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Weaker dollar, high margins and plant availability deliver stellar results for NZ Refining

Wednesday 24th February 2016

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Historically high refining margins, a weaker kiwi dollar and high plant reliability combined to give New Zealand Refining one of its best annual results on record.

The operator of the country's only oil refinery produced a net profit of $151 million for the 12 months to Dec. 31, compared with $10 million in 2014, driven in part by a near doubling in the average gross refining margin at US$9.20 a barrel, prior to cap or floor adjustment, compared with US$4.96 per barrel the previous year.

Having returned to paying dividends at the half year, NZ Refining will pay 20 cents per share on March 24, to yield a total of 25 cents for the year. 

The result was achieved on total revenue of $445.2 million, compared with $230.6 million the previous year, including a record $379 million of processing fees on the largest ever throughput of crude oil at 42.6 million barrels. Income tax on the result is calculated at $58.7 million, compared with $4 million last year.

"Running a highly reliable plant has allowed New Zealand’s only refinery to 'cash in' on a healthy business environment," said Refining NZ chief executive Sjoerd Post. “Our team of 500 employees and contractors has worked hard to keep the refining kit running reliably and safely all year. That’s meant we’ve been able to capitalise on high margins - which have been held up by the strong global demand for petrol, particularly in the US, China and India – while benefiting from a better USD/NZD exchange rate."

The refinery also commissioned its $365 million Te Mahi Hou upgrade and extension project in November, ahead of schedule and on budget, to allow the plant to produce an extra 2 million barrels of petrol annually and reduce its greenhouse gas emissions by 120,000 tonnes of carbon dioxide annually owing to energy efficiency improvements.

The company's shares closed yesterday at $3.60, having risen 39 percent in the last year.

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