Sydney based Ampol engages in the supply of transport fuels. It offers business services, fuel, fuel cards, lubricants and oils, and oil finder. It operates through the Convenience Retail, and Fuels and Infrastructure segments. The Convenience Retail segment comprises revenues and costs associated with fuels and shop offerings at Caltex’s network of stores, as well as royalties and franchise fees on remaining franchise stores. The Fuels and Infrastructure segment consists of revenues and costs associated with the integrated wholesale fuels and lubricants supply for Caltex, including the company’s international businesses.
Why is the Ampol (ASX:ALD) share price climbing?
This morning, Ampol announced their unaudited financial report for Q1 2021. Earnings before Interest and Tax, EBIT as its more commonly called has seen an increase in both of Ampol’s business segments. The convenience retail segment reported a $3 million increase to $78 million over the previous quarter, and the Fuels & Infrastructure business reported a whopping $24 million increase to $85 million over Q4 2020. The Fuels & Infrastructure business consists of Australian F&I, International F&I, and Lytton, and all the three divisions have seen an improvement during the period. This performance has resulted in the group’s EBIT going up by 22.9% to $150 million for Q1 2021.
The 1Q 2021 Lytton Refinery Margin (LRM) was US$5.48 per barrel, slightly above the US$5.13 per barrel LRM realised in 4Q 2020. Singapore Weighted Average Margin (SWAM) for 1Q 2021 was US$5.41 per barrel, which was higher than 4Q 2020 US$4.73 per barrel but well below the historic average. Refinery production for 1Q 2021 was 1,419 ML, ahead of 4Q 2020 production of 1,369 ML. Ampol maintains Lytton production guidance of -6.0BL in 2021.
Total Australian volumes in 1Q 2021 of 3.2BL were 5% lower than 4Q 2020, given the impact of the lockdowns across Brisbane, Perth, Melbourne and parts of Sydney, as well as flooding in NSW and Queensland, and were down 17% vs pcp. Ampol maintains its Australian volume guidance of 13.5-14.0BL in 2021, reflecting an expected recovery in demand throughout 2021, with the volume run-rate in March within this guidance range.
Convenience Retail shop performance also remains strong with shop sales up 10% over pcp and consistent with Q4 despite lockdown impacts. These results resulted in an upbeat performance of the Ampol share price as well as ALD shares ended 5.41% higher at $25.73 a share.
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