One of top ASX listed companies, which is also among dividend paying companies is staging a turn around. The growing fuel demand in Australia and New Zealand has placed it among best growth stocks.
Ampol Limited (ASX: ALD)
Ampol Limited (ASX: ALD) has reported its financial results for the full year ending December 31, 2024, reflecting a challenging period impacted by volatile refining margins and global economic conditions. The company recorded a Group Replacement Cost Operating Profit (RCOP) Earnings Before Interest and Tax (EBIT) of $715.2 million and RCOP EBITDA of $1.2 billion, representing a significant decline compared to the previous year. Statutory Net Profit After Tax (NPAT) attributable to the parent company was $122.5 million, with a final dividend of 5 cents per share declared, bringing the total fully franked dividend for the year to 65 cents per share, reflecting a 66% payout ratio.
The performance of Ampol’s Convenience Retail business was a standout, delivering a modest increase in RCOP EBIT to $356.6 million. Despite a 3.5% decline in fuel volumes, the company’s strategy to position its fuel and convenience offerings at the premium end of the market proved successful. Growth in premium fuel sales, targeted promotional campaigns, and the expansion of Quick Service Restaurants (QSR) such as Hungry Jack’s and Boost Juice contributed to steady earnings. The New Zealand segment, including Z Energy, also demonstrated resilience, recording RCOP EBIT of $231.8 million, despite a slight decline in fuel sales and economic challenges. The business benefitted from segmentation strategies, with a clear premium fuel offering and discount partnerships driving consumer engagement. The retail refresh program, which saw 58 store upgrades completed in 2024, led to a 3.5% increase in shop sales excluding tobacco.
Fuels and Infrastructure (F&I) had a difficult year, with RCOP EBIT dropping to $186.3 million, primarily due to operational disruptions at the Lytton refinery and deteriorating refining conditions. The Lytton Refinery Margin fell significantly to US$7.08 per barrel from US$12.81 in 2023, leading to a reported loss of $42.3 million for the refinery. This was compounded by unplanned outages and supply chain costs, which required additional expenditure to maintain fuel supply. International trading was similarly impacted, with limited volatility in regional fuel markets resulting in a decline in RCOP EBIT to $26.3 million from $138.7 million the previous year.
Ampol continued its expansion into energy transition initiatives, with its Energy Solutions segment rolling out the AmpCharge electric vehicle (EV) charging network across Australia. By the end of 2024, 144 charging bays were operational across 59 sites, including third-party locations such as Mirvac Shopping Centres. The company also progressed its renewable fuels strategy, advancing the Brisbane Renewable Fuels project into the pre-FEED stage in collaboration with IFM and GrainCorp.
Financially, net borrowings increased to $2.77 billion, primarily due to capital expenditure of $642 million and dividend payments. However, the company expects its leverage ratio, which stood at 2.6 times net debt to RCOP EBITDA, to return to its target range of 2.0 to 2.5 times in 2025. Looking ahead, Ampol anticipates an improvement in refining margins, with the Lytton Refinery already showing signs of recovery in early 2025. The company is also focused on achieving $50 million in cost reductions as part of its productivity program.
Ampol expects an improvement in refining conditions, with early 2025 Lytton margins showing signs of recovery. The company is also progressing its Ultra Low Sulfur Fuels project, expected to be commissioned by late 2025.
Despite macroeconomic headwinds, Ampol remains well-positioned to navigate evolving market conditions through its integrated fuel and retail operations, strategic investments in energy solutions, and disciplined financial management. The company’s long-term strategy includes the continued segmentation of its retail network, execution of its Ultra Low Sulfur Fuels project, and further expansion in renewable fuels and EV charging infrastructure.
(Source: Company's Report)
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