Refining New Zealand Ltd (NZX: NZR) has booked a 66% gain in after-tax profit for the year, with its gross refining margin per barrel lifting almost 24%; to more than $US8 ($NZ11.08).
Revenue for the Whangarei-based fuel refiner rose 16% to $411.7 million for calendar 2017, while after-tax profit was up from $47.1 million a year ago to $78.5 M.
NZR shares, down about 11% on a year ago, traded up slightly after the announcement on Wednesday, at $2.44.
Forsyth Barr broker Suzanne Kinnaird said the result was “a big step up” on last year's profit, the main difference being the increased gross refining margin, which rose from $US6.47 per barrel to $US8.02 on average.
“The big positive surprise in the result is the final dividend of 12 cents per share, up 4¢ higher than our forecast,”' Mrs Kinnaird said; the full year dividend coming to 18¢ per share.
The 10-day September pipeline breach, which hamstrung flights into and out of Auckland for several days cost $NZ$14.3 M; with $8.3 M in lost revenue and extra costs of $6 M in repairs, which was only partially offset by $2.9 M from insurance.
A digger was believed to have damaged the pipeline, but no one had been identified over the incident.
Craigs Investment partners broker Peter McIntyre while there was a 1 M barrel reduction in processing, year-on-year, the gross refining margin “more than offset” the reduction.
He noted full year 2018 was set to be impacted by a full shutdown across NZR's entire plant for six weeks, over mid-April through to June 1.
Outgoing NZR chief executive Sjoerd Post said the strong result was down to a combination of plant reliability, healthy refining margins and strong cash generation from operations.
“An outstanding operational performance underpinned by a world-class unplanned downtime of 0.6% allowed the company to capitalise on healthy refining margins and to generate a significant lift in operating revenue to $411.7 M, up 16% on the previous year,'' he said.
The gross refining margin average of $US8.02 per barrel was at the top of its historical $US4-$US6 range, supported by global demand growth and continued execution of NZR's growth strategy, Post said.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.