New Zealand Refining posts net loss of NZD1.5 million

New Zealand Refining saw its refinery margin shrink in the first half of this year, while a high New Zealand dollar ate into its processing fee earnings. The company, which operates New Zealand’s only oil refinery, posted a net loss of NZD1.5 million (US$1.2 million) in the first six months, from a profit of NZD31 million (US$25 million) last year. Revenue plunged 28% to NZD113 million (US$92.6 million), while operating expenses rose to NZD113.9 million (US$93 million), a 1.7% increase from the same period in 2011.
The company’s average gross refinery margin dropped from last year’s US$6.56 to US$4.36 a barrel during the first half of this year. The New Zealand dollar averaged US$0.80, compared to US$0.78, in the first half of 2011.
“The impact on the profitability of our competitor refineries is apparent with closures continuing in Europe, the U.S. and Australia, where Shell brought forward the closure of its Clyde refinery and Caltex Australia revealed plans to close Kurnell near Sydney,” the company said in a statement. “Further reduction of the overcapacity in the global refining sector will go some way to easing the pressure on refiners’ margins.”
Although margins have slightly strengthened since the end of June, there are no assurances that the trend would be sustained for the rest of the year. The company did not give a forecast for full-year earnings, citing uncertainties in global markets.
“Continuing poor growth in global economies, in particular, slowing growth in China and India, has contributed to a falling off in demand for oil products,” the company said. (August 23, 2012)