Ampol’s Refinery Margin Drop and Volume Declines Pose Challenges Despite Retail Growth

Ampol’s H1 2025 Financial Snapshot

Ampol Limited has provided an unaudited update on its trading performance for the first half of the 2025 financial year, revealing a resilient earnings profile supported by growth in its Convenience Retail and New Zealand operations. The company expects to report a Replacement Cost Operating Profit (RCOP) EBITDA of approximately $640 million and RCOP EBIT of around $400 million, underscoring steady momentum despite some volume softness across its fuel sales.

Segment Performance Highlights

The Convenience Retail segment continued to shine, delivering higher EBIT compared to the prior corresponding period. This improvement was largely driven by a favourable sales mix weighted towards premium fuels, reinforcing Ampol’s strong market positioning and the quality of its retail network. Notably, the company expanded its value-focused U-GO brand to 34 sites across Australia, signaling a strategic push to capture diverse customer segments.

Meanwhile, the New Zealand segment posted modest EBIT growth, benefiting from its diversified channels to market. This helped offset challenges posed by weaker sea-freight conditions, which somewhat dampened the advantages of Ampol’s integrated supply chain in the region. Fuels & Infrastructure Australia maintained EBIT broadly in line with the previous year, with supply chain impacts largely mitigated by improved margins on middle distillates.

Refinery Margin and Production Trends

The Lytton Refinery Margin (LRM), a key profitability indicator, averaged US$7.44 per barrel for the first half, down 28% from the prior year but showing signs of recovery with a stronger US$8.71 per barrel in the second quarter. This improvement was driven by better product crack spreads, reflecting more favourable market conditions. Refinery production saw a slight decline, with 1,406 million litres produced in Q2 compared to 1,420 million litres a year earlier.

Despite the refinery’s EBIT hovering around breakeven for the half, the improved margin in Q2 offers a positive signal for the second half. Ampol also indicated it does not expect to receive a Fuel Security Services Payment for Q2, which had previously provided some financial cushioning.

Financial Outlook and Next Steps

Interest expenses are expected to remain stable relative to the prior period, aided by capitalised interest on major projects. The company anticipates a lower-than-average effective tax rate due to favourable one-off outcomes and timing factors. Ampol’s full audited half-year results are scheduled for release on 18 August 2025, which will provide a more comprehensive view of its financial health and operational performance.

Overall, Ampol’s first half results reflect a company navigating a complex energy market with a balanced portfolio approach, leveraging retail growth and regional diversification to offset refinery margin pressures and supply chain challenges.