New Zealand Refining Co [NZX: NZR], the Marsden Point oil refinery controlled by its major customers, sank into the red in the first half of the financial year as weak processing margins and a strong kiwi dollar eroded earnings.
The Whangarei-based company posted a loss of $6.96 million, or 2.23 cents per share, in the six months ended June 30, from a profit of $5.23 million, or 1.87 cents, a year earlier, it said in a statement after the close of trading. Revenue sank 27 percent to $92.4 million.
"By far the biggest impacts on the company's processing fee in the first half have been the weakening of refiners' margins, brought about by a marked decline of the benchmark Singapore refiners' margin, and the high exchange rate," chairman David Jackson said. "The directors have every confidence that the company will prove itself capable of weathering the business environment in the latter part of the year."
The company has been improving its gross margins by taking advantage of historically low wholesale natural gas prices, as one of four initiatives it's pursuing to lift the margin by 66 US cents a barrel.
Chief executive Sjoerd Post said the company was on track to cut costs by $13 million, $6 million ahead of expectations.
The board didn't declare an interim dividend, and agreed that where a shareholder was represented by two directors, the fee for the second director would be waived.
The shares rose 3.1 percent to $$1.69, and have sunk 20 percent this year.