Ampol has reported its financial for the 12 months ending 31 December 2020, with full year earnings of $401 million.
Earnings were down from $607 million in the year prior, impacted by economic weakness and significant disruptions to global hydrocarbon markets.
Fuels and infrastructure (F&I) delivered a full year result of $154 million, which was well below the $450 million delivered in 2019, largely due to lower earnings from Lytton and loss of scale in F&I Australia from COVID-19 related demand destruction.
The reduction in Lytton RCOP EBIT by $215 million compared to 2019 was reflective of the extremely weak external refiner margin environment, impacted by sustained weakness in global hydrocarbon demand from COVID-19. Action was taken to mitigate impacts by bringing forward and extending the refinery T&I, and a renewed focus on costs and efficiency.
Total Australian fuels sales volumes were 13.6BL in 2020, 17 per cent lower than the 16.3BL in 2019, reflecting adverse weather impacts at the start of the year and demand destruction, including the significant impact of government restrictions implemented in response to the COVID-19 pandemic.
International volumes of 6.5BL in 2020, were 36 per cent higher than 4.8BL in 2019, underpinned by continued growth of international businesses and supported by international storage initiatives.
Ampol is currently undertaking a strategic review of its Lytton refinery, which is expected to conclude in the June quarter of 2021. Convenience retail delivered growth for Ampol, with earnings of $287 million in 2020 compared to $201 million in 2019.
Retail fuel earnings were supported by higher margins and also reflect continued improvement in shop performance. Total convenience retail fuel sales volumes were 4.1BL in 2020, 14 per cent lower than the 4.8BL fuels sales volumes in 2019, due to the impacts on industry demand from bushfires and floods in the first quarter, followed by COVID-19 restrictions since late March.
Throughout the year the Ampol network reduced by nine per cent.
A statement said: “Our disciplined approach to optimising our network saw the closure of 33 marginal sites, in addition to the divestment of 25 Higher and Better Use (HBU) sites, which Ampol will remediate as part of sale conditions.
Combined with the transfer of 20 sites to alternate operators, these changes drove a nine per cent reduction of the controlled network size during the period. “Shop performed strongly during the period as we focused on the disciplined execution of our retail strategy, with a seven per cent increase in like-for-like shop sales and a clear focus on cost management.”
Matt Halliday, Managing Director and CEO, said: “Ampol has navigated a tough operating environment, with sustained weakness in refining margins, ongoing government restrictions impacting travel and aviation in particular, and broad economic weakness impacting demand throughout the year.
“Despite the many challenges and disruptions faced, I am pleased with our progress in executing our strategy and delivering on our promises to shareholders.
In 2020 we released significant capital through our Convenience Retail property transaction, announced the return of capital to shareholders through our recently completed Off-market Buy-back, and delivered a subordinated notes issuance. We also commenced our rebrand to Ampol and we are well positioned to deliver on our targeted $195 million EBIT uplift by 2024.
“Heading into 2021, we remain focused on cost and capital efficiency and will continue to make decisions to improve returns and deliver growth to shareholders. Our refining review is ongoing, with an outcome to be communicated to stakeholders in 2Q 2021. I would like to thank all our employees for their contribution to our strategic success and efforts to deliver for customers in a tough market.”