How Will Ampol’s EG Australia Deal Reshape Its Retail Future?

Robust Earnings Amid Global Uncertainty

Ampol Limited has delivered a steady financial performance in the first half of 2025, posting a Replacement Cost Operating Profit (RCOP) EBITDA of $649 million and an RCOP EBIT of $404 million. Despite ongoing geopolitical tensions and global demand concerns, the company’s diversified portfolio, particularly its fuel and convenience retail businesses across Australia and New Zealand, provided a solid earnings foundation.

CEO Matt Halliday highlighted the company’s focus on controllable factors amid external volatility, noting that while cyclical segments like the Lytton refinery and international fuels infrastructure hovered near breakeven, the broader group remained resilient.

Convenience Retail and New Zealand Drive Growth

The Convenience Retail segment saw a 2.9% increase in RCOP EBITDA to $275.9 million, supported by strong retail network quality and improved fuel margins offsetting a 4.6% decline in fuel volumes. Ampol’s strategic shift towards premium sites and food service expansion, including new Quick Service Restaurant offerings on the NSW M4 corridor, underscores its focus on enhancing customer experience and profitability.

Meanwhile, the New Zealand business, including Z Energy, reported growth with RCOP EBITDA of $189 million and EBIT of $128.8 million. This segment benefited from diversified sales channels and an integrated supply chain, alongside progress in its energy transition strategy with an expanding EV charging network.

Strategic Acquisition to Transform Convenience Retail

Ampol’s announcement of its proposed acquisition of EG Australia marks a significant strategic milestone. The deal, subject to Australian Competition and Consumer Commission (ACCC) approval, involves acquiring approximately 500 company-operated Ampol-branded sites. Ampol expects substantial cost synergies of $65-80 million and high single-digit earnings per share accretion, positioning the company for stronger growth and reduced earnings cyclicality.

Funding for the $1.1 billion transaction will include a mix of debt, working capital release, divestment proceeds, and equity issuance. Completion is targeted for mid-2026, contingent on regulatory clearance.

Balance Sheet and Dividend Strength

Net borrowings remained stable at $2.82 billion, with leverage at 2.8 times adjusted net debt to RCOP EBITDA, supported by $5.1 billion in committed facilities. The board declared a fully franked interim dividend of 40 cents per share, reflecting a payout ratio of approximately 53% of underlying net profit, signaling confidence in ongoing cash flow generation.

Outlook and Operational Focus

Looking ahead, Ampol anticipates improved market conditions with rising refinery margins and tightening product and freight markets. Capital expenditure for 2025 is expected around $600 million, including investments in the Lytton Ultra Low Sulfur Fuels Project and retail site enhancements. The company continues to advance its energy transition initiatives, notably expanding its AmpCharge EV charging network across Australia.

Overall, Ampol’s first half results and strategic moves position it well to navigate ongoing market challenges while pursuing growth and diversification.