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NZ Refining FY earnings hold up, full strategic review to come

Wednesday 27th February 2013

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New Zealand refining, the nation's only oil refinery, made a tax-paid profit of $32.6 million in the year to Dec. 31, down 5 percent on the previous year, with volatile refining margins improving towards the end of the year, but still averaging less than in 2011.

In a statement to the NZX, Refining reported record output for the year of 33.6 million barrels of transport fuels and achieved an average refining gross margin of US$5.77 a barrel, compared with an average US$6.11 a year earlier.

"We do not expect the uplift towards the end of 2012 to be sustained and consider it likely that margin volatility will continue through 2013," said chairman David Jackson. Business conditions would remain "difficult" this year, but the refinery was well-placed to respond.

The shares fell 5.6 percent to $2.55 and have declined 17 percent in the past 12 months.

Revenue in the latest year was down 4 percent to $278.5 million, while ebitda (a measure of operating earnings) was down 14 percent at $113.5 million.

Changes to depreciation policy, which appear to have seen the company assign longer commercial lives to some of its storage and other infrastructure assets, reduced the annual depreciation charge by $16.7 million.

After five years in operation, the company would also fully review its strategic plan during 2013 to reflect significant changes to the structure of the refining industry, ongoing over-capacity in the Asia-Pacific region and a customer change in New Zealand, referring to the advent of Z Energy, which owns the downstream storage and retail assets formerly controlled by Shell New Zealand.

Work has begun on the $365 million Continuous Catalyst Regeneration Platformer project, with some $70 million spent to date and site preparation due in mid-2013.

The company announced a five cents per share fully imputed dividend, payable March 28, with a record date of March 21.

BusinessDesk.co.nz

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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