Ampol has announced its financial results for the 12 months ending 31 December 2021. The results reveal the company’s highest earnings since 2018, $631 million, and record fuel sales volumes of 22.04 billion litres.
According to Ampol Managing Director and CEO Matt Halliday, the strong financial results and record fuel sales reflect the ability of our people to thrive under challenging conditions and demonstrates how the business and earnings can respond to the market recovery.
“Throughout the year, we focused on managing what we can control. The safety and wellbeing of our people has been paramount during this time, and I am pleased that during a period of ongoing disruption and uncertainty, we have achieved industry top quartile performance for personal safety,” he says.
“Our customers are responding well to the successful return of the iconic Australian Ampol brand, with rebranded sites outperforming our control sites across key performance indicators.
“As we look ahead, we have a clear strategy to maximise the value of our existing businesses during the energy transition and to diversify and grow our international earnings through the Z Energy acquisition while we prepare for a low carbon future.”
Fuels and infrastructure
Fuels and infrastructure delivered RCOP EBIT of $417.6 million. This, says Ampol, is an increase of 170% on the prior year underpinned by a strong operating performance at Lytton and earnings growth in our international business.
“During the year, safe and reliable operations at the Lytton refinery drove increased production in an improving refiner margin environment. It delivered RCOP EBIT of $158.7 million, including the benefit of $40.0 million from the federal government’s once-off Temporary Refining Production Payment,” says Ampol. “This compares with the loss of $144.8 million incurred during 2020 when the refinery was shut down for the extended Turnaround and Inspection (T&I) due to the impacts of Covid-19.
“The resumption of production at Lytton displaced additional imported volumes required in FY 2020 during the extended T&I. This was the main contributor to the reduction in RCOP EBIT to $110.2 million for Fuels and Infrastructure Australia (ex-Lytton).”
Overall earnings from fuels and infrastructure’s Australian operations (including Lytton) increased by approximately $230 million compared with FY 2020.
Successful execution of the strategy to diversify and grow international earnings, says Ampol, saw fuels and infrastructure international RCOP EBIT grow to a record $110.9 million, up 31% on the prior year. The Gull business in New Zealand and Trading and Shipping International drove the growth in earnings.
The fuels and infrastructure result includes $6.9 million spend to establish the Future Energy team, as well as $44.7 million of foreign exchange gains compared with a $29.9 million gain in FY 2020.
Total Australian sales volumes were 13.05 billion litres in FY 2021. This was 3.9% lower than the 13.58 billion litres in FY 2020. According to Ampol, this reflects the full-year impact of Covid-19 on jet volumes, the impact of rolling lockdowns on Australian retail market demand in the second half, as well as competitor supply chain decisions earlier in the year that adversely impacted net buy/sell volumes.
The decline in Australian sales volumes was, however, more than offset by growth in international sales to 8.99 billion litres, with total sales volumes for the Group reaching a record of 22.04 billion litres.
Convenience retail
Convenience retail delivered RCOP EBIT of $253.7 million. Covid-19 impacts affected most of the second half offsetting the positive trends in first half fuel volumes, shop sales and earnings.
For the full year, fuel sales volumes fell 4.9% (3.2% on a like for like basis) as prolonged lockdowns in NSW and Victoria reduced mobility in the second half. Rapidly rising crude and product prices throughout the year put pressure on fuel margins, says Ampol, particularly diesel margins that take longer to respond but showed improvement towards the end of the year.
“Pleasingly, in our first full year of the company operated model, we have seen the benefits of the focus on safely reducing costs, waste and shrinkage, with shop gross margin (post waste and shrink) improving by 1.3 percentage points,” says Ampol.
“We continued to optimise the network with the closure of 19 marginal sites and the addition of one new to industry site during the year. Combined with divestments and transfers to alternate operators, the company-controlled retail network reduced by 3.4% to 684 sites compared with 708 at the same time last year.
“The rebrand program is progressing extremely well with 880 sites completed by the end of 2021 and the rebranded sites outperforming the ‘control’ sites in key measures of total transactions, as well as volume measures including total fuel, premium petrol and AmpolCard. $51.3 million of rebranding expenses (before tax) have been recognised as a significant item.”
