Why Did Ampol’s Profit Dive While Core Earnings Soared in 2025?
Ampol Limited’s 2025 results reveal a sharp drop in statutory profit amid lower revenue, yet a robust rise in replacement cost operating profit signals resilience beneath the surface.
- Revenue declined 10.1% to $31.37 billion
- Statutory profit after tax fell 32.7% to $82.4 million
- Replacement cost operating profit surged 82.8% to $429.2 million
- Final dividend declared at 60 cents per share, up from 5 cents
- Return on equity improved on replacement cost basis despite statutory decline
Revenue and Statutory Profit Slide
Ampol Limited’s financial results for the year ending 31 December 2025 paint a mixed picture. The company reported a 10.1% decline in revenue, falling from $34.88 billion in 2024 to $31.37 billion. More strikingly, statutory profit after tax attributable to shareholders plunged by nearly a third, down 32.7% to $82.4 million. This drop reflects the challenging market conditions and external factors impacting the downstream oil sector.
Underlying Profit Strength Revealed by Replacement Cost Basis
Despite the headline profit fall, Ampol’s replacement cost operating profit (RCOP); a non-IFRS measure that adjusts for inventory valuation and market price volatility; tells a different story. Excluding significant items, RCOP soared by 82.8% to $429.2 million, more than reversing the previous year’s figure of $234.8 million. This suggests that Ampol’s core operations have strengthened considerably, insulating the company from some of the short-term price swings that affected statutory results.
Dividend Boost Signals Confidence
Reflecting this underlying strength, Ampol declared a final fully franked dividend of 60 cents per share, a substantial increase from just 5 cents in 2024. Combined with the interim dividend of 40 cents, the total payout for 2025 stands at 1.00 dollar per share. The record date for the final dividend is 9 March 2026, with payment scheduled for 2 April 2026. This generous dividend signals management’s confidence in the company’s cash flow and future prospects despite the tough external environment.
Balance Sheet and Returns
Net tangible asset backing per share edged up slightly to $7.66 from $7.49, indicating a stable asset base. Return on equity (ROE) on a statutory basis declined from 3.4% to 2.4%, reflecting the profit drop. However, on the replacement cost basis, ROE nearly doubled to 12.4%, underscoring the improved profitability of Ampol’s core business operations when adjusted for market distortions.
Looking Ahead
While the statutory results highlight the volatility and challenges facing the energy sector, Ampol’s strong replacement cost profit and increased dividend payout suggest a company navigating these headwinds with resilience. Investors will be keen to see how Ampol manages ongoing market fluctuations and whether the improved underlying performance translates into sustained statutory earnings growth in the coming years.
Bottom Line?
Ampol’s 2025 results underscore the importance of looking beyond headline figures to grasp the company’s true operational health.
Questions in the middle?
- What specific factors caused the large gap between statutory and replacement cost profits?
- How sustainable is the increased dividend given the volatile market environment?
- What strategies is Ampol deploying to convert replacement cost profit gains into statutory earnings?
