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Earnings fall for Z Energy

NZ NewswireNZ Newswire 11/05/2016

Z Energy, whose shares jumped to a record last week when it got approval to buy Chevron's Caltex and Challenge! petrol station chains, said full-year earnings fell 1 per cent.

The company's preferred earnings measure is replacement cost operating earnings before interest, tax, depreciation, amortisation and fair value adjustments, which was $238 million in the 12 months ended March 31, down from $241m a year earlier.

It gave a second adjusted measure to exclude $25m of costs associated with the Chevron purchase, which was $263m. Sales fell to $2.5 billion from $3.06 billion.

The Wellington-based company said earnings had been further impacted by the settlement of its dispute with Customs of $13m, including $1m in penalties that had been expensed and $12m recognised in its fuels margin.

Chief executive Mike Bennetts said the outlook for the Z business for 2017 was for earnings of $260m-$290m and capital expenditure of $60m.

The company would update its guidance once the Chevron assets had been brought into the Z operations in June and modelling of its plans and performance assumptions has been completed.

"We remain committed to delivering the synergies of $25-$30 million, to preserving dual brands and to building a well-considered strategy to drive value from the combined operation," Mr Bennetts said.

Z was last month cleared by the Commerce Commission to buy the Caltex and Challenge! petrol station chains on the condition it sells 19 retail sites and one truck-stop.

The competition watchdog's delayed decision on the $785m deal giving Z about 49 per cent of the retail transport fuels market allowing it to buy the 'downstream' assets of American oil giant Chevron, which is exiting all but its exploration activities in New Zealand.

Z shares last traded at $8.10 and have surged 60 per cent in the past 12 months.

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