Annual profit has increased three-fold times to $243 million
Following the acquisition of and 10-month contribution from Chevron New Zealand’s former assets Caltex and Challenge fuel outlets, Z Energy’s annual profit has more than tripled to $243 million. Z Energy’s year to March revenue climbed from $2.52 billion to $3.87 billion. There was a rise of 280% in statutory after-tax profit, from $64 million to $243 million. Term debt decreased by $117 million.
Caltex’ assets were bought by Z Energy for $785 million. In order to gain Commerce Commission approval, 19 retail sites and one truck stop was subsequently divested by Z Energy, leaving it with a 49% share of the retail transport fuel market. The efficiency in combining the two companies brought about $17 million which was included in the result.
After hedging adjustments, fuels gross margin of $676 million was up more than $23 million than Forsyth Barr’s forecast. A rise from 2.36 billion liters a year ago to 3.9 billion liters was seen in all fuel types combined. In line with guidance and Forsyth Barr’s forecast, Z Energy posted a 29.3c dividend for the full year, up 10%.
Z Energy believed results prepared on a replacement cost basis provided a better view of its underlying performance, because movements in the crude fuel price can significantly impact the value of inventory under historic cost reporting.
There was an increase of 59% to $419 million in replacement cost operating earnings before interest, tax, depreciation, amortization and financial instruments (ebitdaf), excluding one-off expenses of the Caltex purchase. Replacement cost after-tax profit rose by $27 million, to $176 million, 18% increase. The increase was mainly due to earnings from the addition of a 10-month contribution from the Caltex business.
"Full year 2017 has been a big year for our business in which we have taken a lot of ground,"Z Energy chief executive Mike Bennetts said. With cash on hand down from $76 million to $9 million, net debt, debt less cash, was up from $354 million a year ago to $986 million as at March. Forsyth Barr broker Lyn Howe said, "Z Energy continues to make good progress reducing debt levels." Source: ODT PWKD16052017