Viva Energy shares fall 6% on 2019 profit guidance

Here's why the Viva Energy Group Ltd (ASX: VEA) share price is down 6.1% to $2 today

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The Viva Energy Group Ltd (ASX: VEA) share price is down 6.1% to $2 today after it told investors to expect underlying profit on a 'replacement cost' basis between $135 million to $165 million over 2019. That compares to $229 million delivered in 2018 when adjusted to make the new AASB accounting standards comparable. 

The company reported: "Earnings have been impacted by lower refining margins during 1H2019, lower retail market margins as a result of oil price volatility and heightened competition, as well as increased ocean freight and effects of lower exchange rates compressing commercial margins."

Viva splits its business between retail fuel sales and supply, commercial fuel sales and supply, and the refining of crude oil for fuel supply. 

Supply, corporate and other costs also increased more than 10% over the calendar year in a result the company attributed to higher shipping, property and associated network costs, among other factors. 

The company declined to provide any guidance for FY20. 

Elsewhere, fuel distributor Caltex Australia Limited (ASX: CTX) is the subject of a $34.50 per share takeover offer. 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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