Refining profit falls on power costs

Thursday 21st August 2008

New Zealand Refining, the nation's only oil refinery, posted a 9.8% drop in first half profit as it was forced to pay more for electricity.

Net income fell to NZ$54 million, or 22.5 cents a share, from NZ$59.9 million, or 25 cents, a year earlier, the company said in a statement. Operating revenue rose 13% to NZ$182.8 million.

The company enjoyed record refining margins in the first half, as demand for fuel world-wide lifted charges for processing oil. Its margin is based on refining charges in Singapore.

"It is now apparent that with the recent reduced demand and increased regional refining capacity, the high margins experienced in the first half of 2008 may not be sustained," the company said.

New Zealand Refining stock rose 1.3% to NZ$7.09 today. It has declined 14% in the past three months.

The company controlled by Royal Dutch Shell, Chevron Corp., Exxon Mobil Corp. and BP Plc. Will pay a first-half dividend of 15 cents a share.

Expenses rose 17% in the first half, led by a 66% surge in materials and utilities. Electricity costs rose by NZ$8.6 million in the first half, even though the company had hedged 50% of its estimated demand.

By Jonathan Underhill

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