Refining New Zealand has posted a sharply lower full year profit as low margins, increased competition, and global trade issues bit into earnings.
Marsden Point oil refinery. Photo: 123rf.com
The Marsden Point refinery operator's profit was $4.2 million, compared with $30m the year before.
Chief executive Paul Zealand said the result was disappointing and reflected a combination of negatives.
"Weaker than expected global refining margins, the result of a slowdown in the global economy, compounded by US sanctions on Chinese crude tanker companies, and additional refining capacity coming online earlier than expected."
He said there was also a glut of some fuel products in the region as China and India exported more, while freight rates had also risen, and an expected lift in margins ahead of changes in marine fuel standards did not eventuate.
Average margins were down 15 percent on the year before which offset the 6 percent rise in fuel processed.
Zealand said margins were likely to remain low in the short term with headwinds such as the impact of coronavirus on supply and demand.
"Expert market commentators are expecting that refining margins will improve in the near-to-mid-term, helped by improving US/China trade relations."
He said the refinery would look to cut its cash spend and increase revenue where it could.