BP defiant on pricing as profits soar 65pc
BP paid its London-based parent company a massive dividend in March, after profits surged by almost two-thirds in 2017.
The company’s latest financial results show BP made a profit after tax of $242.9 million in 2017, up from $147.5m a year earlier, an increase of almost 65 per cent.
The statements also reveal that on March 13 the company paid a $400 million dividend to its shareholder BP Plc, one of the largest companies in Britain. It was the first dividend paid by BP since 2015, when it paid a $300m dividend.
BP has been under fire since Stuff revealed details of an internal email revealing pricing tactics to raise prices at sites in Ka¯ piti and Horowhenua in a bid to stem falling sales at a site in O¯ taki.
Days before the results were released, BP New Zealand managing director Debi Boffa defended the profits the company was making in New Zealand. ‘‘In my view BP gets a fair return from its level of investment in this market.’’
In a statement, BP said the profits covered a year in which fuel sales had grown 7 per cent, far stronger than the industry as a whole, as well as proceeds from the partial sale of its Refining New Zealand shareholding.
Refining NZ owns the Marsden Point refinery and the fuel pipeline that connects the refinery to Auckland.
‘‘BP currently has over $1 billion of capital invested in assets in New Zealand and directly and indirectly employs over 3000 people across the country,’’ the statement said.
After weeks of refusing to comment directly apart from short statements, Boffa agreed to a lengthy interview in which she defended the company’s tactics and profitability.
Boffa and her colleagues were hauled into Parliament in early May by Energy Minister Megan Woods.
Woods had described the email as ‘‘alarming’’ while Prime Minister Jacinda Ardern said BP had explaining to do.
While Woods said after the meeting she believed the petrol market appeared to be ‘‘broken’’, Boffa said the market was competitive and BP was doing nothing wrong.
‘‘I don’t think we’ve done anything wrong,’’ Boffa said. ‘‘The Commerce Commission came out [when the email was published] and confirmed there was nothing relative to the law that we’d done wrong.
‘‘We are a commercial business here in New Zealand; we’ve got over a billion dollars invested in this market; we employ directly and indirectly more than 3000 people.
‘‘We’ve got an element of risk and a very complicated supply chain here so what we’re doing is seeking to get a return on that.’’
An email from BP pricing manager Suzanne Lucas outlined an attempt to rise prices across an area to counter falling sales in O¯ taki.
‘‘Rather than just reducing the price in O¯ taki we will be looking to increase the price at Paraparaumu & Ka¯ piti and also Levin. We have already increased all three sites mentioned by 5cpl [cents per litre] and have found that the Z [Energy station] in Paraparaumu has already matched our pricing,’’ Lucas wrote.
Boffa said the tactics outlined in the email did not explain the wider situation in the area, where prices were not sustainable.
‘‘The context was that we were sitting in a market where we’d been for a number of weeks and months, it was heavily discounted and we’d seen volumes move as a result.’’
She referred to increasing prices as reducing discounts.
‘‘What we were seeking to do was to reduce the level of discounting to get back to what we deemed a sustainable level of return across that geography,’’ Boffa said.
‘‘What we were doing was seeking to reduce discounts. We were not seeking to above and beyond that level of return that we’re seeking and we didn’t.
‘‘Yes, we were changing a price, but in changing a price we were reducing a discount to get back to a sustainable level for our business.’’
She maintained that the petrol market in New Zealand was highly competitive.