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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 trading.
''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 Jackson said.
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 7.67%.
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 McIntyre said.
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 individual investors.
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.