Wednesday 17th February 2021
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Refining NZ today released its financial results, with Chief Executive Officer Naomi James reporting that the Company had safely navigated one of the most challenging business environments in its 60-year history while establishing a pathway to deliver shareholder value.
"The results reflect an outstanding effort by the Refining NZ team who responded quickly and decisively to COVID-19 - finding new ways of running the refinery, reducing the year-on-year cost base by c.$80 million, while delivering the Company’s best safety performance on record. I am proud of what the team has delivered under such challenging business conditions,” said Ms. James.
The weak refining margins prevailing at the start of the year, resulting from excess refining capacity in the Asia Pacific region, were exacerbated by the ongoing impact of COVID-19 across the 2020 year. “The global drop in demand triggered by COVID-19 and the expectation of a slow recovery in oil and refined product demand, particularly for jet fuel, weighed heavily on an already oversupplied market. Singapore Complex Margins were negative across most of the year and the Gross Refining Margin of USD1.63 per barrel earned was the second lowest in the 25-year history of the Company’s Processing Agreements,” said Ms. James.
• Refinery and RAP throughputs were c.30% lower than 2019 due to the significant demand impact of COVID-19 travel restrictions.
• Singapore Complex Refining Margins were negative throughout most of 2020, reflecting structural overcapacity in the Asian refining sector exacerbated by the ongoing impacts of COVID-19.
• Gross Refining Margin of USD1.63 per barrel earned – the second lowest since the 1995 Processing Agreements came into effect – with c.$90 million of Fee Floor payments protecting the Company from the impacts of low margins and demand.
• Significant opex and capex reductions made (c.$80 million) to reset the 2020 cost base to cash breakeven at the Fee Floor.
• Net debt down $10 million to $231 million, reflecting the financial discipline of cash neutral operations.
• A net loss after tax of $198.3 million, including the previously announced (after tax) non-cash impairment of the refining assets amounting to c.$158 million.
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