Refining New Zealand has booked a more than 200% profit
slump, on the back of squeezed profit margins and the high
New Zealand dollar.
For its half year to June, Marsden Point-based Refining's
total revenue plunged 27%, from $126.4 million to $92.4
million, while its after-tax profit went from $5.2 million
last year to a $6.9 million loss.
Chairman David Jackson said the company had ''weathered a
difficult start to the year'' and, by ''sticking to a
strategic plan'' to save $13 million in costs, would prove
itself capable in getting through the second half-year's
''By far the biggest impacts on the company's processing fee
in the first half have been the weakening of refiners'
margins, brought about by the marked decline of the benchmark
Singapore refiners' margin, and the high exchange rate,'' Mr
Refining will not pay a half-year dividend. Its shares were
down slightly on the news, trading at $1.68.
Among the six top shareholders is Mobil, which earlier this
week sold 2% of its Refining stake, down to 17.2%, while Z
Energy has 15.35%, BP 13.51%, Chevron 11.36% and Europa Oil
Craigs Investment Partners' Peter McIntyre said the result
was not unexpected.
He noted the sector was highly competitive, with several
Singaporean refinery options for buyers.
However, given Refining's capital expenditure, including $240
million to date on the Te Mahi Hou refinery extension and
strategic plan, its margins should begin to recover, Mr
Mr Jackson said Refining's balance sheet had been
strengthened, to counter the weakening margin environment, by
extending bank borrowing facilities by $150 million and
adding $54 million of capital raised from institutions and
He said the company was ''on track'' to achieve a lift in its
gross refining margin of $US66c a barrel, through a series of
technical and processing improvements.
The gross refiner's' margin for the half year was $US1.66 a
barrel, down from $US5.27 the year before.