Z Energy’s store offer has seen growth of 17 per cent in total transaction count versus the previous period, despite a nationwide lockdown.

The company last week released its results for the six months to September 2021, revealing it had experienced its “highest year-on-year sales growth from tobacco substitute products, car wash, Z Espress food and beverages, despite being unable to sell higher margin products such as coffee and car wash at alert level four”.

The best performing category in-store was its Z Espress food and coffee offer, which saw sales increase to NZ$32 million, up from NZ$25 million in the same period last year. Snacks increased from NZ$12 million to NZ$13 million revenue, and beverages (including chilled drinks like smoothies and frappes) grew by NZ$3 million to NZ$24 million.

Tobacco substitutes trended up, with revenue increasing from NZ$5 million to NZ$9 million, as the category matures in line with the drive towards Smokefree Aotearoa 2025. Meanwhile, tobacco revenue decreased from NZ$94 million to NZ$84 million.

Despite the lockdowns across the country, Z said it customers were appreciative of the company being open during Alert Level Four (AL4).

“Commercial customers and essential workers took advantage of Z being open during AL4 while retail customers continued to use Z and Caltex as a ‘top-up’ shop to buy their everyday staples and avoid lengthy supermarket queues,” said Z.

The company said it will continue its investment in c-store with 15 new to industry (NTI) sites targeted for opening by FY2024, as it moves towards its FY2025 goal of NZ$500 million c-store revenue.

“Of the 15 NTIs targeted, Z has confirmed two NTIs are underway with the closure of two other sites. During 1H FY22 one Caltex site was converted to an automated offer. The Z Espress store refresh design was finalised in August and two new format stores will be open before the peak Christmas trading period. Rollout of the new Z Espress format has been delayed by COVID-19 lockdowns and will now begin outside of Auckland.”

The company is currently subject to a NZ$2 billion takeover by Australian petrol company Ampol, with the Z Board unanimously recommending that shareholders vote in favour of the Scheme, which would result in overall value to Z shareholders of NZ$3.83 per share.

Ampol has committed to divest Gull to meet competition concerns, with the Commerce Commission expected to be interested in the divestment process. Also, in their Overseas Investment Office (OIO) application, Ampol has confirmed several benefits including enhanced security of supply and capital commitments to the energy transition.

Shareholders will ultimately determine whether the transaction is completed or not. A successful shareholder vote requires 75 per cent approval from 50 per cent of issued capital.

Total earnings of Z increased by 20 per cent to NZ$114 million versus the previous year’s earnings of NZ$95 million. This is primarily due to increased refining processing volume and improved unit refining margin along with increased c-store sales and Z establishing a long emissions trading scheme (ETS) in the first quarter.

Mike Bennetts, Z Energy CEO, said Z remains focussed on its FY24 roadmap objectives.

“To optimise the core business, transition the company to a low carbon future and maintain disciplined capital management. Z delivered on its four-point improvement plan against a challenging operating environment from COVID-19 related lockdowns and rising crude and product prices.”

For the full 2022 financial year, Z energy expects earnings to be between $270 million and $310 million despite ongoing COVID-19 lockdowns.

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