Ampol Limited · ASX:ALD
Ampol — Investor Day (November 2020)
54 slides from Ampol's investor day presentation, Nov 23, 2020
Slide 1: ASX Release: 2020 Investor Day
AMPOL LIMITED ACN 004 201 307 LEVEL 24 2 MARKET STREET SYDNEY NSW 2000 ASX Release 2020 Investor Day Monday 23 November 2020 (Sydney): Ampol Limited provides the attached 2020 Investor Day Presentation. Authorised for release by: the Board of Ampol Limited INVESTOR CONTACT MEDIA CONTACT Dale Koender
Slide 2: Welcome and overview
2 Welcome and overview Matt Halliday Managing Director & CEO
Slide 3: Ampol Leadership Team
3 Ampol Leadership Team Matt Halliday Joanne Taylor Brent Merrick Andrew Brewer Managing Director & CEO Executive General Manager Executive General Manager Executive General Manager Retail, Brand and Culture Commercial Infrastructure Jeff Etherington Alan Stuart-Grant Georgina Koch Interim Chief Fin
Slide 4: Agenda
4 Agenda SESSION ONE 09:00 – 09:55 Overview, strategy and short-term priorities Matt Halliday 09:55 – 10:00 Break SESSION TWO 10:00 – 10:10 F&I Australia Brent Merrick 10:10 – 10:20 F&I International Brent Merrick 10:20 – 10:30 Retail Joanne Taylor 10:30 – 10:40 Energy transition Alan Stuart-Grant 1
Slide 5: Overview & strategy
5 Overview & strategy Introduction Our strategy Short-term priorities
Slide 6: Overview
6 Overview Ampol is Australia’s market-leading fuels and retail business, underpinned by strategic infrastructure and strong customer positions COVID-19 impacts have highlighted the quality of the business (ex-Refining and Aviation), with strong underlying performance in our Retail and Internati
Slide 7: We are the Australian transport fuels leader
7 We are the Australian transport fuels leader Ampol possesses qualities that are unmatched in the Australian transport fuels industry Strategic assets Deep customer base Portfolio of privileged infrastructure: Significant B2B and B2C customer platforms: – 1.5BL owned capacity in highly strategi
Slide 8: We operate in three large and resilient markets
8 We operate in three large and resilient markets Our strong platform means we are well positioned to take advantage of growth opportunities in all of these markets Australian transport fuels Asia-Pacific transport fuels Convenience and QSR Scale ~56BL ~1,100BL $8.8bn in 2019: Resilient Diesel ↓ 1%;
Slide 9: Our non-refining businesses generate good returns
9 Our non-refining businesses generate good returns With the exception of the recent performance of Lytton, the integrated business generates compelling returns EBIT – Business unit ROCE* – Total company $m Percent 400 20% 17% 13% 10% 300 Conv. Retail F&I Aus 3-yr Avg.*** 3-yr Avg.*** Last 12 Months
Slide 10: Our strategy builds on our strengths in fuels
10 Our strategy builds on our strengths in fuels Our strategy focuses on our core business, and establishes a platform to grow and ultimately evolve as energy markets transition Purpose Powering better journeys, today and tomorrow Strategy BRING BACK AMPOL Bring back an iconic Australian brand and r
Slide 11: We will remain disciplined in our approach
11 We will remain disciplined in our approach Our approach will be governed through a well-defined Capital Allocation Framework, underpinned by operating and capital efficiency Capital Allocation Framework Commitment to a strong investment grade credit rating Stay-In-Business Capex Focused on sa
Slide 12: Our decisions are informed by our approach to ESG
12 Our decisions are informed by our approach to ESG Ampol is taking a responsible and long-term view to deliver value for stakeholders CUSTOMERS In aligning our organisation Transition with our customers toward a low-carbon future behind our ESG strategy, we will: EMPLOYEES SHAREHOLDERS Announce
Slide 13: We are delivering on our promises from 2019 Investor Day
13 We are delivering on our promises from 2019 Investor Day Despite a year of unprecedented disruption, we have delivered on the strategic initiatives outlined at our 2019 Investor Day 2019 Investor Day Progress CUSTOMERS Core company-operated Proposed IPO of 49% interest Charter Hall consortium
Slide 14: We have a clear set of 2021 priorities
14 We have a clear set of 2021 priorities Clear strategic priorities to grow shareholder value during 2021 by continuing to grow earnings and improving returns by strengthening our asset positions and improving cost and capital efficiency Rebrand Bring back Ampol Launch national rollout and achiev
Slide 15: Bring back Ampol
15 Market leader Distinctly in transport Australian fuels Bring back Ampol Bring back an iconic Relentless focus World-class Australian brand and on safety and fuels that go reliability the distance reinvigorate our people and customer connection Refreshed Customer- company- driven energy operated s
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Slide 17: Further cost savings
17 17 Further cost savings Take further action on costs to mitigate demand impacts and reinforce competitive position
Slide 18: We continue to take action on costs
18 We continue to take action on costs Continual focus on improving the overall cost base – new program to reduce overheads by an additional $40 million by 2022 $40m Cost-out initiative examples Office relocation $40m IT simplification Rationalise depot network $60m Reduce manning levels
Slide 19: Maximise Lytton value
19 Maximise Lytton value Review to determine how to maximise value from a highly strategic and well-located asset
Slide 20: Lytton review underway
20 Lytton review underway Determining how to maximise value from a highly strategic and well-located piece of infrastructure Why we are taking action Key considerations Possible outcomes Global refining heavily impacted by COVID- Lytton Refiner Margin (LRM) outlook Continued refining operation
Slide 21: Improve retail network
21 Improve retail network We have released significant capital, with further potential to improve returns
Slide 22: We continue to improve our network
22 We continue to improve our network Our actions have improved the quality of our network and released significant capital* Company-operated network Capital released and network quality strengthened Number of sites in network We have delivered on a series of capital initiatives: ~50 ~790 – 25 HBU
Slide 23: Business unit strategies
23 Business unit strategies F&I Australia F&I International Retail Energy transition
Slide 24: Restore F&I Australia ROCE
24 Restore F&I Australia ROCE Our market-leading position provides resilience, but we will take action to further strengthen our infrastructure and focus on capital effectiveness and cost efficiency
Slide 25: Our objectives
25 Our objectives We are well placed to build upon our market-leading position in Australia Superior asset base Integrated value with improved capital creation effectiveness Relentless focus Safe, reliable on costs operations
Slide 26: Our integrated platform creates opportunities
26 Our integrated platform creates opportunities Integration delivers diversified earnings, a strong base for growth off existing business activities and skills to evolve into new areas Reporting segments Integration benefits B2B Australian F&I (ex Lytton) Earnings are diversified by Manufacturing
Slide 27: We are taking action to improve returns
27 We are taking action to improve returns Our business is resilient, but we remain focused on cost efficiency and capital effectiveness Market characteristics* NSW QLD WA VIC SA COVID-19 impacts Loss of scale due to COVID-19 demand reduction impacting current returns Total market demand 15.9BL 13
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Slide 29: International earnings growth
Dale / PJP – what do 29 we want to say here? International earnings growth Leverage our scale and capabilities to accelerate our growth in regional markets
Slide 30: Capability build has translated to earnings growth
30 Capability build has translated to earnings growth Trading & Shipping (T&S) has evolved quickly and is now a strong earnings contributor and key growth enabler for the group Growth Enabler 2016 2017 2018 2019 2020 International New commodity risk Hedging Third party sourcing and International Com
Slide 31: Large Australian short position provides platform for growth
31 Large Australian short position provides platform for growth T&S is systematically layering capabilities, customers, products and geographies onto our ‘physically backed’ system to generate incremental earnings from a very large International opportunity set Australian fuel leader. 1 ~16BL short
Slide 32: Progressing delivery of $70 million EBIT uplift by 2024
32 Progressing delivery of $70 million EBIT uplift by 2024* We continue to focus on delivering organic growth that leverages our core strengths in assets, customers and supply chain International EBIT Strong progress $m 100 2020 Achievements Future plans • YTD volumes up 91 90 77% on pcp^ Expanded
Slide 33: Shop earnings growth
33 Shop earnings growth Leverage our strength in retail fuel to capture opportunities from the evolving behaviours and expectations of our customers
Slide 34: Our objectives
34 Our objectives We are well placed to leverage our strength in retail fuel to capture opportunities from the evolving behaviours and expectations of our customers Enhanced Balance value and merchandising volume to maximise supported by efficient fuel profitability shop operations Disciplined appro
Slide 35: Fuel continues to provide a strong base for Retail
35 Fuel continues to provide a strong base for Retail COVID related market impacts have reiterated the resilience and importance of fuel to the Retail business Ampol is well positioned to continue to generate profitable fuel earnings Resilience and strength in fuel margins Industry retail margins In
Slide 36: Strong growth in shop performance
36 Strong growth in shop performance Transition to company operations largely complete. Merchandising enhancements, combined with change in customer behaviour and operational improvements, sees strong momentum in shop Strong +5.8% LFL sales growth*, ahead of 2020 target of >3% growth Profitability i
Slide 37: Format offer resonating with customers
37 Format offer resonating with customers Improved profitability and capital efficiency is being delivered across Woolworths’ Metro 60%* 6ppts*, ** 20-30%*** average sales gross margin run-rate labour uplifts expansion hour reduction 20-40% 6 pilots capital reductions complete by end in recent pilot
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Slide 39: Leveraging rebrand and formats across our quality network
39 Leveraging rebrand and formats across our quality network Ampol rebrand provides opportunity to elevate core fuel proposition and site appearance Rebrand investment, Simplified brand strategy, Brand ownership, reinvigorating network with Foodary and Metro across shop building brand equity Ampol E
Slide 40: On track to deliver $85 million EBIT uplift by 2024
40 On track to deliver $85 million EBIT uplift by 2024* Significant progress made over 2020 with the accelerated delivery of labour enhancements and efficiencies, implementation of wholesale from Woolworths and progress with range simplification, formats and new store pipeline Uplift Opportunity Fut
Slide 41: Build foundations for energy transition
41 Build foundations for energy transition Transition with our customers, focusing on a targeted set of energy and decarbonisation themes with clear linkages to our capabilities and assets
Slide 42: Transition with our customers
42 Transition with our customers Demand in core Australian fuels expected to remain strong until at least 2030 Australian energy mix forecasts What this means for Ampol Final consumption, MTJ The evolution of Australia's transport fuels is anticipated to be slower than many other developed economi
Slide 43: Investigate targeted options
43 Investigate targeted options Ampol has started focusing on a targeted set of energy and decarbonisation themes, each of which has a clear linkage to our strengths Biofuels and Leverage own demand recycled fuels Customer-led H H Hydrogen transition Our right Where Future Global trading and to play
Slide 44: Apply test and learn approach
44 Apply test and learn approach Leveraging partnerships to test and learn our approach to energy transition Practical approach Case example: Potential downstream hydrogen distribution opportunity in Tasmania 1. Actively engage customers and government on energy transition Ampol is exploring downs
Slide 45: Conclusion
45 Conclusion
Slide 46: Summary
46 Summary Ampol is Australia’s market-leading fuels and retail business, underpinned by strategic infrastructure and strong customer positions COVID-19 impacts have highlighted the quality of the business (ex-Refining and Aviation), with strong underlying performance in our Retail and Internati
Slide 47: AMPLIFY
AMPLIFY 98 Diesel il
Slide 48: Appendix
48 Appendix
Slide 49: Hydrocarbon demand impacts
49 Hydrocarbon demand impacts COVID-19 continues to impact volumes; resilience in diesel demand and jet volumes improving with borders reopening, although outlook remains uncertain, particularly for international jet volumes given border closures Ampol monthly Australian total sales volumes COVID-19
Slide 50: Our rebranding journey is progressing
50 Our rebranding journey is progressing We have commenced rebranding activities across our branded network 2H 2020 1H 2021 2H 2021 2H 2022 Network rollout Network scale Brand transition Pilot launch complete commences achieved Local area marketing Brand objectives National launch Defend market posi
Slide 51: Illustrative Buy-back Example (For an Australian Super Fund Investor)
51 Illustrative Buy-back Example (For an Australian Super Fund Investor) Key Assumptions Comments Assumed Market Price1 $ 28.00 OMBB Price $ 24.08 Assumed Market Price less maximum tender discount of 14.0% Assumed Capital Component $ 2.01 As per ATO Drafting class ruling Original share purchase pric
Slide 52: Proposed Off-market Buy-back Timetable
52 Proposed Off-market Buy-back Timetable November 2020 Announcement of the Buy-Back Monday, 23 November Last day that Shares can be acquired on the ASX to be eligible to participate in the Buy-Back and to qualify for franking credit Wednesday, 25 November entitlements in respect of the Buy-Back
Slide 53: Important Notice
53 Important Notice This presentation for Ampol Limited is designed to provide a high level overview of aspects of the operations of Ampol Limited, including comments about Ampol’s expectations of the outlook for 2020 and future years, as at 23 November 2020. This presentation contains forward-looki
Slide 54: Thank you
/I AMPOL Thank you