New Zealand Refining Company's full-year profit plunged 81% to December 2009.The $23.6 million after-tax full year profit compares to last year's $124.9 million profit.The Marsden point-based company (NZX: NZR) will not pay a dividend.Ordinary reven
New Zealand Refining Company’s full-year profit plunged 81% to December 2009.
The $23.6 million after-tax full year profit compares to last year’s $124.9 million profit.
The Marsden point-based company (NZX: NZR) will not pay a dividend.
Ordinary revenue was down 37% to $250.5 million from last year’s $397.8 million.
Chairman David Jackson said the disappointing result had been widely anticipated, given the volatile market conditions of the second half of 2009, when the company was operating at a loss.
At the beginning of the year, the company’s refining margin was about USD12 a barrel, but by the end of the year it was down to around USD1 a barrel.
“Conditions were dominated by the global financial crisis, which saw demand for oil products falter just as new refinery had come online.
“The resulting oversupply has continued to depress refiners’ margins with a number of major oil companies, including BP, Shell, Chevron and Exxonmobil declaring a significant downturn in profits,” he said.
“Margin pressure continues and is forcing the sale, closure or reduced capacity at refineries across the globe, notably in the UK, France, Spain, Japan and the US where the largest refiner Valero, closed its 185,000 barrels a day Delaware City plant, last November.”
However, the company said its customers’ confidence in the plant kept it fully loaded.
Last year, despite two shutdowns, the refinery processed 37.9 million barrels of feedstock (compared to 39.2m in 2008) and pumped 2.8 million cubic metres of petrol, diesel and jet fuel to Auckland (compared to 2.8m in 2008).
Earlier this month, the company said it operated at near full capacity for November and December, with a throughput of 7.2 million barrels, but margins dropped to the lowest point in at least five years.
NZ Refining said two shutdowns were scheduled for 2010 – in April and September. The shutdowns, for the replacement of a catalyst in the hydrocracker and regenerating the Platformer catalyst respectively, would cost the company $44 million.
Other (budgeted) capital costs during the year amounted to $24 million. Directors had therefore decided not to pay a final dividend.
Mr Jackson said there was no change to its dividend policy and dividend would resume as soon as the company returned to sustainable profitability.
The company's share price was up .3 cents to $3.60 this afternoon.
