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Highlights

  • Ampol offloads loss-making electricity retail businesses in Australia and New Zealand to focus on core operations.

  • Annual earnings expected to rise by AU$30 million following the divestment.

  • Ampol to receive approximately AU$65 million in pretax proceeds from the deals.

Ampol Ltd (ASX:ALD) has announced the sale of its electricity retail businesses in Australia and New Zealand, a move aimed at enhancing its profitability and sharpening its focus on core energy operations. The divestments are expected to deliver a significant lift to the company’s financial performance, contributing approximately AU$30 million (US$19 million) in annual earnings going forward.

The most significant component of the exit involves the sale of Ampol’s New Zealand electricity retail operations to Meridian Energy, a major player in the country's energy sector. The deal, valued at NZ$70 million (US$41 million), includes the transfer of the Flick Electric brand, which Ampol has operated in the New Zealand market.

In Australia, Ampol has entered into a separate agreement with AGL Energy to offload its domestic electricity retail business for a nominal sum. Despite the modest financial value of the Australian sale, the decision reflects Ampol’s strategy to exit a segment that has consistently underperformed.

“Ampol expects to receive pretax proceeds of approximately AU$65 million from the two transactions,” the company announced on Tuesday. The proceeds and the anticipated improvement in earnings will be incremental to Ampol’s existing AU$50 million cost-saving target for 2025.

The company cited ongoing losses from its electricity retail units as the primary rationale for the exit. These divisions have failed to achieve profitability and were seen as a drag on overall earnings. In addition to the divestments, Ampol is exploring potential strategic alliances with both Meridian Energy and AGL Energy. 

Industry analysts view Ampol’s decision as a prudent one, noting that retail electricity has become increasingly competitive and margin-thin.