Source : BUSINESS NEWS
Ampol has agreed to divest its retail electricity businesses in Australia and New Zealand in the hopes of streamlining operations and boosting its earnings margin.
The energy company today announced it would sell its New Zealand-based electricity retailing arm to Meridian Energy for NZ$70 million (A$64.3 million).
Closer to home, Ampol said it would also transfer its Australian retail electricity business to AGL Sales for a nominal sum.
The petroleum company said both transactions would generate around $65 million in pre-tax proceeds.
It also expects earnings tied to its replacement cost operating profit to grow by roughly $30 million a year from the end of 2025.
Ampol claimed the financial gains would stack with a $50 million cost reduction program, which is slated to kick off this year.
Big picture, the company said its divestment decision followed four years of tinkering with future energy and decarbonisation strategies.
These avenues, according to Ampol, will provide greater value as the company invests in renewable fuels and EV charging infrastructure.
“This simplification enables a more focused approach to respond to the evolving mobility energy transition,” Ampol told investors in a market announcement on Tuesday.
Moving forward, Ampol and its sale partners have agreed to explore other opportunities to collaborate in the future.
The petroleum company plans to provide further detail on its evolving strategy when it publishes half-year results on August 18.
The market seems to have responded positively to the announcement, driving Ampol shares more than 2 per cent higher in Tuesday morning trade.
It’s possible that a rally in the crude oil price also drove shares higher; the commodity jumped 1.5 per cent overnight as the US and China appeared to strike a tentative tariff truce.
As trade tensions return to a simmer over the 90-day negotiation phase, it’ll be interesting to see if the West Texas Intermediate can eventually recover from its multi-year low.
