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2/3/2018 — Oil and Gas
Refining NZ has purple patch
By Simon Hartley

Refining New Zealand Ltd (NZX: NZR) has booked a 66% gain in after-tax profit for the year, with its gross refining margin per barrel lifting almost 24%; to more than $US8 ($NZ11.08).

Revenue for the Whangarei-based fuel refiner rose 16% to $411.7 million for calendar 2017, while after-tax profit was up from $47.1 million a year ago to $78.5 M.

NZR shares, down about 11% on a year ago, traded up slightly after the announcement on Wednesday, at $2.44.

Forsyth Barr broker Suzanne Kinnaird said the result was “a big step up” on last year's profit, the main difference being the increased gross refining margin, which rose from $US6.47 per barrel to $US8.02 on average.

“The big positive surprise in the result is the final dividend of 12 cents per share, up 4¢ higher than our forecast,”' Mrs Kinnaird said; the full year dividend coming to 18¢ per share.

The 10-day September pipeline breach, which hamstrung flights into and out of Auckland for several days cost $NZ$14.3 M; with $8.3 M in lost revenue and extra costs of $6 M in repairs, which was only partially offset by $2.9 M from insurance.

A digger was believed to have damaged the pipeline, but no one had been identified over the incident.

Craigs Investment partners broker Peter McIntyre while there was a 1 M barrel reduction in processing, year-on-year, the gross refining margin “more than offset” the reduction.

He noted full year 2018 was set to be impacted by a full shutdown across NZR's entire plant for six weeks, over mid-April through to June 1.

Outgoing NZR chief executive Sjoerd Post said the strong result was down to a combination of plant reliability, healthy refining margins and strong cash generation from operations.

“An outstanding operational performance underpinned by a world-class unplanned downtime of 0.6% allowed the company to capitalise on healthy refining margins and to generate a significant lift in operating revenue to $411.7 M, up 16% on the previous year,'' he said.

The gross refining margin average of $US8.02 per barrel was at the top of its historical $US4-$US6 range, supported by global demand growth and continued execution of NZR's growth strategy, Post said.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.

PDF File Profit announcement. (265.5 kilobytes)
PDF File Financial results report. (3.8 megabytes)
Companies mentioned in article
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