"Z has responded to the significant drop in volume due to the covid-related lockdown and is executing well as the domestic economy gets back to normal," Bennetts said in a statement on NZX. "Assuming no reversion to more restrictive lockdown levels, the better than expected start to the year provides confidence around Z's performance for the rest of the financial year."
Z shares rose 1.5 per cent to $2.79, trimming their loss so far this year to 37 per cent.
The company has slashed its spending, shut its biodiesel refinery and is driving a strategic review at Marsden Point which is expected to see the plant stop refining and be converted to an import terminal.
Z owns 15 per cent of the refinery, which is currently operating at minimal levels given reduced fuel demand and a global collapse in refining margins. Refining NZ today reported a 45 per cent reduction in throughput for May and June, and a 40 per cent reduction in fuel shipments on the firm's pipeline to Auckland.
Bargains aplenty
While petrol and diesel volumes are back to year earlier levels, Z said discounting remains a "significant factor" in retail trade. Jet fuel volumes in late June were still 70 per cent lower than pre-covid levels.
Bennetts said the firm's strategy is working. Z is increasing retail volume in a competitive market while reducing operating expenses. It has reduced its exposure to volatile refining margins, is putting its terminal assets onto a more commercial footing and is benefiting from investments it made in the past three years in its digital platforms and improving the experience of its customers, he said.
Operating costs in the June quarter were $18 million lower than a year earlier, and $4 million lower than forecast. The company is aiming to deliver ongoing cost savings of $48 million during the current financial year and a further $26 million of one-off savings this year.
Z was already under pressure before covid-19 and cut its forecasts last year amid what it considered to be a 'structural' change in the nature of the retail fuel competition as low-cost operators continued to expand, particularly in the South Island.
Today, Waitomo Group, one of the country's fastest-growing fuel retailers, said it will open three new South Island fuel stops – two in Dunedin and a second in Christchurch.
Z noted that while discounting was still evident, the number of site closures in the industry appeared to have accelerated so far this year, and the number of new sites appeared to have slowed.
In the six months to June 30, nine sites closed and 13 new-to-industry sites opened, compared with 16 and 32 for all of 2019, according to a table Z provided.
Z's fuel volumes in the June quarter were 39 per cent lower at 595 million litres, led by a 53 per cent drop in jet fuel and 'other' fuels. Petrol volumes were down almost 42 per cent and diesel was down 19.5 per cent.
Revenue for the period was down 53 per cent at $594 million. Ebitdaf was 60 per cent lower at $38 million and the firm reported a net loss of $15 million, compared with a $34 million profit a year earlier.
