Z Energy, the service station chain, reported a 13 percent decline in first-half earnings, missing its prospectus forecast, after it made top-up payments to the Marsden oil refinery and booked a loss on a weaker New Zealand dollar.

Replacement cost earnings before interest, tax, depreciation, amortisation and fair value adjustments, the company's preferred earnings measure, fell to $91 million in the six months ended Sept. 30, from $101 million a year earlier.

That's short of the $105 million forecast in its offer document when it listed last year. Net profit sank to $22 million from $56 million, Wellington-based Z said in a statement.

The result included a $10 million unrealised foreign exchange loss, as the kiwi dollar fell to about 78 US cents by the end of September from about 84 cents at the start of the month.

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"The company has weathered the costs of a period of severely depressed domestic refining margins, has made top up fee floor payments to the refinery of a net $2 million and has managed the consequences of an extended refinery outage and its aftermath," chief executive Mike Bennetts said.

"Z has operated the company in an integrated fashion and, while not hitting the targets we set, has gone a long way towards mitigating these unusual downsides."

In July, Z said it had been recouping losses on the top-up fees fuel retailers pay to New Zealand Refining Co with higher margins on petrol and diesel. The refinery's shareholding customers had to pay the fees due to intense global competition and a prolonged maintenance shutdown.

The service station chain's fees peaked at $8 million in the first quarter of the financial year, and have reduced in the second quarter, it said.

Revenue slipped 1 percent to $1.65 billion, though the transport fuels refiner, distributor and retailer widened its fuel margin to 16.7 cents per litre from 16.5 cents. Z's total volume of fuel sales rose 4 percent in the first half to 1.25 billion litres, with diesel up 4 percent to 419 million litres. Petrol volumes fell 4 percent to 399 million, against an industry increase of 1 percent in the period, it said.

Z affirmed its annual guidance for operating Ebitdaf of between $220 million and $240 million, and expects better refining and marketing margins in the second half of the year, plus hedging to protect from unrealised currency losses. It anticipates earnings to improve by an extra $30 million to $40 million in the next three to five years as it rolls out service station upgrades, continues to develop its retail offering, and manages its commercial fuels portfolio.

The board declared an interim dividend of 7.7 cents per share, payable on Dec. 3 with a Nov. 21 record date.

The shares were unchanged at $4.14, and have gained 12 percent this year. The stock is rated an average 'buy' based on six analyst recommendations compiled by Reuters, with a median target price of $4.35.

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