Ampol, Australia’s leading fuel retailer, announced a significant 49% drop in its first-quarter refining margins for the Lytton refinery in Queensland, attributing the decline to production losses caused by Cyclone Alfred and weak refining margins in Singapore, a key market for Asia.
The company’s shares fell as much as 2.1%, reaching their lowest point since April 9.
In its quarterly report, Ampol revealed that the Lytton refinery margin dropped to $6.07 per barrel, down from $11.80 in the same period last year. The decrease was primarily due to reduced refining profits in Singapore, where gasoil refining margins hit a three-year low at the end of 2024. This slump was driven by oversupply and weak demand in derivative markets.
Additionally, Ampol cited Cyclone Alfred’s impact, which led to a damaged crude tank roof and increased costs due to delays in crude shipments. The Lytton Refinery experienced about ten days of lost production as the company took precautionary measures before the cyclone hit. As a result, the refinery’s quarterly output fell by 5.7%, totaling 1.30 billion litres.
The global refining sector has been grappling with declining profitability, driven by slower economic growth, the rising adoption of electric vehicles in China, and new refineries opening in Africa, the Middle East, and Asia.
If weak refining margins persist through the second quarter, Ampol could qualify for compensation under Australia’s Fuel Security Services Payment program, offering financial protection during times of market instability.
Despite the refining slump, Ampol’s convenience retail business in Australia saw growth in earnings, driven by improved fuel margins and successful in-store strategies.
“Despite the short-term cyclone impact, Ampol’s Convenience Retail division is thriving, supported by its premium fuel strategy and a $50 million cost-saving program,” analysts at Sandstone Insights commented.
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