Ampol share price (ASX:ALD) slips despite highest earnings since 2018 and record sales

It seems the petroleum giant's results aren't enticing investors today.

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Key points

  • Ampol shares are taking the heat in early trade on Monday after the release of the company's full year results
  • The company achieved record fuel sales and its highest earnings since 2018
  • The Ampol share price has climbed 16% in the last 12 months. 

The Ampol Ltd (ASX: ALD) share price is sliding today after the petroleum company released its results for the 12 months ending 31 December 2021.

At the time of writing, the Ampol share price is down 2.08% at $30.60. Let's take a closer look.

Ampol shares slide on record fuel sales

Key takeouts from the period in Ampol's report today include:

  • Replacement cost of sales operating profit (RCOP) EBIT up 57% to $631 million delivered against the COVID-19 backdrop; highest result since 2018
  • Record total sales volumes of 22.04 billion litres; strong international growth
  • Historical cost of operating sales profit (HCOP) profit (statutory profit) of $560 million compared with a loss of $485 million in FY 2020
  • Declared a final dividend of 41 cents per share (fully franked), taking the total dividend to 93 cents per share
  • Leverage at 1.2 times RCOP earnings before interest, tax, depreciation and amotisation EBITDA; $479 million returned to shareholders

What else happened this year for Ampol?

It was a strong 12 months for Ampol, with fuels and infrastructure delivering RCOP EBIT of $417.6 million, representing an increase of 170% on last year.

The company said the result was "underpinned by a strong operating performance at Lytton and earnings growth in our international business".

For the year, Australian sales volumes totalled 13.05 billion litres in FY21, 4% behind FY20's result. Ampol says this reflects "the full-year impact of COVID-19 on jet volumes, the impact of rolling lockdowns on Australian retail market demand in the second half, as well as competitor supply chain decisions earlier in the year that adversely impacted net buy/sell volumes".

Although Australian sales volumes declined, this was offset by growth in international sales to roughly 9 billion litres and, as a result, total group sales volumes notched a record of 22.04 billion litres.

Ampol's board also declared a fully franked final dividend of 41 cents per share, taking the total dividend to 93 cents per share – an increase from 48 cents per share in FY20.

The company is completing the dividend on a 61% payout ratio of the full-year RCOP net profit after tax (NPAT), to be paid in March 2022.

Management commentary

Speaking on the announcement, Managing Director and CEO of Ampol Matt Halliday said:

Ampol's strong financial results and record fuel sales reflect the ability of our people to thrive under challenging conditions and demonstrates how our business and earnings can respond to the market recovery. Throughout the year, we focused on managing what we can control. The safety and wellbeing of our people has been paramount during this time, and I am pleased that during a period of ongoing disruption and uncertainty, we have achieved industry top quartile performance for personal safety. Our customers are responding well to the successful return of the iconic Australian Ampol brand, with rebranded sites outperforming our control sites across key performance indicators. As we look ahead, we have a clear strategy to maximise the value of our existing businesses during the energy transition and to diversify and grow our international earnings through the Z Energy acquisition while we prepare for a low carbon future.

What's next for Ampol?

Regarding its outlook, the company noted that "[g]lobal refining fundamentals have improved through increasing demand for refined products and the structural decline in capacity caused by refinery closures".

It added that the Lytton refinery is "well positioned to benefit from expansion in refiner margins, with reduced earnings downside through the Fuel Security Services Payment, should the Government Margin Marker fall below a certain level".

The company also added it is well on track to complete the first steps of the Z Energy Ltd (ASX: ZEL) acquisition and will realise cash flow to earnings in the second half.

"During 2022, we will focus on the three key projects: commencing the rollout of EV charging stations to over 100 sites, a targeted pilot of an Ampol branded electricity offer and deepening our understanding of the hydrogen supply chain", the company concluded.

Ampol share price snapshot

The Ampol share price has climbed 16% in the last 12 months, rallying 3.5% this year to date. However, in the past week, it has dipped almost 4% into the red.

The company has a market capitalisation of approximately $7.3 billion at its current share price.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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