Ampol chief executive Matt Halliday says the push by the fuel group to try to capitalise on a “buy Australian” sentiment which is accelerating among customers won’t be undermined if the company decides to shut down the Lytton refinery in Brisbane.
Mr Halliday says Ampol is ”actively engaging” with the Federal government which has a $2.5 billion fuel security subsidy package on the table, as the company moves to the final stages of its review into the Lytton refinery, with a decision likely in the second quarter of calendar 2021.
He said customers want to ”buy Australian” when choosing where to fill up their vehicles with fuel and that sentiment is growing during the pandemic. Ampol, formerly known as Caltex, is slowly rebranding 1930 outlets, with 25 already completed. Mr Halliday said they should all be rebadged to the historic brand by late 2022.
Ampol on Monday launched a $300 million off-market buyback after completing a $635 million sale of its convenience retail property portfolio. Mr Halliday also announced there would be a full ”decarbonisation” strategy for the company in the first half of calendar 2021.
The buyback comes after the company completed the sale of a 49 per cent stake in its freehold retail convenience sites to Charter Hall and Singapore’s GIC, delivering net cash proceeds of $635 million compared with its previous guidance of $612 million.
The $300 million buyback will begin on December 7 and close on January 22, 2021, and equates to about $1.20 per share. Ampol shares jumped 7.25 per cent to $30.49 in opening trade and finished 4.6 per cent higher at $29.75.
Mr Halliday said Ampol had also mandated a number of banks to investigate a potential issue of hybrid securities.
Ampol also outlined it is targeting an extra $40 million in cost savings by 2022 through a combination of office relocations, information technology simplification and use of automation. It is eyeing an ”uplift” in earnings before interest and tax from non-fuel operations of $195 million by 2024.
Chevron, which sold its half stake in Caltex Australia in a $4.6 billion deal in 2015, advised earlier this year that it intends to revive the Caltex name itself in Australia, using it at the Puma Energy network of petrol stations in Australia that it acquired in a surprise $425 million deal struck in December. Ampol also revealed on Monday it was in talks to buy Puma’s partially constructed fuels terminal in Perth.
The pandemic has resulted in tough conditions, but Mr Halliday said on Monday that demand was returning as the Victorian economy reopened. He said on a year-to-date basis diesel demand across the group was 1 per cent lower than last year, while gasoline was down 15 per cent, and jet fuels were down 53 per cent.
Ampol on October 19 revealed its third-quarter profits had slumped almost 75 per cent because of a heavy $82 million loss in refining, even though returns from convenience retailing improved.
The Lytton refinery is under review for a potential shutdown despite the federal government’s fuel security package, which would provide a direct subsidy for local production of fuels. Rival Viva Energy also has its unprofitable Geelong refinery under review for possible closure. BP on October 30 announced it should shut its only Australian refinery, Kwinana in Western Australia.
Mr Halliday reiterated all options were on the table for the Lytton refinery review. The three main options are to continue refining at Lytton in Brisbane but find more efficiencies, convert it to an import terminal, or shut it down and sell off the land for industrial use.
A string of analysts have predicted that more shutdowns of refineries are inevitable, warning that the government measures may only provide a temporary delay.
Mr Halliday said a fair way into the future there were likely to be both electric vehicle charging stations and petrol bowsers in all Ampol service stations, and he applauded the move by the South Australian Government to put in place a road user charge for electric vehicle owners.
Victoria is following suit. “I think there can’t be a free lunch,” Mr Halliday said. Electric vehicle owners don’t pay any fuel excise.
Ampol was the subject of an $8.8 billion takeover bid by Montreal-based group Alimentation Couche-Tard, which walked away in April after the economic fallout and uncertainty of the pandemic.
Mr Halliday said on Monday that he didn’t look over his shoulder worrying about a return of the predator. “The thing that we can control is to make sure we’re maximising value for shareholders,” he said.
One of Mr Halliday’s rivals for the top job at Ampol, Louise Warner, was poached by its former suitor, Couche-Tard, stoking speculation that the Canadian convenience retailer could be gearing up to revive its takeover ambitions.
Ms Warner, a highly experienced fuels industry executive who was overlooked for the chief executive role earlier this year, has been hired as head of global fuels and trading, based on the US east coast.
Extracted from AFR