donations for the Christchurch Earthquake Appeal –
Tomorrow Starts Here, which was set up by the Prime
minister John Key to help build a brighter future for
christchurch. customers are able to choose to add a
donation of $1, $3 or $5 to their purchase at Shell and Z sites
and this money will go directly to the appeal.
since the huge earthquake rocked the city on 22 February
many people have been involved in the effort to return the
city to normal. But there is still an enormous amount of work
Z Energy partners with Christchurch Earthquake Appeal
to do, especially in the wake of the recent earthquakes and
aftershocks on 13 June. christchurch needs our support now
more than ever as winter approaches to get back on their
feet. we want to use the national reach of our network to
make this happen!
z.co.nz
the earthquake on the 13th of June led to some damage to
retail operations but after power was restored most have been
cleared to operate (as at time of printing). the integrity of
the company’s bulk storage tanks at lyttelton appears intact
and customers should not be concerned about fuel supply to
the city as fuel deliveries were continuing into christchurch
and stock levels remain healthy. we will be regularly posting
updates on the situation in christchurch on our website at
www.z.co.nz or on Facebook http://www.facebook.com/
zenergy#!/zenergynz
as part of being a straight up Kiwi company we have released a
report on our financial performance for our first year as a
new Zealand company; highlights from that report are included
on page 2 of this month’s issue.
Hopefully you know by now that a key part of our business is
listening to our customers, so if you have a few minutes to give
us feedback we would love to hear from you. simply send us an
email to theenergydrop@z.co.nz
Welcome to the July edition of The Energy Drop! After the unseasonably warm May we had it’s hard to believe it is winter already. This winter is going to be tough for a lot of people especially Cantabrians, who as we know continue to be rocked by more earthquakes.
As always, my best regards to you and yours,
David Robinson GM Commercial
we reckon our fellow Kiwis, and especially
our customers, should know what we
have been doing in our first year of Kiwi
ownership.
report. it opens our doors and let’s people
take a look at what it is we do, why we do
it, who we are and what matters to us.
we reckon this is the first time that a new
Zealand fuel company is reporting so fully
and publicly on its performance. this is a
part of our commitment to transparency
and our intention to change the rules for
the better in this country.
we won’t go over the entire report – it is
available online at http://z.co.nz/about-z/
really important first year in which we have
taken big steps towards our goal of being a
world-class Kiwi company.
an arm of a global company to a stand
alone Kiwi company. we had lots to do
in our first year to ensure that we could
maintain the same level of service our
customers expected from us.
because for many customers little – if
anything - appeared to have changed.
Hopefully the change to Z has been much
more obvious.
Greenstone energy that you might find
interesting
first year performance.
a glimpse of the journey within the year that was Greenstone Energy
Creating what matters
Key facts and figures about Greenstone Energy’s first year
• 3,500 investors subscribed
issue, enabling us to raise $147
million to repay bank debt
• we have 219 service stations
nationwide and these are
most common way new
Zealanders interact with us.
market share – the largest
sites are in prime locations
with growing traffic volumes.
more than the industry
sites have pumped greater
opened Bethlehem site, just
to pump nearly 10 million
litres of fuel!
is one of the reasons for
our market leadership – we
nZ, which in turns owns Fly
Buys. Fly Buys is the most
successful (by household
penetration per capita)
million active accounts (75%
average, each day, a Fly Buys
card is swiped more than
300,000 times.
“The words ‘what matters’ have many perspectives – for our customers, our staff and stakeholders and others we work with.” Mike Bennetts, CEO, Z Energy.
Continued on the next page
Jeff Waghorn (L)
features in the
Financials
Storage/handling costs have increased (between 2005 and 2010, they grew over 40%).
Before mid ’80’s
50c– 60c
Operating costs
Net profits
Net profit, (what’s left over) has reduced over recent years due to the increasing costs below. Net profit is currently 2 –3c per litre.
Operating costs include wages, overheads, transport, product storage and electricity. These costs have increased (between 2004 and 2008, they grew by 40% on average).
What’s happened within the margin over the last few years?
4. Gross Refining Margin
160
140
120
100
80
2.30
2.10
1.90
1.70
1.50
104
102
100
98
96
115
110
105
100
95
NZD/barrel
NZD/barrel $/litre
Storage/handling costs have increased (between 2005 and 2010, they grew over 40%).
Before mid ’80’s
50c– 60c
Operating costs
Net profits
Net profit, (what’s left over) has reduced over recent years due to the increasing costs below. Net profit is currently 2 –3c per litre.
Operating costs include wages, overheads, transport, product storage and electricity. These costs have increased (between 2004 and 2008, they grew by 40% on average).
What’s happened within the margin over the last few years?
4. Gross Refining Margin
160
140
120
100
80
2.30
2.10
1.90
1.70
1.50
104
102
100
98
96
115
110
105
100
95
NZD/barrel
NZD/barrel $/litre
Storage/handling costs have increased (between 2005 and 2010, they grew over 40%).
Before mid ’80’s
50c– 60c
Operating costs
Net profits
Net profit, (what’s left over) has reduced over recent years due to the increasing costs below. Net profit is currently 2 –3c per litre.
Operating costs include wages, overheads, transport, product storage and electricity. These costs have increased (between 2004 and 2008, they grew by 40% on average).
What’s happened within the margin over the last few years?
4. Gross Refining Margin
160
140
120
100
80
2.30
2.10
1.90
1.70
1.50
104
102
100
98
96
115
110
105
100
95
NZD/barrel
NZD/barrel $/litre
Storage/handling costs have increased (between 2005 and 2010, they grew over 40%).
Before mid ’80’s
50c– 60c
Operating costs
Net profits
Net profit, (what’s left over) has reduced over recent years due to the increasing costs below. Net profit is currently 2 –3c per litre.
Operating costs include wages, overheads, transport, product storage and electricity. These costs have increased (between 2004 and 2008, they grew by 40% on average).
What’s happened within the margin over the last few years?
4. Gross Refining Margin
160
140
120
100
80
2.30
2.10
1.90
1.70
1.50
104
102
100
98
96
115
110
105
100
95
NZD/barrel
20%
15%
10%
5%
0%
5. Earnings Before Interest, Taxation, Depreciation, Amortisation and Financial Instruments (EBITDAF)
200
150
100
50
$m
20%
15%
10%
5%
0%
5. Earnings Before Interest, Taxation, Depreciation, Amortisation and Financial Instruments (EBITDAF)
200
150
100
50
$m
low margins are generally not talked about openly by any
industry and particularly not the fuel industry – but it’s an issue
that needs to be addressed.
Before 1988, when the fuel industry was regulated by the
government, fuel retailers enjoyed margins of 50 to 60 cents
per litre. after the de-regulation this dropped to 30 cents per
litre. this has been further driven down by the competitive
nature of the business to as low as 15-17 cents per litre.
out of that 15 cents companies need to pay their operating
costs, things like wages, overheads, transport, product storage,
and electricity costs. Unfortunately, as the margins have
dropped these operating costs have steadily increased. For
example, between 2004 and 2008, the average operating costs
for a retail site increased by 40%.
what that leaves us with is a post-tax margin, or net profit of
between two and three cents per litre and that is including
convenience store margins. By contrast, almost 90 cents of the
pump price currently goes to the Government in taxes
and levies.
so how has the industry made a return? Good question. costs
have been cut to the point where exiting new Zealand is a very
real option for companies – that’s why more than 2,000 service
stations have closed, and more and more sites are un-staffed.
long term security?
while consumers may think flat margins are a good thing, there
are long-term implications for communities, security of fuel
supplies and the broader new Zealand economy.
new Zealand is a difficult market. we are isolated from global
supply chains and have stringent fuel specifications – especially
compared with asia – and relatively low volume potentially by
global standards. Fair margins are needed to ensure profitability
and success in the industry, to enable investment in the network
and in our offers to customers, and to deliver commercially
acceptable returns to shareholders that recognise their
investment risk.
our view is that margins must rise in order to ensure security
longer term. a rise of just a few cents per litre in terms of net
profit will make a real difference to ensuring a sustainable, safe
and reliable fuel supply for new Zealand, and choice
for consumers.
Something to think about…
The problem with low margins An excerpt from Greenstone Energy first year document
By the time you are reading this, we will have a least two,
maybe three Z sites open and operating in Greenlane, Skyway
and Takanini (opening 1 July).
on the 3 June, Z energy had the first of many big milestones
under the new brand, with the first ever Z site being opened in
Greenlane auckland. Z Greenlane was opened by local retailer
Bill carson, chief executive mike Bennetts, and local mP Peseta
sam lotu-iiga. also amongst those present, were auckland
local council board members margi watson, lee corrick
and tim woolfield, along with customers, a few locals from
the community and even former all Black wilson whineray
who made a brief appearance, just by chance. the lucky first
customer to fill up received full forecourt service including a
window cleaning, and a free tank of fuel. the second customer
was offered a free taste of the new kiwi made pies and café-
quality coffee available on site.
ever since its doors were opened, Z Greenlane has been
busy with customers enjoying the new site, including the new
forecourt service promise, the hotel style bathrooms, the
delicious kiwi made pies, freshly brewed coffee and for those
in need of some extra information, the onsite touch screen
computer a-Z has been going down well with customers.
the opening of Z Greenlane represents the start of a significant
journey as we begin to re-brand the shell network, beginning
with ten pilot sites. we want our customers to give us feedback
on these sites, so by the time we start rebranding the entire
network, we will be able to pin down our offer and service to
something truly tailored to our customers. the first Z energy
truckstop is due to open at waiouru in september, so be sure to
check that out too.
remember if you are a shell card customer you can still use
your card at Z or shell branded service stations too. if you get
the opportunity to check out our first Z sites, be sure to drop in
and let us know what you think at yourviews@z.co.nz
For those of you who don’t live near any of the new sites, let us
show you around our virtual site on www.z.co.nz
Z Greenlane – the first of many
Storage/handling costs have increased (between 2005 and 2010, they grew over 40%).
Before mid ’80’s
50c– 60c
Operating costs
Net profits
Net profit, (what’s left over) has reduced over recent years due to the increasing costs below. Net profit is currently 2 –3c per litre.
Operating costs include wages, overheads, transport, product storage and electricity. These costs have increased (between 2004 and 2008, they grew by 40% on average).
What’s happened within the margin over the last few years?
4. Gross Refining Margin
160
140
120
100
80
2.30
2.10
1.90
1.70
1.50
104
102
100
98
96
115
110
105
100
95
NZD/barrel
Key account manager – shell card, based
in auckland.
Z Career
growing the shell card business in the
north island. i am currently looking after
auckland and the surrounding regions.
i have been through the transition and
restructure under Greenstone and now
Z energy.
my top priority is to always try and keep
customers (internal & external) happy.
i would like to share and achieve my
promise to manage and grow my portfolio
in line with the company’s strategic plan
and grow value for Z energy.
Hobbies/Interests outside work
wife Gauri & son Videsh. i am involved in
my son’s sporting activities swimming,
cricket & soccer. i also coach and mentor a
young cricket team.
The distribution of Z Cards commences in August As part of our re-brand to Z we will be ‘Z’ing’ our Fuel
Cards. Z branded fuel cards will start to be sent out from
August onwards and will be phased in over a period of
a couple of months. These will replace the existing Shell
Cards and will have the same functionality, product limits,
daily and monthly limits and same card details as the
current ones but printed on Z Cards. We will have more
detail in next month’s issue but if you have any queries you
can contact us on 0800 474 355 or cardenquiries@z.co.nz
Guidelines for using truck stops
truck stops are a great way to fill up trucks, trailer tanks
and buses. shell branded truck stops have fast flowing
pumps, and offer a safe spacious place to fill your vehicle.
while being unmanned means you have a faster experience,
it does mean that when there are issues on site they aren’t
resolved as quickly as at a service station. this can cause
customer frustration. we do our best to keep our sites up
and running all of the time, but when we can’t it’s great if
customers like yourselves can help us.
the biggest thing you can do to help is if you notice that
the fuel tank is empty, there is damage to hoses or other
pumping equipment effecting ability to fill then use the
green call button at the payment terminal to contact us.
the sooner we know about it the sooner we can fix it.
this also applies if there is a paper jam at the terminal,
the emergency stop has been pushed and power is out, or
anything else on site that you can see that might affect the
usage of the truck stop. Please press the green call button
and you will be connected to someone that can arrange a
technician to get there asaP.