Ampol reported 1H26 EBIT of $1,392 million, which is more than it has made in any entire year. The positive impacts of the Iran war shock boosted earnings in refining and its fuel wholesale operations significantly. The glide path lower for refining and wholesale earnings should still result in outsized margins over 2H26e and FY27e. We set a long-term refiner margin at $12.50 (prev $11.90) by FY28e. The Convenience segment result showed modest dollar margin growth of 4.7%. The addition of EG from 2H26e onwards will distort margin metrics given the thinner margins in EG, but therein lies the upside in synergies.

Ampol’s 1H26e trading update revealed an even stronger half of earnings than the market expected, albeit the earnings growth was centred on trading profits given oil price volatility. Ampol stated that EBIT would be near $1,350 million for 1H26e, a rise of $946 million. The key question is the sustainability of earnings. Refining margins may stay elevated while there is Middle East conflict but lower volatility oil market would result in lower earnings.

Ampol’s EG acquisition has been approved by the ACCC on condition of divesting 41 sites. Even with this, the EG deal is compelling. The EG stores enable a faster rollout of U-GO sites and cost savings in buying and overheads. We see value creation from this deal with further synergy upside. Ampol is positioned for a very strong year of earnings given higher refining margins in FY26e. However, the more enduring upside will come from the EG acquisition.

Ampol’s 3Q25 trading update showed weak volumes across all divisions, but the improvement in margins more than offsets the volume decline. Refining margins have lifted by 22% from 2Q25 to 3Q25 and is above the long-term average. In Convenience, shop gross margins increased by 295bp while fuel volumes dropped. We are mindful that the dynamic of falling volumes and rising margins will at some point be difficult to sustain. The approval of the EG acquisition remains a key share price catalyst.

Ampol’s 2Q25 trading update showed improving margin performance across the majority of its segments. Refinery margins in diesel have lifted globally and its convenience operations in Australia & NZ are seeing improving fuel margins. While conditions are good, the EBIT momentum is in line with our thinking.