Coffee, snacks, beverages and confectionery along with fuel sales have helped Ampol’s half yearly results for 2023.
Ampol reports first half 2023 group replacement cost operating profit (RCOP) earnings before interest and tax (EBIT) of A$576.3 million.
The result includes growth in non-refining RCOP EBIT, inclusive of a net uplift in New Zealand earnings from the acquisition of Z Energy (May 2022) and divestment of Gull (July 2022).
It also includes the impact of Brisbane’s Lytton refinery unplanned outage (where a technical fault in a petrol production unit was notified in March 2022 and operations resumed in May 2022), compared to a record refining result last year.
Operating profit (excluding one-off items) reportedly dropped to A$329.6 million in the half year for 2023, impacted by the Lytton refinery fault which contributed to a 26% decline in first-half core profit.
During July, fuel margins for convenience retail softened due to rising wholesale product prices and the lag in flowing these through to board pricing. This will probably normalise as product prices stabilise, says Ampol, which expects continued strong shop performance in the current economic environment.
Capex spend is expected to skew to the second half, trending to A$450 million including investments in highway sites, the Lytton Ultra Low Sulphur Fuels Project and EV public charging networks.
“Ampol has delivered another strong result through our strategy to build a more resilient business via growth in non-fuel and international earnings,” says managing director and chief executive Matt Halliday.
“I am pleased with the progress we have made integrating Z Energy, with the management team having already delivered the expected benefits and synergies.
“The value of our integrated supply chain was on full display this period. The team adapted to the changing market conditions and a refinery outage to deliver a pleasing performance, while the ongoing improvement in convenience retail was another standout.”
Its statutory net profit after tax (NPAT) (attributable to parent) is $79.1 million, total sales volumes increased by 25% from the first half in 2022 to 14.4 billion litres, and an Interim dividend was declared of 95 cents per share, representing a 69% payout ratio of RCOP NPAT (attributable to parent) excluding significant items.
“Fuels and Infrastructure RCOP EBIT for the first half of the 2023 financial year was $303.9 million – 47% lower (on a continuing basis) than the same time last year as lower Lytton refinery earnings, compared to a record performance last year, were partially offset by the stronger performance from F&I Australia (ex-Lytton and Future Energy).
“Margins improved as the finished product markets stabilised in the period following the Russian invasion of the Ukraine, resulting in reduced volatility of the Quality Premiums and product freight rates relative to what was experienced during 2022.“
Future Energy operating expense was $19.5 million, with Ampol progressing the rollout of the AmpCharge on-the-go electric vehicle charging network in Australia. As at the end of June 2023, 34 charging bays at 14 sites have been delivered in Australia as part of the ARENA and NSW Drive Electric programs.
Convenience retail earnings rose 31% as fuel sales improved in addition to continued strong shop performance.
Fuel volumes rose 1.1%, 2.7% on a like-for-like basis, while overall retail fuel margins were higher than in the first half of 2022, particularly in diesel, as wholesale product input costs stabilised, says Ampol.
“Excluding tobacco, network shop sales grew 5.6% on a like-for-like basis as key categories of coffee, snacks, beverages and confectionery achieved strong growth.
“Average basket value continued to grow, more than offsetting the impact of reduced tobacco sales. “Shop gross margin also continued to improve, reaching 34.9 post waste and shrink through a combination of improved pricing, promotions and product mix. As a result, excluding higher electricity charges, total shop income increased compared to the same time last year.”
Rationalisation of the company operated network was essentially complete by the end of 2022. Total Ampol branded sites at June 30, 2023 totalled 1816, including 643 company operated sites.
“The pilot of 50 MetroGo stores was also completed late last year and has been the subject of a joint review in the half. The outcome of this review is that Woolworths and Ampol have agreed to not progress with a broader rollout and existing stores will be rebranded to Foodary over the coming months,” says Ampol, adding the two companies remain committed to their partnership on Everyday Rewards loyalty and redemption.
“The outcome of the review provides Ampol with greater flexibility to leverage the entire network to execute the next phase of Ampol’s retail strategy.
“Our immediate focus is on investment in new major highway sites including Pheasants Nest, M4s and M1s. The two new marquee sites at Pheasants Nest are now open and construction is well progressed on the refresh of the M1 flagship sites which will include Ampol-operated Hungry Jack’s Quick Service Restaurants (QSRs).
“Over time, we also intend to take a more tiered approach to our Foodary offer to better meet the needs of our local customers as well as unlock the potential of QSRs across more of our premium network.”
Ampol secured a A$600 million US Private Placement with a number of tier one counterparties. “This transaction will complete in the third quarter and will include tenor of between eight to 15 years.”
The board has declared an interim dividend of 95 cents per share, with payment due September 27. 2023.
Ampol says it has seen a promising start to August, with air travel recovery expected to drive jet fuel.
