Ampol suffered a 12.6 per cent slump in its share price as the market ignored its forecast of record full-year profits and zeroed in on a shock loss in jet fuel sales and trading and shipping.
The former Caltex Australia posted a $21.3 million loss in the September quarter in its fuels & infrastructure business activities excluding refining, citing “a headwind” in margins on jet fuel sales due to higher freight costs, and a sharp drop in product prices that hit profits from trading and shipping.
Chief executive Matt Halliday said he expected further “volatility” in the market and the company pointed to uncertainties affecting trading conditions, including a recently announced increase in Chinese export quotas.
Earnings before interest and tax for the first nine months of the year were just over $1 billion, easily more than double the same period in 2021, the former Caltex Australia said on Tuesday. EBIT in the third quarter slowed to $272.3 million.
The nine-months figure included EBIT at the Lytton plant in Brisbane of $587.7 million, up from $70.8 million in the same period a year earlier.
Benchmark net profit for the third quarter excluding one-off items also more than doubled to $573.5 million. But net profit of $102.5 million for the September quarter, while more than three times higher than a year ago, fell well short of estimates from Jefferies of $199 million, according to Reuters.
Shares in Ampol dived $3.93 to $27.35, their lowest for more than 12 months.
RBC Capital Markets analyst Gordon Ramsay said the “good” earnings from refining, convenience retailing and the Z Energy business in New Zealand were offset by “weak” results in fuels & infrastructure, excluding the refinery.
“Ampol appears to have been caught out by holding product for a few months that has ended up being sold at a loss,” Mr Ramsay said of the situation in jet fuel which Ampol largely imports and sells on a relatively thin margin.
The negative EBIT in fuels & infrastructure excluding Lytton compared with a profit of $53.8 million a year earlier.
Still, Ampol said it is “on track to deliver record full-year earnings”, while advising that market volatility that has been evident through the year is set to continue.
“To date, the recently announced increase in Chinese export quotas has yet to materialise but remains an area to watch, and global product inventories remain below previous years’ lows as we head towards a northern hemisphere winter,” it said.
“The Australian dollar has continued to weaken in recent weeks, benefiting refining margins in Australian dollar terms.”
Ampol said that since the end of September, demand for fuels in Australia has been “largely unaffected” by the return of the fuel excise levy.
“While retail margins continue to fluctuate in response to the volatility of product costs, shop sales have remained strong, and Convenience Retail is well positioned as it heads into the fourth quarter,” it said.
The improvement in the nine-month numbers is primarily due to a steep increase in the returns from processing a barrel of crude oil into a barrel of fuels, with the so-called refiner margin for the Lytton plant in Brisbane averaging $US15.46 a barrel in the September quarter, compared with $US6.76/bbl in the same three months of 2021.
The turnaround in refining comes after the Lytton plant looked to be heading for closure in 2020-2021 when Australia’s refiners were suffering heavy losses and in desperate negotiations with the federal government over a rescue package.
Two of the then four remaining refineries still closed, leaving only Lytton and Viva Energy’s Geelong plant.
While a refinery subsidy package was put in place by the Morrison government, refining margins have since surged on the recovery in fuels demand after the worst of the pandemic.
The news comes after Viva reported its best three-month sales result since before COVID-19.
Ampol also reported a funding deal with the NSW government to expand the electric vehicle fast-charging network across the state. It will deliver more than 110 fast-charging bays at 19 AmpCharge sites on key commuter routes.
Extracted from AFR