Z Energy fuel sales bounce back after Covid restrictions

Ampol bought Z Energy in May last year. Photo / Dean Purcell

Z Energy fuel sales rose 19 per cent in the nearly eight months ending December 2022 compared with the same period in 2021 which was heavily impacted by Covid-19 lockdowns.

The fuel retailer which was bought by Ampol in May made total fuel sales of 2.76 billion litres with earnings before interest and tax of $140 million for the period from May 1 to December 31 2022.

Its underlying earnings before interest, tax, depreciation and amortisation was $285m. The company’s EBIT was impacted by a $78.6m purchase price accounting adjustment which related to an increase in the New Zealand Emissions Trading Unit component of cost of goods sold.

The units were fair valued on Ampol’s acquisition of Z. It made an average fuel margin of 18.2 cents per litre.

Ampol, which is listed on both the ASX and NZX, released its full year results today.

Matt Halliday, managing director and chief executive of Ampol, said Z Energy had made good progress in managing the transition to a full import model since the closure of the Marsden Point oil refinery.

“With the closure of the only New Zealand refinery the transition to New Zealand full import model was completed with no disruption to customer supply.”

The company also said that Z’s exit from the National Inventory Agreement and its superior infrastructure had seen it gain commercial volume share.

Halliday said the management team also continued to progress synergies and performance improvements outlined at the time of the acquisition.

“To date $22m of synergies have been delivered in 2022 for an annualised run rate of $55m.”

Since the start of the 2023 financial year the company noted Auckland’s anniversary weekend January storm had a short-term impact on fuel sales.

“Z Energy’s retail fuel and shop sales in January 2023 were temporarily impacted by significant flooding experienced in Auckland that reduced mobility.”

But despite this event fuel sales were up 28 per cent compared to the same period in 2022 which was affected by a Covid lockdown.

The company expected full volume supply to start from April when a third-party contract expired.

“Z Energy will contribute a full year of earnings to the group in 2023, with Ampol’s trading and shipping operations in Singapore to commence full supply to Z Energy from April 2023 when existing third-party supply agreements expire, enabling supply-related synergies to be realised.”

The financial accounts show it cost Ampol A$29.1m in acquisition costs for Z Energy in 2022 on top of the A$6.8m it spent in 2021.

Z Energy has 526 sites in New Zealand with 192 in the Z retail network and a further 134 in the Caltex retail network. In October 50 Z sites and one Caltex-branded site was sold to an unlisted property vehicle.

Ampol has 51 per cent ownership of this vehicle with the remaining 49 per cent owned by Charter Hall retail REIT (real estate investment trust).

It also owns 148 truckstops and supplies 52 Pak’nSave or New World branded petrol stations.

Ampol Group made a net profit after tax of A$795.9 million - this was up 42 per cent from A$560m the year earlier.

Continuing operations - which exclude Gull which was sold on July 22, 2022, the company made A$727.5m up 40 per cent from A$521.1m.

It will pay a dividend of A$1.05 cents per share.