Viva Energy, which runs the OTR and Coles Express networks, has reported declining sales in its convenience store chain.

The company is blaming illegal tobacco sales and the cost-of-living crisis for its convenience predicament.

In the fuel company’s convenience and mobility business, fuel sales volumes edged up 0.5 per cent while convenience sales fell 4.1 per cent.

While the group’s overall fuel sales were up 4 per cent on a pro forma basis to 16.8 billion litres, that growth was driven mainly by the solid performance of the commercial and industrial division, where volumes rose 5.2 per cent.

“Group performance was negatively impacted by lower demand within our convenience business due to cost-of-living pressures and illicit tobacco trade, coupled with high inflation lifting the cost of doing business,” said CEO and MD Scott Wyatt.

During the year, the group completed the OTR acquisition and received regulatory approvals for the Liberty Convenience deal.

On the bottom line, earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew 5 per cent to $748.6 million, with the commercial segment up 5 per cent and the convenience segment down 0.4 per cent.

For FY25, Viva expects to deliver EBITDA of between $270 million and $330 million. The group said challenging retail conditions and weak retail fuel margins during the first two months are driving lower earnings expectations for the convenience & mobility business.

According to the Australian Financial Review, the soft outlook disappointed investors, driving Viva’s stock price down by 24 per cent on Tuesday.