Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Z sales slide on margin push, operating earnings gain 13%

Z Energy sales slide on margin push, operating earnings up 13%

May 3 (BusinessDesk) - Z Energy's second full year of operation since its sale to local investors by Shell has produced a 13.1 percent lift in operating earnings, although sales have fallen as the transport fuels distributor cut out loss-making contracts and faced severe competition on petrol station forecourts.

Earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments came in at $195 million in the year to March 31. That was up from $172 million the previous year, despite a five percent slide in the total volume of sales to 2.524 million litres of petrol, diesel, aviation fuel and other products.

Z's truncated disclosure documents, posted with the NZX this morning, do not include a total revenue figure for the year, but show retail petrol sales were down 9 percent to $867 million and commercial diesel sales were off 14 percent to $562 million.

The latter fall reflected a "conscious decision" either to reprice or remove uneconomic commercial accounts.

Z is preparing for a possible sharemarket listing this year and appointed lead advisers for a float earlier this week, as its 50/50 owners, the New Zealand Superannuation Fund and Infratil, seek to reduce their exposure to the business and, in Infratil's case, to accumulate funds for other investments and debt restructuring.

Its outlook for the year ahead is stable, with operating costs forecast to be down to between $260 million and $270 million from $280 million in the year just past, and a range for EBITDAF of $185 million to $200 million, unchanged from the guidance for the last financial year.

Capital expenditure is forecast to rise from $71 million this year to between $70 million and $90 million, in addition to some $20 million of unexpended capex carried forward from last year to the current year.

The company says operating costs were higher in the last year because of an $11 million increase in retailer commissions and $4.5 million of Christchurch earthquake-related repairs, which were expensed to the balance sheet.

Rebranded Z outlets showed a 9 percent increase in store sales, compared with a decline in those outlets still operating under a format unchanged since Shell's ownership, with a jump in store-only sales, in line with strategic intentions.

A sale and leaseback programme for its retail sites realised a net $82 million during the year to give a yield of approximately 7.6 percent.

The profit presentation papers also show a $12 million impairment has been booked against the company's 17 percent shareholding in the Marsden Point oil refinery, and is projecting a US$7 per barrel refining margin, down from US$7.40 in the year just ended.

However, chief executive Mike Bennetts signalled improving margins from its crude and refined product supply chain.

"We expect new international procurement contracts for refined fuel and crude oil negotiated by Z over the last 12 months to deliver substantial for the company.

"With moves by Port of Tauranga to dredge to enable larger vessels, Z is positioning itself to use larger and most-effective import vessels to deliver Z's finished fuel products, which should also represent significant cost savings", with Z also reorienting to North Asian refineries.

The company is also advancing investment in 40 million litres of new storage capacity at Tauranga and the Port of Lyttelton.

"Ensuring the capital cost of terminal operations is captured in commercial contracts is also already sending important investment signals and enabling much needed reinvestment in the country's fuel infrastructure," Bennetts said.

The company is budgeting a $20 million dividend payment to its two shareholders and faces emissions trading scheme costs of $40 million.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news