Can Viva Energy’s Refinery Upgrade and Cost Cuts Fuel Growth in 2026?

Sales and Market Dynamics

Viva Energy Group Limited has reported a slight uptick in total sales volumes for the third quarter of 2025, increasing by 0.9% compared to the same period last year. This growth was primarily driven by a 2.4% rise in commercial and industrial fuel sales, notably supported by expansion in the aviation sector. However, this was partially offset by a 2.3% decline in convenience and mobility fuel volumes, reflecting broader challenges in the retail fuels market and a reduced store footprint.

Convenience sales excluding tobacco remained steady year-on-year, but tobacco sales continued their downward trend, falling 15% compared to the previous quarter. This decline is attributed to recent packaging law changes, although month-to-month tobacco sales stabilized during the quarter.

Refinery Performance and Upgrades

The Geelong refinery experienced a 23% reduction in intake due to planned maintenance on the Residual Catalytic Cracking Unit, which was successfully restarted in mid-October. Despite lower throughput, the refinery margin surged 76.6% to US$11.3 per barrel, up from US$6.4 in the prior year quarter. The refinery is on track to resume fully optimised production by mid-November with the commissioning of the Ultra Low Sulphur Gasoline unit, positioning Viva Energy ahead of Australia’s new fuel quality standards effective December 2025.

Capital investment of approximately $280 million is planned to meet these new fuel specifications, partially offset by $150 million in federal government funding. This investment underscores Viva Energy’s commitment to regulatory compliance and operational excellence.

Strategic Initiatives and Leadership Transition

On the strategic front, Viva Energy is progressing well toward delivering $35 million in incremental synergies and cost reductions in the second half of 2025. These savings are expected to come from system consolidations, organisational efficiencies, and improved procurement and marketing efforts. The company has also expanded its retail footprint with 21 new OTR stores opened this year and plans for 15 more by year-end.

Leadership changes are underway in the Convenience & Mobility segment, with Jennifer Gray stepping in as interim CEO while a search for a permanent replacement continues. Supported by John Joyce, Gray is focused on driving top-line growth, capturing synergies, and enhancing operational performance through common systems.

Outlook and Challenges Ahead

Looking ahead, Viva Energy anticipates a seasonally stronger fourth quarter for convenience and mobility sales, supported by improved execution and a leaner cost base. However, the commercial and industrial segment may face headwinds from a softer cruise season impacting marine fuel demand. The company remains confident in delivering $80 million in total synergy and cost benefits for the full year 2025.

As Viva Energy navigates regulatory changes, operational upgrades, and leadership transitions, the coming months will be critical in translating these initiatives into sustained financial performance.