Z Energy, the nation's biggest fuel retailer, has announced a $263 million profit for the 12 months ended March 31, 2018.
This is up $20m from the previous financial year and marks a historical high for the company.
Overall revenue for the company was up $26m to $449m.
Chief executive Mike Bennetts said the company is forecasting replacement cost ebitdaf between $450m and $485m in the 2019 financial year, and $60m in capital expenditure.
Bennetts also said the company expects to pay a 2019 dividend of between 50 cents and 55 cents, equivalent to between 90 per cent and 100 per cent of free cash flow, if it hits the midpoint of that guidance.
The board declared a full-year dividend of 21.9 cents, up from 19.9 cents in 2017, bringing total dividends for 2018 to 32.3 cents.
The fuel industry has come under fire this week after a leaked email from BP revealed that company's pricing tactics, prompting Energy Minister Megan Woods to call BP in to explain.
The leaked email, uncovered by Stuff, mentioned Z Energy.
The email contained details of plans by BP pricing manager Suzanne Lucas to counter dwindling sales in Ōtaki, where the price of fuel was 20 cents more expensive than in nearby town Levin.
Instead of reducing the price in Ōtaki to make the station more competitive, Lucas proposed an increase of the fuel price across the entire region, with the expectation that competitors would match the new price.
"We have already increased all three sites mentioned by 5cpl [cents per litre] and have found that the Z [Energy station] in Paraparaumu has already matched our pricing," Lucas wrote.
The industry was already being scrutinised after a report by three independent economic consultancies for the Ministry of Business, Innovation and Employment (MBIE) released last July found New Zealand's petrol market may not be competitive, with retail margins increasing over the past five years while more expensive petrol in the South Island and Wellington aren't explained by higher costs in those areas.
Z today said that it thinks the most likely outcome of last year's fuel market study is a Commerce Commission market review once relevant legislation is passed later this year.
"In our view a market review is likely to find a competitive market dynamic working effectively as demonstrated by the tension between volume and margin for existing participants, multiple new entrants investing capital due to the low barriers to entry, and customers have a wide range of choices for price and non price based offers," Z said.
"The weighted average cents per litre discount declined in 2H FY18 driven by a reduction in the price spread, contrary to previous experience where spreads have expanded in a rising crude price environment. Most intense discount areas have shifted out of high population trading areas in line with an increase in new sites from regional distributors."
Z said that in the year, gains from continued strong refining margin and growth in non-fuel revenue had been offset by the impact of competitor discounting and one-off supply disruption costs and price lag. Fuel margins dropped in the year, to 16.5 cents per litre, from 17.4 cents per litre in 2017. It said this reflected the changing product mix and costs from its loyalty offers.
In 2018, Z sold 1.35 billion litres of petrol, which is 4 per cent less on a like-for-like basis when adjusted as if the 2017 data included a full year of sales from its Caltex acquisition. Even using those adjusted figures, its diesel sales rose 4 per cent to 1.64 billion litres in the year, and its other sales rose 6 per cent to 1.15 billion litres, driven by jet fuel volumes.
The company's monthly market share was at around 39 per cent at the end of March, down from about 42 per cent in March 2017, and Z said this was due to "unusual variations in competitor monthly sales data" reported through industry exchange.
Some 60 new sites have been built by Z's competitors in the past two years, which the company said raises "concerns of over capitalisation leading into a period of uncertain long term demand".
Z announced today it will take over the Mobil fuel supply contract with Foodstuffs, which covers 53 New World and Pak'nSave branded service stations, from September. The company didn't put a dollar value on the partnership, but said its 2019 guidance reflects seven months of the financial contribution.
The company's service station food offering lifted earnings in the year, with non-fuel margins rising to $76m from $69m a year earlier. Average weekly shop sales rose 5 per cent, helped by sales growth from sandwich and pie campaigns along with healthy food offers, Z said.
Looking at the long term, Z says petrol demand is tracking above the more optimistic scenarios developed by the BusinessNZ Energy Council.
It said there are insignificant changes in the lead indicators of disruption and electric vehicle uptake continues to grow from a low base, and while battery pack costs are declining, pricing and availability compared to conventional engines "remains challenging."
The company's shares last traded at $7.30, and have dropped 5.6 per cent in the past 12 months.