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Z Energy posts $82m first-half profit

NZ NewswireNZ Newswire 9/11/2016 Jonathan Underhill

Z Energy raised its first-half dividend as the service station operator posted a 22 per cent gain in earnings and a 57 per cent jump in fuel volumes following its acquisition of Chevron New Zealand's Caltex and Challenge! brands.

Profit rose to $82 million in the six months ended Sep. 30, from $67m a year earlier, the Wellington-based company said in a statement. Sales climbed to $1.66 billion from $1.3b.

Last month, Z Energy said it had identified $10m to $15m of additional savings from the integration of the Caltex and Z businesses, bringing the total to be achieved in the 2018 year to between $40m and $45m.

The transport fuel company bought the Chevron assets for $785 million this year, making it the country's biggest petrol retailer, with about 49 per cent of the retail transport fuels market.

On Thursday it lifted its guidance for 2017, saying it was far enough into the integration to make a more accurate assessment.

"Obviously the majority of these increases in profit arose from the Caltex business," chief executive Mike Bennetts said in the company's first-half report.

"However, the underlying business benefited from growth in marketing volumes (albeit less than industry growth), flat fuel margins and continued growth in convenience store sales. These elements were offset by the expected decline in refining margins which were 38 per cent lower than the record levels of last year."

Z Energy will pay an interim dividend of 9.4 cents a share on Dec. 12, up from 8.5 cents a year earlier. Its shares last traded at $7.41 and have gained 9.6 per cent this year, outpacing a 5.4 per cent rise in the S&P/NZX 50 Index.

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