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Z Energy back in black with $92m half-year profit

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Local fuel retailer Z Energy has returned to profit as sales and margins picked up as business improved after last year’s Covid-19 lockdowns.

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Z Energy reaffirmed its forecast full year operating earnings of between $270m and $310m.
Photo: RNZ

The country’s biggest fuel company, which is under a takeover offer, had a net profit of $92 million in the six months ended September, compared with the previous year’s $58m loss.

Z’s preferred profit measure, replacement cost, was a profit of $11m compared with a $19m loss.

Chief executive Mike Bennetts said the company had delivered on its four-point improvement plan despite challenges caused by lockdowns and rising prices.

“Z remains focused on its financial year 2024 roadmap objectives … to optimise the core business, transition the company to a low carbon future and maintain disciplined capital management.”

Revenue jumped 45 percent to $2.17 billion, with 18 percent more fuel sold although retail margins were squeezed by higher crude oil prices, increased turnover at service station shops, and better refining margins for fuel processed at the Marsden Point refinery.

In a commentary on the results, the company said there continued to be excess refining capacity in the region because of reduced demand, which backed its decision to support the end of refining at Marsden Point and converting it to an Import Terminal System.

“The ability for the industry to import refined fuel cargoes direct to ports around the country increases flexibility of supply, enables cost efficiencies for ITS [import terminal system] users and reduces NZ’s carbon emissions.”

It said it would wait for further detail from the government on the production of biofuels before deciding on whether to recommission its biodiesel plant.

Z Energy said it was also making progress on revamping its service station shops. It has a target of increasing sales from the stores to $500m by 2025.

The company is also putting 52 sites into a separate real estate company, which it will sell 49 percent of to private investors, and then lease back the stores.

It reaffirmed its forecast full year operating earnings of between $270m and $310m.

Australian fuel retailer Ampol has made a near $2 billion takeover offer for Z Energy, which has the unanimous backing of Z’s board subject to certain conditions and regulatory approvals.

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