Fuel retailer Z Energy is back in the black as sales begin to return to normal after Covid-19 lockdowns.
File image. Photo: RNZ
The company made a full year profit of $57 million in the year ended in March, compared with last year's loss of $88m.
Revenue fell 29 percent to $3.52 billion, reflecting the continuing pressure of reduced demand and a squeeze on refinery margins.
"The external operational environment remains challenging," Z said in a market announcement.
"Refining continues to face excess supply, along with Covid-19 related reduced demand, resulting in refining margins remaining at historic lows."
Total marketing volume for the full year was 3086 million litres, down 22 percent on the year earlier, largely in jet, bitumen and marine fuel, it said.
"The processing agreement in place with Refining NZ means that Z is fully exposed to the downside of this market given our commitment to floor payments in these circumstances."
Z owns 15.3 percent of Refining NZ.
It said the cost of refining in New Zealand had reduced the refinery's cost competitiveness as more efficient refineries in the Asia Pacific region were about to come on-line.
"These cost pressures, along with a de-optimised refinery due to the sudden drop in demand for jet, has reinforced Z's belief that the country would be best served by the refinery moving to an import terminal system," it said, adding the move would increase the security of supply and enable cost savings, while reducing carbon emissions.
It expected to conclude negotiations with Refining NZ by the end of the month.
The company also cut $49m in costs, exceeding its own savings target.
As a result of its performance, Z said it would resume paying a dividend to shareholders, six months ahead of its forecast, with a final dividend of 14 cents a share.
Z was forecasting underlying profit for the current financial year to be between $270m and $310m, which compared with $238m in the year just ended, and with dividends to be in the range of 19 cents to 23 cents per share.