Ampol Ltd (CTXAF) (Q4 2024) Earnings Call Highlights: Navigating Challenges and Strategic Growth
RCOP EBIT: $715 million.
RCOP NPAT: $235 million, excluding significant items.
Net Borrowings: Approximately $2.8 billion, excluding leases.
Leverage: 2.6 times on a last 12 months basis.
Total Sales Volumes: 27.27 billion liters, down about 2% year on year.
Dividend: Ordinary final dividend of $0.05 per share, total dividend for 2024 at $0.65 per share, payout ratio of 66% of NPAT.
Capital Expenditure: Approximately $640 million.
Australian Wholesale Volumes: Down 0.5% due to exit from low margin jet sales to defense.
Convenience Retail EBIT Growth: 6% annual compounded growth since 2020.
Shop Sales Ex-Tobacco: Up 2%.
Tobacco Sales: Fell by around 14%.
Premium Fuel Sales Mix: Increased by 1.7 percentage points to 55.4%.
Statutory NPAT: $122.5 million.
Inventory Losses: $137 million after tax.
F&I Australia Additional Costs: Estimated at $25 million due to unplanned refinery events.
Refinery Production: Reduced to 5.3 billion liters, with high-value product at 4.8 billion liters.
Refinery Outage Impact: Estimated at $140 million.
2025 Net Capex Expectation: $600 million.
Warning! GuruFocus has detected 4 Warning Signs with CTXAF.
Release Date: February 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Ampol Ltd (CTXAF) reported a strong safety performance in 2024, achieving near-best personal safety levels across the business.
The company delivered a consistent growth in convenience retail, with a 6% earnings CAGR since 2020 in Australian fuel and convenience.
Ampol Ltd (CTXAF) successfully acquired Z Energy, which has performed well despite a challenging economic environment.
The company declared a final dividend of $0.05 per share, reflecting confidence in the outlook and commitment to shareholder returns.
Ampol Ltd (CTXAF) is progressing with strategic projects, including the ultra-low sulfur fuels project, expected to enhance product offerings and margins.
The global refining market challenges in 2024 significantly impacted Ampol Ltd (CTXAF)'s commodity-linked business segments.
Operational disruptions at the Lytton refinery led to disappointing performance and financial losses.
Total sales volumes decreased by 2% year-on-year, with a notable decline in international business opportunities.
Leverage increased to 2.6 times, above the target range, due to higher capital expenditure and dividend payouts.
The rollout of EV charging infrastructure has been slower than expected, impacting the pace of energy transition initiatives.
Q: How sustainable is Ampol's convenience retail performance given the tough macro environment and illicit tobacco issues? A: Matthew Halliday, CEO, stated that despite the intense consumer pressure in 2024, Ampol saw growth in sales excluding tobacco, which was down mid-teens. Tobacco is a low-margin part of the business and is becoming less material. Ampol is confident in its strategy and execution capability, expecting continued earnings growth. New Zealand's sales excluding tobacco grew 3.5% last year, indicating positive trends. Higher input prices have affected fuel pricing, but normal conditions are observed otherwise.
Q: How confident is Ampol in Lytton's ability to operate reliably before the TNI next year? A: Matthew Halliday, CEO, expressed confidence in Lytton's reliability, citing investments and proactive maintenance steps taken in 2024, such as the FCC pit stop. The asset is well-invested, and the team is strong, setting up for a clearer year in 2025.
Q: What is the outlook for Ampol's international F&I business, given the significant drop in EBIT from 2023 to 2024? A: Matthew Halliday, CEO, explained that the international F&I business relies on market volatility and less well-supplied markets. Ampol expects markets to tighten in 2025, supported by geopolitical factors and sanctions, which should restore volatility and earnings recovery after a soft 2024.
Q: How should investors think about Ampol's dividend policy in 2025, given leverage settings and capital allocation framework? A: Matthew Halliday, CEO, emphasized Ampol's commitment to its capital allocation framework and the importance of dividends to shareholders. While the second half of 2024 saw a lower dividend, Ampol expects to return to the target leverage range and maintain dividends within the 50-70% payout range over time.
Q: Can you provide more details on the $50 million cost-out program and its impact on different segments? A: Matthew Halliday, CEO, highlighted three key areas for cost savings: demurrage, technology, data, and digital savings, and energy solutions. These savings will impact refining, F&I Australia, and the group as a whole, with a backend-loaded realization due to the nature of the activities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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