Refinery profit lift cuts debt to $54m

Stronger refiner's margins for the first six months of this year has seen the New Zealand Refining Company report an interim net profit after tax of $31 million and an interim dividend of three cents a share.

The interim net profit figure is a 7.5 per cent higher than the figure for the same period last year.

Releasing the half-yearly results, the company also announced the improved earnings had enabled it to reduce debt from $86 million at the start of the year to about $54 million at the end of June.

Chief financial officer Denise Jensen said after the announcement that margins had been relatively stable this year compared to 2010's volatility when the price per barrel slipped from $12 to less than one dollar in the course of the year.

This year margins had averaged US$6.56 a barrel for the the six months to the end of June but "the weak US dollar continues to weigh heavily on the company's performance," she said.

Uncertainty about what the exchange rate was doing was "really one of the drivers we will be watching over the next few months".

The NZRC board says it fully expects the US dollar to remain weak and this would continue to affect the company's processing fee revenue for the second half of the year, but the impact would be "considerably lessened" by the continued firming of refiners' margins.

Globally refiners' margins had continued to strengthen, buoyed by growing demand in the US, Europe, China and India; further rationalisation of refining capacity, as well as prudent management of global crude stocks.

The board said the feasibility report on a proposed $400-500 million growth project for the refinery, which would materially increase the NZRC's share of the domestic motor petrol market, was expected to be completed early next year.