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Australia's Viva Energy falls as new tobacco laws dent the first-half convenience sale

Shares of Viva Energy fell as much as 11 percent on Monday, after the Australian fuel retailer reported a decline in convenience sales in the first half due to new tobacco laws.

The stock dropped up to 11.4%, to A$1.94, its lowest level since June 10 and set to suffer its largest single-day percentage decline since late February.

The company stated that it expected its group-level earnings before interest taxes, depreciation and amortisation to be A$300 (A$195.4) million on a replacement costs basis. This is well below the A$452 reported a year earlier.

Convenience sales fell 10% on an annual basis to A$835 Million, due in part to a 27% decline in tobacco sales as a result of the new plain-packaging rules and increasing pressure from illicit tobacco products.

The second quarter performance was largely unchanged year-on-year, excluding tobacco.

Australia's

New smoking laws implemented in April require tobacco companies print health warnings onto the paper that covers the filter of each cigarettes.

Commercial and industrial sales declined 2% against last year. However, second-quarter volume grew 2% over a year earlier and 6% over the March quarter. This was aided largely by better weather conditions and increased demand.

The Geelong Refinery recovered its margins through the first half, reaching $8.2 a barrel despite a January unplanned outage and increased energy costs.

Viva opened nine OTR stores, formerly On the Run in the second quarter. Eleven more were under construction or undergoing conversion at the end of June. ($1 = A$1.5352) Reporting by Rishav chatterjee, Bengaluru. Editing by Sumana nandy

(source: Reuters)