Ampol Ltd (ASX: ALD) shares are having an eventful day on Tuesday.
In early trade, the $7 billion ASX 200 stock fell deep into the red.
The fuel retailer's shares were down as much as 5% to a new 52-week low of $27.68.
Ampol's shares have since recovered most of this decline and are now fighting to get into positive territory.
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Why did this ASX 200 stock fall hard?
Investors were quick to hit the sell button today in response to the release of the company's third quarter update.
According to the release, for the three months ended 30 September, group total fuel sales volumes were 6.5 billion litres. This is down 1.7% quarter on quarter and 5.7% on the prior corresponding period.
The latter reflects a 6% decline in Australian sales volumes, a 7.4% decline in International volumes, and a 0.8% decline in New Zealand volumes.
Refinery earnings hit
Weighing even heavier on the ASX 200 stock was likely to be its Lytton Refiner Margin (LRM), which collapsed during the third quarter. It came in at US$1.48 per barrel, down 83% quarter on quarter and 92% year on year.
Management advised that its third-quarter LRM includes the impact of the lower value production mix from the Lytton refinery during the planned Reformer T&I maintenance period, which coincided with significant weakness in global finished and intermediate products margins.
It notes that the reformer experienced performance issues following mechanical completion, requiring additional repair work in September, which led to a slower ramp up. Refinery production for the quarter was 916 ML, which is down 35% quarter on quarter.
The sum of the above is an approximate $100 million negative impact to group RCOP earnings before interest and tax.
And while the refinery was back operating at full capacity, management highlights that it has recently begun experiencing operational issues with the Fluidised Catalytic Cracking Unit (FCCU).
The ASX 200 stock intends to take advantage of the current global refining market environment to effect repairs to the regenerator across the month of November. During this time, the refinery will operate at a reduced rate and is expected to produce approximately 350 million litres of high value product (HVP).
Management is aiming to offset some of these lost earnings with an initial $50 million cost reduction that will be delivered in 2025. It is also pursuing additional opportunities to improve productivity and simplify its business in the period ahead.
Commenting on the quarter, Ampol's CEO, Matt Halliday, said:
Notwithstanding the challenging global refining market and operational performance of Lytton, which has been impacted by a series of one-off events this year, the rest of the business continues to perform well and demonstrate its resilience. We are confident in the steps we are taking at Lytton to enable stronger operational performance in 2025 which should coincide with the refiner margin impact of production run-cuts currently being taken across the world.
