Ampol's Quarterly Update Mixed: Retail Solid, Refining Lags

what happened

Ampol's latest quarterly update sent mixed signals, according to Market Talk, which cites Jefferies. The company's convenience retail arm kept performing well even as consumers grew more cautious and fuel prices stayed elevated, though the fuel margin environment became harder.

The refining division, however, came in below Jefferies' expectations. The analysts say Ampol captured a smaller share of the benefit from strong regional crack spreads, largely because planned maintenance ran longer than anticipated.

Jefferies keeps its hold rating and cuts its price target by 3.3% to A$44.00 per share. Analyst Michael Simotas said: "Convenience execution is creditable, refining margin should be a tailwind for some time and FSSP 2 likely positive, but upside is largely priced in." Ampol closed Monday at A$41.93.

why it matters

FSSP 2 is the expected result of a review of the government's Fuel Security Services Payment, which supports refiners when refining profitability is low. For investors, refining margins and the outcome of that review are the key swing factors, since they shape how heavily the company leans on its retail business.

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