Shares of Ampol Ltd (ASX:ALD) have dropped 4.3% to AU$30.72 following the release of the company's first-half results for the six months ended June 30, 2024. While the ASX 200 index displays only minor declines today, Ampol's performance diverges notably, with its results drawing significant market attention.
Despite a mixed performance, Ampol's results highlight a dramatic turnaround in its profitability metrics. The company reported a statutory net profit after tax (NPAT) of AU$235.2 million, marking an impressive 197.3% increase from the previous year. This substantial profit growth contrasts sharply with a decline in the group replacement cost operating profit (RCOP), which fell by 29% to AU$233.7 million. Revenue from ordinary activities also dipped slightly by 1.1%, totaling AU$18.24 billion.
One of the key factors behind the significant increase in NPAT is a reduction in inventory losses. In the first half of 2023, Ampol suffered a AU$220.1 million inventory loss, but this figure was significantly lower this year at AU$21.1 million. This improvement has been crucial in driving up the net profit figure.
Despite these gains, Ampol's interim results reveal some challenges. The company's convenience retail segment experienced a 4.8% decline in fuel volumes, reflecting broader consumer sentiment and changing consumption patterns. However, this decline was mitigated by improved fuel margins, partly due to a higher proportion of premium fuel sales.
Additionally, Ampol’s Z Energy segment, a New Zealand fuel retailer acquired in 2022, saw a positive development with a 3.9% increase in RCOP earnings before interest and tax, reaching AU$127.6 million. This result is notable given that New Zealand's official interest rate remains at a 15-year high of 5.5%, which typically exerts upward pressure on operating costs.
Ampol's fully franked interim dividend was set at 60 cents per share, a reduction from the 90 cents per share distributed in the previous period. This cut reflects the company's focus on balancing shareholder returns with its financial stability amidst fluctuating market conditions.
In summary, while Ampol’s strong profit growth and reduced inventory losses are commendable, the decline in fuel volumes and the adjusted dividend payout highlight ongoing challenges. The market’s reaction to the results underscores the complex dynamics affecting the energy sector.