N.Z. Refining Sees Oil Demand Rise

Press, Volume CVI, Issue 31223, 22 November 1966, Page 21

N.Z. Refining Sees Oil Demand Rise

(New Zealand Press Association)

AUCKLAND, November 21.

The demand for oil products of New Zealand Refining Company, Ltd., Whangarei, should be higher in the current year but production will be restrained by capacity limitations and the necessity to carry out the biennial overhaul, says the chairman (Mr H. A. Hansen) in his annual report.

The level of production at the close of the year to June 30 left very little spare capacity and studies for the best way to expand the refinery at Marsden Point are now in an advanced stage. However, the choice of expansion route has not been finally determined. There are many possible fields of expansion and large sums could be involved. Because of this substantial capital expenditure programme, cash resources had to be preserved. As announced, the profit jumped £962,728, or 221 per cent, to £1,395,817. However, this was after writing off all preliminary expenses of £246,510 against only £50,000 in training costs last year. If these, with the exception of £93.928 training cost, had been deducted in the appropriation account, the profit would have been £1,538,399.

Mr Hansen says the improved result was mainly because of the refinery operating at design performance for the entire year, whereas last year it worked at lower efficiency and had to be shut for three weeks for modifications. Most units now are at abovedesign capacity. Costs Steady The production increase was achieved without a corresponding rise in costs, apart from additives to petrol and distribution.

The profitability of the company has been protected by processing agreements.

The earning rate on average shareholders’ funds jumped from 7.7 to 22.2 per cent, while that on capital made a similar move from 7.2 to 23.3 per cent.

The balance sheet shows great liquidity. Shareholders’ funds rose £915,817 to £6,742,711, including capital of £600.000.