NZ Refining margins offsetting weak US dollar
Aug. 22 (BusinessDesk) – New Zealand Refining Co. is expecting strong refiner margins to continue through the current financial year, offsetting the impact of the weak U.S. dollar on earnings.
Announcing results for the six months to June 30, NZ Refining reported net profit of $31.2 million, up 7.5% on the same period last year, on a 16.9% increase in half-year revenue to $157.9 million.
The improved earnings allowed the company to reduce debt to around $54 million at June 30 from $86 million.
“We fully expect the U.S. dollar to remain weak and this will continue to weigh on the company’s processing fee revenue for second half of the year,” directors said in a statement to the NZX. “The impact will be considerably lessened by the continued firming of refiners’ margins.
“Directors are confident of the company’s porspects for the remainder of the year.”
The company continues to progress a $23 million feasibility study ahead of potentially investing up to $500 million to increase the refinery’s share of domestic petrol sales, with a report due early next year.
The refinery was also hit hard by the March 26 spike in electricity wholesale market spot prices, which were above $20,800 per Megawatt hour for several hours, and have been reset by the Electricity Authority to $3000 per MWh.
NZ Refining is supporting the authority in court action brought against that decision by several electricity generators, and has accounted for the costs on that day at $3000 per MWh.
Shares in the country’s only oil refinery were down 1.5% at $3.20 shortly after the profit announcement.