October 25, 2018 / 10:51 AM / 9 months ago

UPDATE 2-Vivo Energy profit dips after supply disruptions, eyes expansion

* Supply disruptions in Kenya, Uganda and Ivory Coast weighed

* Ivory Coast infrastructure constraints to linger until year end

* Retail margins lower in Morocco, Vivo's biggest market

* Global oil price increase put pressure on profits (Adds comments from CEO, CFO)

By Julia Payne and Shariq Khan

LONDON, Oct 25 (Reuters) - African fuel retailer Vivo Energy is considering expansion into Nigeria and South Africa, its chief executive said, as the firm reported a slight fall in quarterly profits due to supply disruptions and thinner retail margins in Morocco.

Vivo distributes and markets Shell-branded fuels and lubricants across 15 African countries, including Kenya and Morocco, but has no presence in Africa's two biggest economies.

"We're keeping an eye on expansion opportunities in Nigeria and South Africa in particular," Chief Executive Christian Chammas said, without giving more detail.

The company, which debuted on the London Stock Exchange in May, earlier said third-quarter gross cash profit was down 2 percent at $167 million compared with the same period last year but comparing the first nine months, profit was up 4 percent.

High oil prices eroded margins in its biggest retail market Morocco despite the company's efforts to pass on some of the cost to consumers. Short-term supply disruptions in Kenya, Uganda and Ivory Coast also weighed on the results.

Chammas said, however, that this month's steep drop in Brent oil futures will provide a boost for year end, adding that pipeline outages in Kenya and Uganda had been resolved.

Vivo said total retail volumes grew just 1 percent in the quarter. Overall Q3 volumes grew to 2,323 million litres, up 2 percent from the last year. It said it expected growth of 4 percent for the full year.

"Growth is still being delivered and the Engen deal is a very positive element that will bring growth next year. We expect to deliver higher retail margins," Chammas said.

He was referring to Vivo's purchase of a network of service stations from South Africa's Engen in a deal that will complete in March next year.

Vivo's share price was down $1.5 percent at 114 pence at 1020 GMT.

The company, which was created in 2011 by a partnership between energy trader Vitol Group and Africa-focused private equity firm Helios Investment, expects to exceed its earlier target of opening 80 retail stations across its existing 15 African markets this year.

"The price of the (crude oil) barrel is above us but the continent's growth is so strong that it's auto-hedged," Chammas said

Chief financial officer Johan Depraetere added that African currencies have so far held up unlike emerging market Turkey's lira which has lost a third of its value against the U.S. dollar this year.

In Ivory Coast, supply issues were expected to persist until year end. A fire hit the country's refinery earlier this year and an import jetty was damaged, which has slowed fuel imports. (Additional reporting by Arathy S Nair in Bengaluru; Editing by Amrutha Gayathri and Emelia Sithole-Matarise)

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