Ampol Limited (ALD)
BUY

Ample returns

 20 Feb 2023
Sector: Energy

FY22 RESULT

Need To Know

  • Group RCOP EBITDA $1,764m +84%, ahead of consensus $1,704m
  • Final dividend 105cps (full year 225cps) plus special dividend 50cps, fully franked. Room for more capital management this year

A massive FY22 result from Ampol, well ahead of the market, with an excellent dividend and special for shareholders. Strong refiner margins, a strong performance from Convenience Retail, and a good first contribution from Z Energy led to the outstanding result.

Result. Group RCOP EBITDA $1,764m vs consensus $1,704m a clear beat. Convenience Retail was strong (EBIT $347m +37%) ahead of consensus at $334m. After a poor 3Q22, non-Lytton F&I bounced back to a full year EBIT of $244.9m, +11% on last year.

Dividend. The final dividend of 105cps (market 87cps) put the full year dividend at 225cps fully franked, another big beat over the market. ALD declared a special dividend of 50cps fully franked taking the full year payout to 275cps, a payout of 65% of net profit.

Leverage remains at the bottom end of guidance (net debt to EBITDA is 1.7x) leading management to say: “further capital management initiatives will be considered by the Board during FY23”.

Trading update. The Lytton Refining Margin in January at US$18.40/bbl was above the US$17.86/bbl average for FY22 while fuel volume growth continues to leave the pandemic a long way behind. Australian fuel volumes sales were up 19% compared to the same time last year (January +5.6% LFL on pcp).

Investment View

A very big result that we knew was brewing, hence our Buy recommendation, although the share price has been hesitant. 

As volumes continue to lift, refining margins remain good and Convenience Retail still pushes out solid trading performance, the underlying result will take care of itself. 

The better news for shareholders is the likelihood that the Board has ample room to extend the returns. Even with the big increase in FY22 dividends, there is upwards of $750m with which the Board can contemplate returning over FY23 without messing up the balance sheet.

Figure 1: FY22 Result

Figure 2: Fuel sales volumes by channel (BL)

Figure 3: Fuel sales volumes (BL)

Figure 4: Lytton Refinery performance

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Stock Overview

Share Price

Company Overview

Ampol Australia is an independent transport fuel company. It owns and operates the Lytton Refinery in Queensland. ALD has acquired Z Energy in New Zealand for NZ$2bn. In total, ALD will have approximately 2,400 sites supplying ~23.5 BL of fuel pa.

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