Z Energy lifted first-half profit 10 per cent as the acquisition of Chevron New Zealand's retail network swelled sales, even as retail margins shrank from what the transport fuels company described as the top of the cycle.
Net profit rose to $80 million, or 22 cents per share, in the six months ended September 30 form $73 million, or 18 cents, a year earlier, the Wellington-based company said in a statement. Sales climbed 26 per cent to $2.09 billion on a 13 per cent increase in the volume of fuel sold to 2.1 billion litres, although margins shrank to 17.3 cents per litre from 18.2 cents a year earlier.
On Z's preferred measure, which strips out the changes in the value of inventory, replacement cost operating earnings before interest, tax, depreciation, amortisation and fair value adjustments rose 19 per cent to $221 million reflecting a full six-month contribution from Chevron compared to just four months a year earlier, The company affirmed annual guidance on that basis to be between $445 million and $475 million.
"We've seen softer contribution from the retail business as retail margins appear to be at the top of the cycle, while the commercial business has improved both volumes and margins," chief executive Mike Bennetts said. "Z's strength across the supply chain has also contributed to the result due to greater economies of scale."
Z is embarking on a new long-term strategy as it beds in the Chevron assets more quickly and efficiently than it had initially anticipated, which will let it repay debt taken on for the acquisition earlier and start paying larger dividends to shareholders.
