Z Energy, the New Zealand listed service station chain, more than tripled its annual profit after acquiring Chevron New Zealand's Caltex and Challenge! brands.

Profit jumped to $243 million, or 61 cents per share, in the 12 months ended March 31, from $64m, or 16 cents, the year earlier, the Wellington-based company said in a statement. Revenue climbed to $3.87 billion from $2.52b.

The latest earnings were boosted by 10 months of contribution from the Chevron acquisitions. The transport fuel company bought the assets for $785m, making it the country's biggest petrol retailer, with about 49 per cent of the retail transport fuels market. Today it forecast a further lift in profit for the current financial year.

"The result includes $17m of synergy that we've been able to deliver from efficiencies through combining these two companies and we're confident we will deliver approximately $40m of total synergy by the end of this financial year," said chief executive Mike Bennetts. "Z's focus will be on delivering the synergies from this transaction and then increasingly to delivering value through the company's next iteration of its strategy."


The company today forecast 2018 earnings, based on replacement cost operating earnings before interest, tax, depreciation and financial adjustments, for the current financial year of between $445m to $475m. Today it reported 2017 earnings on that basis of $419m, excluding one-time costs associated with the Chevron acquisitions, which was 59 per cent ahead of the year earlier and ahead of its forecast range of $385m to $415m.

Z Energy will pay a final dividend of 19.9 cents per share on June 7, taking the total annual dividend to 29.3 cents, up from 26.6 cents a year earlier. Its shares last traded at $7.83 and have gained 14 per cent the past year.

Bennetts said the company's volume and margin on a cent per litre basis declined, citing competition in the market and the company's diversification of its retail business model. the fuel gross margin fell 17 per cent to 17.6 cents per litre compared with the year earlier, the company said.

"We think fuel margins are top of cycle and expect some softening over the coming year as a result of the multitude of new participants in the industry fighting for a share of the market," he said, noting there were 21 different brands operating in the New Zealand market. "The Caltex acquisition gives us the scale and a portfolio of options to deliver distinctive value without an undue reliance on fuel margin."

Z Energy said it had pushed out the commissioning timetable for its planned $26m biodiesel plant at Wiri, Auckland, which is running 12 months behind its original schedule. It expects to supply the upper North Island commercial and retail markets with a 5 per cent biodiesel blend from the middle of the 2017 calendar year.