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


NZ Refining confirms grim profit outlook

NZ Refining confirms grim profit outlook as margins keep contracting

by Pattrick Smellie

Dec 17. (BusinessWire) - Decimated refining margins at the country's only oil refinery will push year end profit for the New Zealand Refining Co Ltd down as much as 90% to between $10 million and $20 million in the year to December 31.

Gross Refining Margins in September and October were a mere US$1.16, compared with US$9.35 at the beginning of the year and "there remains considerable uncertainty with respect to our final result", the company said in a statement this morning to the NZX.

"Subject to the refinery operations continuing without major disruption we expect the full year net profit after tax to fall within the NZ$10 million to $20 million range."

Share in NZ Refining fell 2.5% to $3.95 in early trading on the NZX this morning.

The company warned at its half year earnings announcement in August that it was likely to report a loss for the second half, having reported a $52.5 million net profit in the six months to June 30.

Uncertainty about the final result was "due to the way prices for refinery feedstock and products and the exchange rate are set under our processing agreements with customers".

"Refining margins worldwide are under severe pressure and market indicators suggest that negative margins are being experienced by many refineries. The margins realised at NZRC have been very low."

The high New Zealand dollar had further reduced processing fee income.

NZ Refining said the premium earned for producing fuel to meet New Zealand specifications and its position in its home market provided some relief and the floor mechanism in processing agreements guaranteed a minimum refining income of approximately $118 million a year.

"We are in a better position than many of our competitors and expect a modest recovery in margins."

Two scheduled major shutdowns are scheduled at the refinery in April and September next year and hydrocracker catalyst replacement will require "a significant non-discretionary capital spend", which the refinery has adequate bank facilities to cover.

(BusinessWire) 10:13:09

© Scoop Media

Business Headlines | Sci-Tech Headlines


Frog Recruitment: Kiwi Workers Reluctant To Make Business Trips Across The Ditch Despite Trans-Tasman Bubble Opening

When the trans-Tasman travel bubble opens today, many Kiwi companies won't be rushing to buy an air ticket, reluctant to cross the ditch to do business. The latest survey conducted by leading recruitment agency, Frog Recruitment of nearly 1,000 New Zealand ... More>>

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>


Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>