The Ampol Ltd (ASX: ALD) share price is on the move on Tuesday.
At the time of writing, the fuel retailer's shares are up 1% to $31.53.
What's driving the Ampol share price higher?
Investors have been bidding the Ampol share price higher today following the release of its third quarter update.
According to the release, the company delivered strong profit growth during the quarter despite battling lockdowns in New South Wales and Victoria.
Ampol reported unaudited Fuels & Infrastructure (F&I) earnings before interest and tax (EBIT) of $83 million. This was up from a loss before interest and tax of $19 million a year earlier and was driven by an improved performance by the Lytton refinery business.
Lytton Refinery RCOP EBIT came in at $22 million. This reflects the continued improvement in the Singapore Weighted Average Margin. The Lytton Refiner Margin (LRM) for the quarter was US$6.76/bbl, up from US$5.90/bbl during the first half. Total production for the quarter was 1,565 ML compared with nil in the third quarter last year.
Things weren't quite as positive for the Convenience Retail (CR) business, which reported a 62% decline in EBIT to $33 million. This reflects the New South Wales and Victorian lockdowns, with fuel volumes down 16% compared with the same time last year.
Nevertheless, Ampol ultimately reported a 76% increase in unaudited third quarter EBIT to $102 million.
Management commentary
Ampol's Managing Director and CEO, Matt Halliday, said: "The third quarter was a challenging period for many businesses and Ampol was no exception. In the face of extended lockdowns on the East Coast our business and our people responded, focusing on the safety of our team members and customers and cost control."
Mr Halliday appears optimistic that the end of lockdowns will boost its performance.
He commented: "The recent announcements from the New South Wales and Victorian State governments to lift COVID restrictions linked to higher vaccination rates is encouraging. While we do expect volumes to begin to recover as consumer mobility increases, crude and refined product prices have continued to trend higher in recent weeks. This will benefit Lytton's profitability but will temper retail margins in the short term."
"Additionally, the reopening of domestic and international borders will be positive for jet demand. While it will take a little time to assess the strength of the recovery, we are optimistic about entering 2022 with improved momentum as restrictions are progressively eased," the CEO concluded.
The Ampol share price is up 11% in 2021.
