V
Slide 37: Our Aspiration
Our Aspiration Deliver earnings of ~$500M in five years through a mix of organic growth, optimisation and M&A For personal use only 5-year EBITDA ($M) aspiration1 Pathway to ~$500M EBITDA • Continued organic earnings growth across main fuels and specialties businesses ~500 • Further bolt-on acquisit
Slide 38: Energy & Infrastructure
For personal use only Energy & Infrastructure Jennifer Gray Viva Energy Group Limited Investor Day 2023
Slide 39: Transformation and Growth Strategy
Transformation and Growth Strategy Extensive infrastructure positions supporting energy security and energy transition For personal use only 1. Maximise refining 2. Solidify position as 3. Deliver low carbon opportunity Energy security partner fuels • Maximise production of • Position supported by e
Slide 40: Australian Fuel Market
Australian Fuel Market A long-term decline in Petrol is likely to be offset by growth in Diesel and Jet through the next decade Australian fuel demand Demand fundamentals For personal use only updated house view (base case)1 • Declining Petrol volumes (-4%) expected to be (BL) offset by Jet (>40%),
Slide 41: Regional Refining Margin Outlook
Regional Refining Margin Outlook Regional refining margins expected to remain higher for longer, albeit volatile Singapore product crack forecast Asia Pacific product balance forecast Robust refining outlook For personal use only (US$/BBL)1 (kb/d)1 40 800 • New, large-scale refineries are hard to ju
Slide 42: Refining Operating Costs
Refining Operating Costs Operations impacted by a period of elevated costs and turnaround impacts in 2022 and 2023 For personal use only Refining operating costs over time Last two years impacted by unique events (A$/BBL) 1H2023 significantly impacted by lower • 2022 impacted by higher energy and co
Slide 43: Refining Outlook
Refining Outlook Well positioned to capture higher regional refining margins Mid-cycle EBITDA assumptions (next five years) Operating sensitivity For personal use only Operating costs to normalise to A$8.50/BBL • Every US$1/BBL increase in the GRM delivers A: A$/US$ 0.68 ~A$55-60M p.a. EBITDA1 B: Cr
Slide 44: Supply Chain Advantages
Supply Chain Advantages We maintain 55 fuel import terminals and depots and own major high-pressure pipelines nationwide Darwin Gove Cocos Islands For personal use only We supply ~25% of the Australian Weipa National infrastructure Wyndham fuel market1 Geelong Refinery Cairns • Our national footprin
Slide 45: Energy Security Partner
Energy Security Partner Supporting Australia’s energy security through infrastructure solutions and long-term partnerships For personal use only Strategic Storage • Gas Import Terminal • Storage >1.2BL, with additional 90ML Existing port and industrial zone diesel storage in Geelong from mid-2024 •
Slide 46: Long-Term Transition of Geelong Energy Hub
Long-Term Transition of Geelong Energy Hub Opportunity for progressive transition to lower carbon fuels utilising existing infrastructure For personal use only Today 2050 Existing Maximise production capability and efficiency Capability Repurposing Conversion (Terminal / Processing) of existing hydr
Slide 47: Deliver Lower Carbon Fuels
Deliver Lower Carbon Fuels Our infrastructure is well positioned to support the energy transition and reduce emissions For personal use only Medium risk, feedstock High-risk, long-term Low risk, foundation investments transition investments diversification investments Geelong co-processing Low carbo
Slide 48: Conclusion
Conclusion Lower refining volatility (to the downside) and robust refining margin outlook supports strong earnings For personal use only Energy & Infrastructure EBITDA ($M) over time1 518 ~ 250 79 103 -128 2019 2020 2021 2022 Mid-cycle EBITDA 2 Construction of diesel strategic storage at Geelong – O
Slide 49: Financial Highlights
For personal use only Financial Highlights Carolyn Pedic Viva Energy Group Limited Investor Day 2023
Slide 50: Capital Management Framework
Capital Management Framework A disciplined approach to capital management to grow shareholder value For personal use only • Safe, reliable operations • Traditional energy businesses Underlying Sustaining • Maintain earnings Growth • Earnings diversification Earnings Capital • Energy efficiency and •
Slide 51: Capital Management Framework – Growth Categories and Returns
Capital Management Framework – Growth Categories and Returns A balance of investment across traditional, adjacent and emerging opportunities For personal use only Growth Category Examples Returns Criteria • Convenience • Rebalancing of investment towards earnings diversification Earnings Diversifica
Slide 52: Capital Expenditure
Capital Expenditure Continued capital discipline to direct free cash to growth opportunities For personal use only Capex forecast 2024 2025 2026 To decline from 2024 as major projects complete Sustaining ~$250M – 300M p.a. Capital1 ULSG and aromatics upgrades, Strategic Storage Compliance (~$160M ne
Slide 53: Capex Summary
Capex Summary Growth capex focused on earnings diversification FY2023 FY2024 FY2024 For personal use only guidance guidance1 guidance1 ($M) ($M) ($M) Convenience & Mobility 35 – 45 85 – 90 Growth 50 – 65 Commercial & Industrial 75 – 85 95 – 100 Sustaining 265 – 275 Energy & Infrastructure 55 – 60 12
Slide 54: A Strong Track Record of Cash Generation
A Strong Track Record of Cash Generation Our non-refining businesses have delivered $1.3BN of free cash flow since 2018 C&M and C&I 2018 2019 2020 2021 2022 1H2023 For personal use only EBITDA (RC) 437 324 382 393 571 347 Depreciation and Amortisation (67) (88) (96) (113) (106) (53) Finance Costs (3
Slide 55: Disciplined Capital Allocation
Disciplined Capital Allocation Focused on disciplined capital management through an intense multi-year investment period Convenience & Mobility (C&M) Commercial & Industrial (C&I) Energy & Infrastructure (E&I) For personal use only • Expect to generate strong FCF as capex Characteristics • High FCF
Slide 56: Investment Case
For personal use only Investment Case Scott Wyatt Viva Energy Group Limited Investor Day 2023
Slide 57: Reasons to Invest in Viva Energy
Reasons to Invest in Viva Energy A unique exposure to diversified retail, industrial and energy businesses, with strong growth potential ✓ The opportunity to extend a world-class food and convenience offering to a network of more For personal use only than 700 stores in Australia, with a pathway to
Slide 58: Appendix
For personal use only Appendix
Slide 59: Glossary
Glossary Replacement Cost (“RC”) EBITDA (RC) Geelong Refining Margin Viva Energy reports its performance Profit before interest, tax, depreciation The Geelong Refining Margin is a on a “replacement cost” (RC) basis. and amortisation adjusted to remove the non-IFRS measure calculated in RC is a non-I
Slide 60: For personal use only
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