Fuel refiner and retailer Ampol (ASX:ALD) is facing a rough end to 2024. Problems that emerged in the three months to September are continuing into the final quarter of the financial year.
The problems cost it around $100 million in lost earnings in the September quarter. From the tone of Tuesday’s update, another hit this quarter to revenues cannot be ruled out.
That’s why the shares were weaker in yesterday’s very upbeat session, hitting a 52-week low of $27.68 in early trading and closing down 2.1%.
The company has reported a drop in sales volumes for the September quarter and flagged a maintenance stop at its Lytton refinery in Brisbane next month. This is for repairs to a vital piece of kit needed to break down crude oil.
The company said the third-quarter performance was impacted by the planned Reformer Turnaround and Inspection to the Lytton refinery and significantly weaker finished and intermediate product cracks (such as petrol, diesel, jet fuel and others).
The company said third-quarter margins at its Lytton refinery in Brisbane averaged just US$1.48 (A$2.20) a barrel, down from US$$9.69 a year ago, with refinery volumes down 45% to 916 million litres thanks to the planned maintenance.
Fuel sales volumes in Australia in the quarter were down 6% from a year ago at 3.824 billion litres, while international sales volumes fell 7.4% to 1.791 billion litres.
Ampol blamed the fall on a decline in refining margins to a lower-value production mix during a planned maintenance, which coincided with significant weakness in global margins. The combined impact for the quarter was estimated at $100m in group earnings.
The company said it will take advantage of the weak market environment to undertake these important repairs in November, during which time the refinery will operate at a reduced rate.
"Given the current refining margin environment, Ampol intends to undertake a further maintenance stop at Lytton to repair the regenerator, part of the Fluidised Catalytic Cracking Unit (FCCU), reducing production to approximately 350 million litres for the month of November," the company said.
Refiners elsewhere have been cutting their production runs to do maintenance or just to try and control oversupply — which Ampol said had seen “a modest level of margin recovery" so far in October.
It said fuel sales volumes overall were largely resilient with the trend in the first half of the year. Meanwhile, convenience retail sales were largely flat from a year ago but improved from the first half, benefiting from favourable market conditions.
