Ampol Limited · ASX:ALD
Ampol — H1 2020 Earnings Presentation
35 slides from Ampol's earnings presentation, Aug 25, 2020
Slide 1: 2020 Half Year Results Presentation and Investor Discussion Pack
AMPOL LIMITED ACN 004 201 307 LEVEL 24 2 MARKET STREET SYDNEY NSW 2000 ASX Release 2020 Half Year Results Presentation and Investor Discussion Pack Tuesday 25 August 2020 (Sydney): Ampol Limited provides the attached 2020 Half Year Results Presentation and Investor Discussion Pack for the half year
Slide 2: Introduction and overview
2 Introduction and overview Matt Halliday Managing Director & CEO
Slide 3: Strong business foundations
3 Strong business foundations Resilient performance in 1H 2020 against a backdrop of severe economic disruption Resilient Performance Action taken to mitigate COVID-19 impacts Australian volumes down 14% on 1H 2019 due to COVID- Increased focus on customer and employee safety, and 19 disruption
Slide 4: Despite the new challenges related to COVID-19, our safety performance has improved
4 Despite the new challenges related to COVID-19, our safety performance has improved Fuels & Infrastructure Personal Process Safety and Spills Convenience Retail Personal Safety Safety 15 12 20 10 15 10 8 6 10 5 4 5 2 0 0 0 2016 2017 2018 2019 1H 2020 2016 2017 2018 2019 1H 2020 2016 2017 2018 2019
Slide 5: Resilient 1H 2020 financial performance
5 Resilient 1H 2020 financial performance Strong performance in Convenience Retail; Lytton and jet demand heavily impacted by COVID-19 1H 2020 1H 2019 % ∆ 1H 2019 EBIT – Fuels & Infrastructure (ex-Lytton) $171m $192m -11% EBIT – Fuels & Infrastructure (Lytton) -$59m $1m NMF EBIT – Convenience Retail
Slide 6: COVID-19 has materially impacted Australian fuel demand
6 COVID-19 has materially impacted Australian fuel demand Demand impacts continue to be experienced given government-mandated travel restrictions Wholesale Fuel Australian Fuel Demand (vs. pcp) 50% Ampol Australian volumes down 14.1% on pcp; jet fuel most impacted given international and domestic
Slide 7: We continue to take action to mitigate COVID-19 impacts
7 We continue to take action to mitigate COVID-19 impacts Current COVID-19 impacts Action taken Crude oil market remains volatile Continued focus on optimising value from the integrated Continued global hydrocarbon demand weakness due to supply chain through all market conditions government tr
Slide 8: Continued growth delivered in F&I International
8 Continued growth delivered $52 million 1H 2020 International EBIT, up 63% on 1H 2019 in F&I International 4 new Gull sites and 9 new SEAOIL sites during 1H 2020; site rollout plans adapted to meet COVID-19 circumstances Continued earnings growth in Gull and International storage capabilities
Slide 9: Continued improvement in Convenience Retail performance
9 Continued improvement in Convenience Retail performance Retail volume weakness offset by industry margin strength and oil price lag benefits Industry retail fuel margin strength offset volume weakness during 1H 2020; Ampol has continued to Fuel NAM per site up outperform on fuel: 26.9% on pcp
Slide 10: Ampol rebranding update
10 Ampol rebranding update Reflecting our status as Australia’s leading independent transport fuels company 2 retail pilot sites to be launched in early 2H 2020, ~20 sites to be rebranded by end of 2020 Premium fuels to rebrand to Amplify with Ampol retail sites Re-branding across B2B, card cu
Slide 11: Capital and cost efficiency is core to our strategy
11 Capital and cost efficiency Remaining $40 million* of existing cost-out program has initiatives in place, and tracking to deliver by end of 2020 is core to our strategy Accelerating cost reduction initiatives originally planned for delivery over the medium term 1H 2020 capex of $88 million;
Slide 12: Execution of Convenience Retail property transaction
12 Execution of Convenience Retail property transaction Delivery of our strategy and compelling value achieved for shareholders in volatile market conditions Key Transaction Features* Transaction Structure Overview • Charter Hall - GIC consortium to acquire 49% Property Trust interest, Ampol retaini
Slide 13: Group financial result
13 Group financial result Jeff Etherington Interim CFO
Slide 14: 1H 2020 result impacted by COVID-19
14 1H 2020 result impacted by COVID-19 Hydrocarbon market disruption has impacted both Lytton and F&I ex-Lytton RCOP EBIT; strength in CR RCOP EBIT; COVID-19 impacts driving HCOP significant items and inventory loss 300 121 255 60 40 7 221 312 21 155 21 100 (626) 434 -100 $m -300 -500 101 -700 * Ref
Slide 15: Fuels & Infrastructure result
15 Fuels & Infrastructure result LRM* weakness, lower Lytton sales due to extended T&I, and COVID-19 impacted volumes and supply costs; partially offset by strong cost discipline and growth in international earnings 1H 2020 v 1H 2019 F&I RCOP EBIT 300 250 193 60 200 $m 150 33 14 29 112 100 23 12 13
Slide 16: Lytton impacted by disruption in global hydrocarbon markets
16 Lytton impacted by disruption in global hydrocarbon markets Action taken to optimise cashflows through 1H 2020 SWAM impacted by sustained weakness in jet and gasoline product cracks as a result of global demand destruction extended T&I 1H 2020 LRM of US$4.86/bbl, impacted by elevated crude Ly
Slide 17: Convenience Retail result
17 Convenience Retail result Strength in industry fuel margins; resilient shop performance despite reduced network size 1H 2020 v 1H 2019 Convenience Retail RCOP EBIT 300 250 200 $m 63 0 17 150 0 6 125 100 85 50 0 * Includes $1 million lower fuel commission ** Includes $10 million dry stock inventor
Slide 18: Balance sheet and cashflow
18 Balance sheet and cashflow Maintaining optimal capital structure, with resilient cashflows, to maximise value and shareholder returns Period end net borrowings $m and gearing % $m Movement in cash flows and period end net borrowings 1400 50 1,500 1,264 1,233 45 84 1,233 1200 1,250 40 127 868 621
Slide 19: Increasing balance sheet headroom
19 Increasing balance sheet headroom Focus on operating and capital efficiency Capital Allocation Framework What We Are Doing Remaining $40 million of existing cost-out program to be delivered by end of 2020 1 Stay-In-Business Capex Focused on safety and reliability of supply Cost-Out Accelera
Slide 20: Closing remarks
20 Closing remarks Matt Halliday Managing Director & CEO
Slide 21: We are committed to operating a sustainable business
21 We are committed to operating a sustainable business People Communities Environment 37.3% women in senior leadership Bushfire and drought relief through EV charging station roll-out in roles StarCash donations partnership with EVIE Employer of Choice for Gender Ampol Best All Rounder -
Slide 22: Well-positioned to unlock value and deliver potential $195m earnings uplift by 2024
22 We continue to be well-positioned to unlock value and deliver potential $195m earnings uplift by 2024 Property transaction Use our strong position Continual focus on Leverage our history of Continuation of F&I executed; explore in retail to deliver non- capital efficiency to cost discipline to in
Slide 23: Q&A
23 Q&A
Slide 24: Appendix
24 Appendix Significant items 25 Fuels & Infrastructure – financial highlights 26 Lytton refinery result 27 Lytton refinery – highlights 28 Australian fuel volumes 29 Convenience Retail – financial highlights 30 Financial discipline – capital returns and balance 31 sheet Financial discipline – capit
Slide 25: Significant items
25 Significant items 1H 2020 1H 2019 Half Year Ending June $M $M Impairment of non-current assets* (355) 0 Ampol rebranding expense** (57) 0 Other expenses*** (36) 0 Other income**** 2 0 Total Significant Items (Before Tax) (446) 0 Tax 134 0 Total Significant Items (After Tax) (312) 0 * Ampol has un
Slide 26: Fuels & Infrastructure
1H 2020 1H 2019 Change (%) 26 Fuels & Total Fuels Sales Volumes (BL) Australian Volumes (BL) 9.9 7.0 9.6 8.1 4 (14) Infrastructure International Volumes (BL) Lytton LRM Sales from Production (BL) 2.9 2.0 1.5 2.9 93 (29) Lytton Total Production (BL) 2.0 3.0 (34) Australian F&I (ex Lytton) EBIT (A$m)*
Slide 27: Lytton refinery result
27 Lytton refinery result 1H 2020 v 1H 2019 Lytton RCOP EBIT 100 50 External Drivers Controllable Drivers 10 67 1 59 0 -50 63 4 8 17 40 -100 9 -150
Slide 28: Lytton refinery – highlights
Lytton refinery – highlights Operational performance in 1H 2020 impacted by extended T&I 28 High Value Transport Fuels Production Volumes, Production Utilisation (%) and Availability (%) LRM impacted by regional refining margin weakness and BL % increased landed crude premiums 3.5 100 T&I brought
Slide 29: Australian fuel volumes
29 Australian fuel volumes Fuels & Infrastructure Australian Volumes Convenience Retail Fuel Volumes BL BL 9 -4% 3.0 8 0.05 1.5 1.3 -14% 2.5 0.04 7 0.7 0.03 6 2.0 0.7 0.7 5 4.2 4.1 0.6 4.1 1.5 0.5 0.4 4 0.4 3 1.0 0.5 0.5 2 0.1 0.1 0.4 2.7 2.6 0.5 0.1 1 2.2 0.7 0.6 0.5 0 0.0 1H 2018 1H 2019 1H 2020 1
Slide 30: Convenience Retail
Convenience 1H 2020 1H 2019 Change (%) 30 (1) Period end COCO sites (#) 661 584 13 Period end CORO sites (#) 83 206 (60) Retail Total Sales volumes (BL) Total Sales volume growth (%) 1.99 (17.7%) 2.42 (1.6%) (18) (16) Premium Fuel Sales (%) 50.3% 49.2% 1 (2) Total Fuel Revenue ($m) 1,521 2,119 (28)
Slide 31: Financial discipline – capital returns and balance sheet
31 Financial discipline – capital returns and balance sheet Interim dividend of 25 cents per share (2019: 32 cps) fully franked; half year dividend pay-out ratio 52% Ampol capital return history* Debt Maturity Profile (A$m) Payout Ratio Cents per share 70% 200 60% 50% 150 100 40% 250 100 1,105 125 1
Slide 32: Financial discipline – capital expenditure
32 Financial discipline – capital expenditure Indicative Capital Expenditure*, subject to change (includes T&I**) Depreciation and Amortisation $ millions 1H 2019 1H 2020 2020 Forecast 2020 $ millions 1H 2019 1H 2020 Forecast*** Lytton Stay in business (includes T&I)** 13 35 ~85 190 - 200 Convenienc
Slide 33: Our assets – retail infrastructure
33 Our assets – retail infrastructure Australian retail network Dealer Owned Leased Total Owned Company Operated (Calstore)^ 306 299 0 605 Company Operated (Diesel Stop) 20 34 0 54 Company Operated (Depot Fronts) 9 3 0 12 Franchised 45 37 1 83 Supply Agreement 53 12 577 642 Agency StarCard 0 0 9 9 E
Slide 34: Important Notice
34 Important Notice This presentation for Ampol Limited is designed to provide: • an overview of the financial and operational highlights for Ampol Limited for the 6-month period ended 30 June 2020; and • a high level overview of aspects of the operations of Ampol Limited, including comments about A
Slide 35: Thank you
/I AMPOL Thank you