Ampol has announced its financial results for the six months ending 30 June 2022. The business delivered its strongest half-year replacement cost operating profit (RCOP) in its history ($734.1 million, including $693.1 million from continuing operations).
Ampol Managing Director and CEO Matt Halliday also acknowledges that this was “against the backdrop of increased market volatility due to the global energy shock, Covid-19 outbreaks and extreme weather”.
“This result demonstrates the benefits of Ampol’s integrated supply chain,” he says.
“Ampol team members have supported their communities and customers during some of the most challenging weather conditions we have experienced, keeping critical supply chains open. This commitment to delivering for our customers reflects the strength of the culture we are building at Ampol.
“We also completed the acquisition of Z Energy, strengthening our presence in New Zealand and we welcome the Z Energy team into the Ampol Group.”
Fuels and infrastructure
Fuels and infrastructure (F&I) RCOP EBIT for the continuing operations grew to $575.8 million as refiner margins reached unprecedented highs in the second quarter.
Lytton RCOP EBIT was $443.9 million compared to $49.3 million in the previous corresponding half and was the major contributor to the improved F&I result, according to Ampol.
The conditions driving refiner margins caused headwinds in other parts of the supply chain, says Ampol. This included quality premiums (the cash price paid to secure product over and above MOPS daily pricing), which rose to record levels as global markets rebalanced in response to Russian sanctions and lower refined product exports from China.
Conversely, says Ampol, the volatility created opportunities for the trading and shipping team to source, store and blend physical products, and manage price risks using derivatives. The strong trading and shipping performance offset the impact of quality premiums in the period.
Total Australian sales volume rose 2.1% compared with the same time last year, as the growth in sales to commercial customers, particularly in aviation, offset the decline in retail volumes which felt the impacts of Covid-19, flooding and high prices.
Future Energy operating expense increased to $13.2 million, compared with $1.6 million in the first half of 2021. Ampol launched its EV charging brand AmpCharge in April and commenced the rollout of the first phase of its electric vehicle charging network, with the first sites operational in July.
Ampol also received an energy retailer authorisation from the Australian Energy Regulator during the half and will pilot a retail electricity offer during the second half, initially for a small group of employees. This trial is part of a broader assessment of opportunities for Ampol to develop an at-home charging offer for its customers.
Gull New Zealand was held for sale at 30 June and is shown as a discontinued operation for the half. The divestment completed on 27 July with the gain on sale to be reported in the second half.
Convenience retail
The convenience retail (CR) RCOP EBIT declined compared to the same time last year to $127.3 million as the combined impacts of Omicron, floods and high retail fuel prices reduced demand and compressed margins.
Fuel volumes were down 7.5%, 5.8% on a like for like basis. Average margins came under pressure, says Ampol, particularly in May and June, due to the rapid rise in the cost of petrol and diesel and the lag in passing these higher costs through to retail prices.
Despite the difficult conditions affecting fuel sales, Ampol says shop performance remained strong.
Total shop income was up 8.1% on the prior comparable period. Ampol says this was due to improved product mix, promotional activity, labour efficiency and reduced waste and shrink with an improvement in gross margin (post waste and shrink) of 2.3 percentage points. Average basket size also grew.
CR continued to rationalise its network during the half, closing 17 stores and adding one new to industry site, taking the company retail network to 668 sites. The rebrand of the Ampol owned network is said to be essentially complete with 1285 sites rebranded at 30 June 2022, with remaining work focussed on EG sites which will be rebranded by the end of the year.
Z Energy
The acquisition of Z Energy in New Zealand was completed on 10 May 2022, with earnings and total fuel sales included in the Group’s results for the months of May and June.
Like Australia, high fuel prices and Omicron outbreaks have impacted New Zealand demand creating challenging trading conditions in May and June. July, however, saw improved mobility and margins.
Integration plans are said to be “well progressed”, including preparations to integrate the Z Energy supply chain into Ampol’s trading and shipping operations in Singapore. Ampol says it’s confident it can deliver the anticipated benefits (estimated to be NZ$60-80 million per annum).
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