Ampol reported a net profit of 325.5 million Australian dollars (US$232.3 million) in the six months through June, compared to a A$626.2 million loss a year earlier. The company reports on a historical cost basis.
On a replacement cost-of-sales basis—-which strips out the impact of movements in oil prices by restating the cost of sales using the replacement cost of goods sold–Ampol’s profit was 70% higher at A$204.5 million.
Half-year revenue totaled A$9.82 billion, compared with A$8.05 billion a year earlier. The company said it will pay an interim dividend of 52 Australian cents a security, more than double a payout of 25 cents a year ago.
Ampol’s earnings are on a firmer footing after the federal government confirmed a fuel support package to protect producers when refining margins swing lower. Australia’s refining sector had been under pressure as operators reckoned with anemic fuel demand and growing competition from newer, more efficient fuel-making facilities in Asia and the Middle East. The pandemic had also sapped demand, especially for jet fuel.
In May, Ampol said the package provided a variable support payment of up to A$108 million annually for its Lytton refinery in Queensland state during periods of low refining margins. As a result, management said it would keep Lytton operational until at least the middle of 2027.
Last month, Ampol said Lytton had a breakeven first quarter and likely returned to a modest profit before interest and tax on a replacement cost basis over the following three months. It also anticipated a one-off grant of around A$40 million from the government for its first-half production before the permanent fuel support package begins.
Some analysts had predicted Ampol would launch a share buyback alongside its half-year result. Morgan Stanley had forecast share repurchases worth around A$300 million, which would be a positive catalyst for Ampol’s stock. In the lead-up to Ampol’s half-year result, Ampol’s shares had fallen to three-month lows as lockdowns to counter Covid-19 outbreak in major Australian cities curb people’s mobility.
However, Ampol said it has made a takeover offer for Z Energy that values its equity at nearly 2 billion New Zealand dollars (US$1.37 billion).
Z Energy said Monday that it has agreed a four-week period of due diligence and exclusivity with Ampol, which operates Gull gasoline stations in New Zealand.
The NZ$3.78 a share offer is a 22% premium to Z Energy’s closing price on Aug. 12, which was the date prior to the company receiving Ampol’s offer. Z Energy said Ampol had made previous offers at NZ$3.35, NZ$3.50 and NZ$3.60 a share, which it had rejected as not insufficiently valuing it.