WELLINGTON: BP New Zealand Holdings, the country’s biggest petrol station chain by sales, reported a 70 per cent slump in annual profit last year as falling oil prices late in the period eroded the value of its inventory, generating its smallest earnings in more than a decade.
Net profit dropped to $30.3 million in calendar 2014 from $102.4 million a year earlier, even as sales revenue was largely unchanged at $3.3 billion, according to the Auckland-based arm of the multi-national company’s financial statements, filed with the Companies Office.
That’s the smallest profit has reported since 2003, when its annual revenue was $1.74 billion.
BP New Zealand reported a 6.9 per cent decline in the cost of raw materials and consumables used, to $2.67 billion in the year, benefiting from the global slump in crude oil and refined fuel prices, offset by a $184 million expense on the change in the value of inventories of finished goods and work in progress.
The service station chain’s inventories were $294.2 million at the end of the 2014 calendar year, down form $509 million in 2013.
The industry is currently undergoing rationalisation, with NZX-listed Z Energy seeking competition regulator approval to buy the rival Caltex and Challenge! brands from Chevron New Zealand for $785 million, adding 147 service station and truck refuelling depots to its existing 200 outlets.
The merged entity leapfrog BP as the biggest transport fuel retailer in the country, with about 49 per cent of the market and annual sales of more than $5.8 billion.
There are about 236 BP-branded petrol stations across New Zealand, of which 80 are owned and operated by the arm of the global company, with the remainder dealer-owned.
In its submission to the Commerce Commission, Z argues both BP and Mobil will be competitive constraints on its behaviour as their global parents provide ample resources to prevent New Zealand-owned Z from exercising market dominance if the acquisition goes ahead.
BP New Zealand completed its acquisition of Rural Fuel in the 2014 financial year, acquiring goodwill value of $53.2 million from the purchase.
Palmerston North-based Rural Fuel delivers petrol to farmers, contractors and transport operators across the lower and central North Island.
BP valued the investment at $57 million at the December 31 balance date, having raised its investment to 100 per cent from the 40 per cent share it had held since 2007.
The service station chain said it faces backdated excise duty claims from New Zealand Customs Service in relation to Wiri Oil Services, a joint venture between the four major fuel companies, and BP’s terminals that aren’t operated by Wiri.
The assessments relate to “prior years up to and including 2014” and are being disputed, BP said.
