Refining NZ reports $3m loss after extended shutdown

PETROLEUM supplier Refining New Zealand has as expected reported a $3 million loss for its firsthalf trading period to June, having been impaired by a long maintenance outage at its Marsden Point plant in Northland.

The negative impact of the maintenance shutdown was $43.2 million, the company said.

Revenue for the half dropped 36% from $151 million a year ago to $97 million, earnings before interest tax were down 94% from $56 million to $3 million, and the company’s after tax profit slumped from $35 million last year to the $3 million loss.

Shares opened yesterday at $2.46 and were up 5c to $2.51 at close.

During the shutdown there were complex retrofits of Refining’s hydrogen manufacturing unit and midsection replacement on its high vacuum unit, but work and weather challenges caused 13 days of delay on the $22 million capital spend project, while work on an original equipment manufacturer valve failure led to further delays.

Forsyth Barr broker Suzanne Kinnaird said the $3 million loss and $49 million operating profit had been expected, given reporting at the time of the extended maintenance outage.

She noted the gross refining margin for the period was $US2.60 per barrel, and without the outage that would have been $US8.25.

‘‘However, in a move signalling Refining New Zealand’s confid ence for second half trading, it delivered a 3c interim dividend,’’ she said.

Mrs Kinnaird’s main concern was the extent of any maintenance capital expenditure in the future.

The company said the current refining margin and foreign exchange environment was ‘‘favourable’’, and that the next shutdown would be in 2020.