New Zealand Refining (NZR) is expected to deliver a record more-than-$150 million profit for its full-year result on Wednesday, with all eyes now on the level of dividend it settles on.
Forsyth Barr broker Suzanne Kinnaird said that for only the second year in its history, NZR's gross refining margins had been above the $US9 ($NZ13.70) per barrel cap, which was ‘‘driving the excellent result''.
‘‘We know that NZR is going to produce a superb full-year 2015 result, close to the maximum it can ever achieve, but what we don't know is the size of the final dividend,'' she said.
She is forecasting the full-year 2015 result to be a record.
Craigs Investment Partners broker Peter McIntyre said when NZR reported its November/December throughput and margins, it highlighted ‘‘an exceptional finish to the year'' with another through-the-cap margin.
‘‘We are likely headed to top-of-cycle values in the next 12 months as refining margins are expected to remain above long-term averages,'' he said.
‘‘NZR has now completed the three planned initiatives that were undertaken in order to improve the gross refining margin, this driving a further uplift relative to the Singapore margin.''
Mrs Kinnaird said that previously, full year 2006 held the record with earnings before interest, tax, depreciation and amortisation (ebitda) of $279 million and after-tax profit of $150 million. Mrs Kinnaird is forecasting full-year 2015 ebitda of $286 million and a profit of $153 million.
However, the 2015 result follows ‘‘several tough years'', best demonstrated by the fact 2015 ebitda will be more than the past three years combined, and after-tax profit greater than the past six years combined.
‘‘The dividend announcement is likely to be the most interesting outtake,'' she said.
The full-year 2015 sees NZR resume dividend payments for the first time since the first-half 2013 result, having started with a 5c-per-share interim dividend after the first-half result.
‘‘While earnings could potentially support a higher payout, we are forecasting a final dividend of 15c per share,'' Mrs Kinnaird said.
She said NZR had indicated it was targeting a gearing range of between 10% and 20%, which equated roughly to net debt between $100 million and $200 million.
‘‘Our forecast is that debt levels will be a little over $200 million, providing NZR with confidence that it can step up dividends.'' From Wednesday's result, Mrs Kinnaird is looking for commentary on NZR continuing to pursue gross refining margin-enhancing projects.
In December, NZR had announced a gas pipeline was to be expanded and she was hopeful of projects such as dredging the Whangarei harbour to accommodate larger crude cargoes.
