6 Nov 2014

Z Energy's first-half profit falls

2:52 pm on 6 November 2014

Z Energy's first-half net profit fell 61 percent in what the chief executive describes as the most challenging six months in the company's history.

Fuelling the drop to $22 million in net profit, for the six months ended September, was a 4 percent drop in petrol and diesel volumes sold, the well-publicised problems at Refining New Zealand, and unrealised foreign exchange gains.

The company's preferred measure of operating profit fell 13 percent to $91 million.

Chief executive Mike Bennetts said the company had changed its petrol pricing strategy from remaining aloof on aggressive discounting, to matching the competition on a localised basis.

"We have changed our strategy, so we change our tactics around pricing. The strategy is still to optimise volume margin mix within an economy of scale, but with retail tactically we are price-matching."

"There have been some instances where our prevailing main port price might be whatever it is and the market, or some players in the market, have been priced up to 30 cents below that," he said.

"We don't think that's good for our customers to see that variety where they could be buying from Z at one price, and they go around the corner and it could be 20 or 25 cents different.

"So we tactically have matched up on all of the people who choose to price at that bottom level," he said.

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