Ampol Limited has announced its financial results for the 12 months ending 31 December 2023.
Ampol Managing Director and CEO Matt Halliday says: “Ampol continues to successfully execute its strategy, delivering another strong financial performance. This result represents a near record performance including an improved earnings contribution from the non-refining divisions.
“The result reinforces the adaptability and resilience of Ampol’s integrated supply chain in what was another year where energy markets moved rapidly in response to geopolitical events. We continued to grow our Petrol and Convenience earnings, delivering another strong performance in Convenience Retail. We benefited from a full 12 months’ contribution from Z Energy including benefits and synergies as a result of the acquisition by Ampol and the transition to Ampol supply through the year. The growth in Fuels and Infrastructure (Ex-Lytton) illustrates how we can respond to changing market conditions through our sourcing capabilities, privileged infrastructure and effective risk management, more than doubling the earnings compared to last year.
“The balance sheet is strong, providing Ampol with the flexibility to invest in our core fuels and convenience businesses, and to prudently invest in the energy transition while delivering our highest ever dividends to shareholders. Our strategic assets, supply chain expertise, deep customer base and iconic brands position the Group to succeed today and into the future.”
Fuels and Infrastructure (F&I)
Fuels and Infrastructure RCOP EBIT for the 2023 financial year was $736.5 million, 14% lower (on a continuing basis) 2 than the same period last year, with the strong F&I (Ex-Lytton and Future Energy) result largely offsetting a decline in refining earnings from the historically high level seen in 2022.
“Lytton RCOP EBIT was $362.3 million as the Lytton Refiner Margin (LRM) eased to an average of US$12.81 per barrel, from historical highs in 2022. Labour and electricity charges increased operating costs and total production for the year was lower, mainly due to the unplanned outages in the second quarter and in December.
“F&I (Ex-Lytton and Future Energy) earnings more than doubled and reflects the ability for our strategic assets and supply chain expertise to adapt to changing market conditions to optimise the margin across our integrated supply chain. F&I Australia (Ex-Lytton and Future Energy) benefited from growing domestic demand. Total Australian sales volumes rose 11% to 15.6 billion litres, including the continued recovery in jet volumes post-Covid.
“F&I International earnings (adjusted to exclude Gull as a discontinued operation) rose 22%. International volumes (excluding Z Energy) rose 12% as we leveraged our Australian and New Zealand demand to grow third party sales. This includes an uplift in earnings from US Trading and Shipping operations with sales volumes up approximately 0.6 billion litres.”
Future Energy commenced the rollout of the AmpCharge on-the-go electric vehicle (EV) charging network. By the end of December 2023, 82 charging bays at 36 sites have been delivered in Australia with parts of the network build supported by government grants. “We continue to explore other low carbon transport solutions including renewable fuels.”
Convenience Retail (CR)
Convenience Retail continued to perform strongly with RCOP EBIT earnings up 2.1% to a record $354.6 million driven largely by improved fuel margins. Fuel volumes were down 1.6%, 1.0% on a like-for-like basis.
“Overall retail fuel margins were higher than in 2022, reflecting favourable fuel mix, network improvements and costs recovery.
“Excluding tobacco, network shop sales grew 3.0% on a like-for-like basis as key categories of bakery, snacks, beverages and confectionery achieved strong growth. Average Basket Value also increased year on year and shop gross margin 4 also continued to improve, reaching 36.1% post waste and shrink which helped to offset falling tobacco sales, and higher electricity costs. The rebranding of 50 MetroGo stores to Foodary is complete and there has been an improvement in the earnings at these sites including the benefits of the changes to product range. The two new marquee sites at Pheasants Nest opened and the M1 northbound flagship site refresh is also complete including the Ampol-operated Hungry Jack’s Quick Service Restaurant (QSR), the second restaurant in the trial.”
New Zealand (including Z Energy)
The New Zealand segment contributed RCOP EBIT of $263.5 million to the Group result, reflecting a full 12 months’ contribution of Z Energy and the contribution from the transition to fuel supply from Ampol. “Fuel sales volumes improved by 11%, on a proforma basis compared with 2022, as the Covid recovery improved demand particularly for jet fuel, and Z Energy continued to grow wholesale sales volumes, leveraging its infrastructure position.
“The Z Energy management team has delivered the anticipated benefits of the acquisition and the objective to simplify the business to drive improved profitability. The underlying business performed strongly, including a strong performance from shop as sales and gross margin continued to improve. The 2023 result for New Zealand includes the once-off recovery of impacts from the New Zealand Government’s temporary reduction of fuel excise duty in 2022 as part of the Government’s response to elevated global fuel prices. Z Energy also has continued to execute on its energy transition strategy having installed 104 EV charge bays at 37 sites across the Z retail network by the end of 2023.”
Current trading conditions and outlook
“Overall, the Group has had a strong start to the year. The Lytton Refiner Margin for January reached US$13.33 per barrel, above the LRM for 4Q 2023 and historical averages, and reflects the impact of the December outage on volumes and yield. Convenience Retail and Z Energy have continued to trade broadly in line with the same time last year.
“In December, Fuels and Infrastructure were not directly impacted by risks associated with navigating the Red Sea. More recently freight rates escalated as geopolitical tensions flared, particularly for product freight, and this trend is likely to be positive for Lytton and the integrated supply chain.
“With the recent finalisation of the new fuel standards by the Australian Federal Government, Ampol intends to upgrade the Lytton refinery to produce gasoline compliant with the new specifications for both regular and premium gasoline grades. Ampol has made significant progress in design, site preparation, and procurement of long lead time items ahead of a Final Investment Decision expected in the coming weeks. Estimated remaining capital spend is approximately $250 million, net of applicable Federal Government grants. The project is expected to be commissioned in the second half of 2025. Ampol also notes that, historically, gasoline cracks for the new specification (10ppm sulfur content) have traded at a premium to cracks for the current Australian grades. Gasoline typically represents approximately half of the Lytton production slate.”
A scheduled turnaround and inspection is planned for 2H 2024. “This is expected to take approximately seven weeks with refining output of high value product similar to levels seen in FY 2023.”
“Beyond the short term, Ampol continues to extend and improve its convenience retail offers in both Australia and New Zealand. These networks will form the cornerstone of an on-the-go charging network, which is expected to extend to 300 charging bays in Australia and 150 charging bays in New Zealand by the end of 2024 and provide Ampol with the flexibility to adapt its approach to transition as it evolves.”
