Ampol chief executive Matt Halliday is confident “there will be returns available ultimately” for the fuel retailer as it links its own long-term profitability to the nation’s energy transition and decarbonisation journey.
“The energy mix needs of our customers will change over time and Ampol is taking the necessary steps to adapt,” Mr Halliday said.
The group, which applied to become an energy and gas retailer last month, will step up its “test and learn” program to roll out EV fast chargers at 100 locations, supported by funding from the Australian Renewable Energy Agency, and undertake small scale trials of its energy offer in select markets this year while pursuing pilot-scale green hydrogen production at its Lytton facility in Brisbane.
The Sydney-based business has committed to spending $100m by 2025 as it looks to leverage its network and assets, including its 700-strong retail network site, into the future with its internal modelling predicting local road transport fuel demand is going “to remain robust until at least 2030 under all scenarios”.
“Ampol aims to power customer journeys through a combined fuel offer and electricity at their home and on the go,” Mr Halliday said.
“We have a strong business, a strong fuel and convenience offering for our customers today that’s going to be important for some time to come, but as the transition happens, and EV take-up increases along with hydrogen-powered heavy vehicles, it will be about leveraging the assets we have and transitioning the profitability of the business over time.
“It will be about leveraging those strengths that we have that enable us to be an efficient distributor of energy.
“We’re well positioned with a strong network, a really strong brand and strong supply chain capabilities to operate and deliver an efficient offer for our customers, which means there will be returns available ultimately for us on the hydrogen-based heavy vehicles side, and equally from a charging and broader energy offer on the light passenger side.”
He also said Atlassian co-founder Mike Cannon-Brookes’ $8bn takeover bid for AGL is an ongoing demonstration of “disruption and transformation” in the energy sector.
“I think what you’re seeing is a sector where demand has quite a strong outlook as you look to the electrification of a range of industries, including transportation in the future, but the generation mix and the supply side of the industry is going to be totally transformed and look nothing like it has in the past.
“I think that gives a lot of rise to a lot of opportunities and a lot of change in the sector.”
His comments came after strong international demand delivered Ampol’s best earnings in three years and a swing back to a profit of $560m for the 12 months to December 31.
Earnings before interest and tax climbed 57 per cent to $631m, the highest result since 2018.
The group, which reported record total sales volumes of 22.04 billion litres, also declared a higher 41c per share final dividend, taking its full year payout to 93c per share – a substantial increase on the 48 cents per share last year.
Total Australian sales volumes were 13.05 billion litres, 4 per cent lower while international sales grew to 8.99 billion litres.
While the emergence of Covid-19 variant Omicron hit January sales volumes, there is cause for optimism as mobility increases and ahead of expectations the completion of its $1.9bn buyout of NZ’s Z Energy this year will boost earnings.
Ampol’s sale of its Gull service stations in NZ worth about $NZ600m ($562m) – aimed to appease the New Zealand Commerce Commission – is also progressing with a shortlist of bidders.
Australian sales volumes are likely to remain below pre-Covid levels and while the opening of international borders to inbound tourists is welcome, jet demand “will likely take several years to recover” to pre-pandemic levels, the group said.
Global refining fundamentals have improved through increasing demand for refined products and the structural declines in capacity caused by refinery closures.
With refining margins high, Ampol does not expect to receive any of the subsidies introduced as part of the $2.3bn refinery rescue package introduced in 2021 and available until 2027.
The rescue scheme secured 1250 jobs at Ampol’s Lytton refinery in Brisbane and Viva Energy’s Geelong plant – after refiners BP and ExxonMobil Corp shut their plants.
Equity research firm Barrenjoey retained an overweight rating on Ampol with a price target of $37.01 after net profit beat expectations and on the “improved outlook for Lytton refinery margins”.
Royal Bank of Canada equity analyst Gordon Ramsay described the results as “solid with an improving outlook”, retaining an outperform rating with a price target of $33.
RBC had estimated profit to come in at $483m while dividend also beat expectations.
Shares are trading more than 3.5 per cent lower to $30.13 per share at 3.30pm AEDT despite the stellar results.
Extracted from The Australian