Z-Energy profits jump
The country’s largest fuel retailer has revealed a rise in profits and increased its dividends to shareholders, as it defended the nature of the market.
Wellington-headquartered Z Energy reported a historic net profit after tax of $263 million for the 12 months ended March 31, an increase of $20m over the previous financial year. The NZXlisted company said its final dividend was 10 per cent up on 2017.
The petrol industry has been under intense scrutiny in recent days in the wake of the publication by Stuff of an internal BP email outlining the company’s pricing plan, to raise prices across a region to protect sales at a particular site.
In its results presentation, Z Energy said it was likely that the petrol industry would be the subject of a Commerce Commission study when the competition regulator is given the power to selfinitiate general market studies.
‘‘In our view a market review is likely to find a competitive market dynamic working effectively as demonstrated by the tension between volume and margin for existing participants, multiple new entrants investing capital due to the low barriers to entry, and customers have a wide range of choices for price and non-price based offers.’’
Z Energy said about 70 per cent of its fuel was sold at a discount to the main port price, otherwise known as the ‘‘national price’’, typically charged in Wellington and the South Island.
However, it indicated that discounting was dropping.
‘‘The weighted average [cents per litre] discount declined in [the second half of the financial year] driven by a reduction in the price spread, contrary to previous experience where spreads have expanded in a rising crude price environment,’’ Z said in a presentation accompanying its results.
‘‘Most intense discount areas have shifted out of high population trading areas in line with an increase in new sites from regional distributors.’’
In 2017, an inquiry overseen by the Ministry of Business, Innovation and Employment said there were characteristics in the petrol industry that cast doubt on whether it was a competitive market.
Z Energy chief executive Mike Bennetts shared a terse exchange with former Energy Minister Judith Collins about the inquiry.