Australia's Viva Energy slips as new tobacco laws dent first-half convenience sales (updated)

Viva Energy

29/07/2025 02:14

Updates with details and background from paragraph 3 onwards

July 29 (Reuters) - Shares in Viva Energy VEA.AX shed as much as 11% on Monday after the Australian fuel retailer posted a drop in first-half convenience sales as new tobacco laws and a rise in black market tobacco sales hurt its high-margin business.

The stock fell up to 11.4% to A$1.94, the lowest since June 10, and was set for its biggest single-day percentage loss since late February.

The company flagged it expects its group level earnings before interest, taxes, depreciation, and amortisation (EBITDA) to come in at A$300 million ($195.4 million) on a replacement cost basis, well below the A$452 million reported a year ago.

Convenience sales dropped 10% year-on-year to A$835 million, dragged down by a 27% slide in tobacco sales following the new plain packaging rules and growing pressure from illicit tobacco products.

Excluding tobacco, convenience sales dipped 2%, with second-quarter performance broadly steady year-on-year.

Australia's new smoking laws, implemented in April, require tobacco companies to print health warnings on the paper covering the filter of each cigarette.

Meanwhile, commercial and industrial sales fell 2% versus last year, although second-quarter volumes grew 2% from a year ago and 6% from the March quarter, aided by improved weather and demand conditions.

At the Geelong Refinery, margins recovered through the half to hit $8.2 per barrel, despite an unplanned January outage and higher energy costs.

Viva added nine new OTR, formerly On the Run, stores in the second quarter, with 11 more under construction or conversion as at June end.

($1 = A$1.5352)

 (Reporting by Rishav Chatterjee in Bengaluru; Editing by Sumana Nandy)

 ((Rishav.Chatterjee@thomsonreuters.com;))