It wasn’t a big surprise that Ampol’s earnings surged for the six months to June 30.
Like so many of its peers around the world the surge in oil prices saw refining margins soar, meaning fat profits from processing oil into various products, even if petrol sales volumes took a hit.
But rather than restrain rewards for shareholders because drivers have been hit by huge petrol price rises, despite the benefit of the temporary halving of the fuel excise making its fuel products cheaper, Ampol more than doubled its interim dividend.
Ampol declared a fully franked interim dividend of 120 cents a share or 61% payout ratio of first half replacement cost net after tax profit (excluding significant items).
“This represents a more than doubling of the prior year’s interim dividend and represents a 29 per cent increase to the total dividend for FY 2021,” Ampol said.
Investors liked that news and sent the share sup 2.3% to $34.92 by Monday’s close in a market off nearly 1%.
The company said its first half Group replacement cost after tax profit soared 315% to $734.1 million, including $693.1million from Continuing Operations (which excludes the contribution from the Gull contribution in NZ which has been sold)
The group’s statutory NPAT of $695.9 million was up 114% compared to 1H 2021
The group results included two months of Z Energy trading and full six months of Gull earnings
Total sales volumes increased to 11.5 billion litres but Ampol added that its Australian sales volume only rose 2.1% compared with the same time last year, “thanks 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.”
Looking to the rest of the year, Ampol said that “Since the end of the half, global crude and product markets have continued to experience significant levels of volatility, falling in mid-July.
“The Lytton Refiner Margin eased to US$16.46/bbl for July, driven largely by weak gasoline product cracks, but remains above historical averages.
“Irrespective, supply/demand fundamentals are largely unchanged with Russian sanctions and variable levels of Chinese refined product exports constraining supply. On the demand side, global inventory levels are low ahead of the traditional inventory build for the northern hemisphere winter.
“During July, both Convenience Retail and Z Energy experienced a strong recovery in retail fuel margins as refined product costs eased. As a result, Convenience Retail exited July with EBIT in line with the prior year, on a year-to-date basis.
“The recent easing in refined product costs is also expected to release working capital and improve operating cashflow in the second half,” Ampol added.
CEO, Matt Halliday said in the statement: “Against the backdrop of increased market volatility due to the global energy shock, COVID-19 outbreaks and extreme weather, Ampol has delivered the strongest half year Replacement Cost Operating Profit in its history. This result demonstrates the benefits of Ampol’s integrated supply chain.
“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.”
