Ampol has posted a jump in first-quarter profit of more than 50 per cent as its margins on processing crude oil into petrol and diesel almost doubled from the same period in early 2021, even as earnings from convenience retailing stalled.

Earnings at Ampol’s only refinery, the Lytton plant in Brisbane, surged to $60.6 million in the March quarter, a turnaround from a loss of $200,000 in the same period in 2021, making the federal government’s refinery subsidy package unnecessary for the quarter.

The refinery was under threat of closure last year before Ampol committed to keep it open until at least mid-2027 thanks to subsidies that would be paid out when refining margins were low. The country’s two refiners, Ampol and Viva Energy, are also getting $250 million of funding from the government to help fund the upgrade of their refineries to meet stricter fuel standards.

Earnings before interest and tax at Ampol’s broader fuels and infrastructure business surged 79.5 per cent to $119.4 million, while convenience retail EBIT dipped 1 per cent to $76.9 million. The fuels and infrastructure earnings included a widening in the loss at the Future Energy business, which includes the rollout of electric vehicle chargers and a pilot electricity offer to retail customers, to $5.3 million, from $1 million.

Shares in Ampol dropped 1.6 per cent to $32.30 even as chief executive Matt Halliday described the first-quarter result as “strong … during a period of turbulent operating conditions”.

“The business has successfully managed the short-term impacts of omicron, significant flooding events and the unprecedented volatility caused by the Russia and Ukraine conflict,” he said.

Production, however, dipped slightly from the first quarter last year as output was hit by flooding in Brisbane, which closed the river to shipping, and by unscheduled maintenance work. The lower output is expected to hit profit by $15 million.

The fuels supplier, the former Caltex Australia Ltd, signalled some uncertainty about how the impact of higher prices for diesel and jet fuel would flow through to earnings, even amid a further strengthening in refining margins since the end of March due to the impact of Russian sanctions.

Benchmark profit for the whole group for the March quarter rose 54 per cent to $113.1 million, while bottom-line statutory profit, which is less closely watched by the market, rose 57 per cent to $274.4 million.

Ampol’s refining margins surged 93 per cent compared with the March quarter last year, to $US10.59 a barrel, a figure that included an average of $US14.62/bbl for March.

The company, which is aiming to implement the acquisition of New Zealand fuels retailer Z Energy on May 10, still described the convenience retailing performance as “strong” given the impacts of COVID-19, floods and record high retail fuel prices. It said total shop income rose 5.8 per cent on the March quarter last year, due to an improved mix of products, labour efficiency and reduced waste.

Ampol intends to list its shares on the New Zealand exchange in mid-May as part of the Z deal, which secured approval from the New Zealand High Court on Tuesday.

Extracted in full form: Ampol refinery roars back into the black (