6 Nov 2012

Half year profit down for Z Energy

6:51 pm on 6 November 2012

Half year profit at Z Energy fell sharply after subdued economic activity reduced demand.

However, the fuel retailer says its gross earnings rose as the higher price of oil improved margins.

Z Energy chief executive Mike Bennetts says the company kept margins high despite high oil prices and intense competition.

Z Energy, which is owned by Infratil and the New Zealand Superannuation Fund, made a profit of $2.3 million in the six months to September, a decrease of 90% compared with the same period a year ago.

The company blames that on changes in oil prices which affects the value of its inventory.

However, gross earnings rose 17% to $96.8 million, despite motorists buying less fuel due to higher prices and intense competition from rivals.

Petrol sales fell 7%, which Z Enegy also blames on closing stations to change from the Shell to Z Energy brand.

Fuel margins picked up and profit equated to 2.6 cents per litre, compared with with 2.4 cents.

Looking ahead, Z Energy expects conditions to remain challenging and is still forecasting full year gross earnings of between $185 million and $200 million.