Why Did Ampol Swing to a $25 Million Loss in H1 2025?

Financial Performance Overview

Ampol Limited (ASX, ALD) has reported a challenging first half for 2025, posting a statutory net loss after tax of $25.3 million, a sharp reversal from the $235.2 million profit recorded in the same period last year. This downturn was primarily driven by significant items including a $60.5 million loss and a substantial $145 million inventory loss, reflecting the volatility in crude and product prices.

On a replacement cost operating profit (RCOP) basis, which excludes the effects of inventory gains or losses and significant items, Ampol’s net profit after tax fell 22.9% to $180.2 million. Revenue declined 16.2% to $15.3 billion, influenced by lower crude prices and a 6% reduction in sales volumes, particularly in international markets amid geopolitical uncertainties.

Dividend and Capital Management

In response to the softer earnings, the Board declared a fully franked interim dividend of 40 cents per share, down from 60 cents in the prior year. This payout aligns with Ampol’s dividend policy targeting 50% to 70% of underlying RCOP net profit after tax. The company maintains a strong balance sheet with gearing at 44.4% and net borrowings of approximately $2.82 billion, supported by diversified funding sources and a weighted average debt maturity of four years.

Strategic Initiatives and Operational Highlights

Ampol continues to invest heavily in its core operations and future growth platforms. Capital expenditure for 2025 is expected to reach around $600 million, including significant investment in the Lytton refinery’s Ultra Low Sulfur Fuels (ULSF) project and ongoing maintenance activities. The refinery faced a temporary disruption due to Cyclone Alfred, incurring costs of $14.7 million before insurance recoveries.

The company is also accelerating its energy transition strategy, focusing on expanding its electric vehicle (EV) charging network across Australia and New Zealand. As of June 2025, Ampol has deployed 180 charging bays at 69 sites in Australia and 184 bays at 56 sites in New Zealand. Concurrently, Ampol is simplifying its Energy Solutions business by divesting retail electricity operations to concentrate on EV charging and renewable fuels, including sustainable aviation fuel and renewable diesel.

Growth Through Acquisition

In a significant move to expand its retail footprint, Ampol entered into a Share Purchase Agreement to acquire EG Australia for a headline price of $1.1 billion, subject to an estimated $50 million working capital adjustment. The transaction, payable in $800 million cash and $250 million in Ampol scrip, remains subject to Australian Competition and Consumer Commission (ACCC) approval and is expected to close in the second half of 2026. This acquisition aligns with Ampol’s strategy to enhance its convenience retail network and fuel operations.

Outlook and Market Conditions

Post-reporting period, Ampol has observed an improvement in refining margins, with the Lytton refinery margin rising to US$9.95 per barrel in July. The Alkylation Turnaround and Inspection at Lytton commenced in mid-July and is expected to complete by late September. Ampol anticipates that its fuels and convenience retail segments will maintain current trends, supported by tightening product and freight markets. The company remains focused on disciplined capital allocation to balance shareholder returns with strategic investments in the evolving energy landscape.