By David Winning
SYDNEY-Ampol Ltd. sharply increased its dividend and said its half-year net profit more than doubled as it benefited from a strong expansion in refining margins and stronger fuel demand as pandemic restrictions were lifted.
Ampol posted a net profit of A$695.9 million ($478.2 million) in the six months to June, compared with A$325.5 million a year earlier. The company, which reports on a historical cost basis, said the result included a two-month contribution from the Z Energy business in New Zealand.
On a replacement cost of sales basis—-which removes the impact of oil price fluctuations by recalculating the cost of sales using the replacement cost of goods sold–Ampol’s half-year profit is rose to A$471.0 million from A$187.3 million a year ago.
Half-year revenue totaled A$17.33 billion, up from A$9.46 billion a year earlier. The company said it would pay an interim dividend of A$1.20 per share, up from a payment of 52 cents a year ago.
Analysts had expected a strong result after Ampol said last month that its Lytton refining margin hit a record $32.96 a barrel in the second fiscal quarter, from $10.59 a barrel in the second fiscal quarter. of the previous three months. Stronger refining margins reflect a recovery in fuel demand from pandemic lows and reduced petroleum product inventories. Ampol said margins were also supported by sanctions on Russian crude oil and Chinese export quotas trending below historic levels.
Ampol was able to increase production to take advantage of higher refining margins. In its second fiscal quarter, the company produced 1.56 billion liters of petroleum products, compared to 1.41 billion liters in the January-March period when its refinery was affected by unscheduled maintenance and shutdown. from the Brisbane River to shipping.
“Amid heightened market volatility due to the global energy shock, Covid-19 outbreaks and extreme weather, Ampol achieved the highest half-year operating profit in its history,” the director said. General Matt Halliday. “This result demonstrates the benefits of Ampol’s integrated supply chain.”
Some analysts had predicted that Ampol would lift shareholder returns, given the tailwind in refining margins and the completion of its takeover of Z Energy in May. Since the end of its financial year, Ampol has completed the sale of the Gull business in New Zealand to Allegro Funds Pty. ltd. for net cash proceeds of approximately NZ$522 million ($322.5 million).
“In the short term, the board and management are focused on bringing the group’s leverage back sustainably to the target range of 2.0 to 2.5 times,” Ampol said. “More broadly, the board and management remain committed to the capital allocation framework, including balancing energy transition investments with capital management initiatives over time.”
At the end of June, Ampol’s leverage was 2.6 times, reflecting the timing of its two transactions in New Zealand. Ampol said the pro forma leverage was 2.2 times.
Write to David Winning at firstname.lastname@example.org