Morningstar | Crude Price Tide Finally Turns in Favour of Z Energy Following Challenging Period
After Shell's exit in 2010, Z Energy successfully increased its gross fuels margin by 65%. However, New Zealand transport fuel consumption has stagnated for more than a decade and we think optimising the fuels margin can only go so far. Further, we have reservations in the owning of a stake in New Zealand's only refiner, comparatively modest though it is. Refineries are low-margin and capital-intensive, but Z Energy has many favourable attributes that make it an attractive investment at the right price. Management has made proven market inroads where Shell took its eye off the ball. Z Energy has driven returns on invested capital admirably back above its cost of capital, a key plank in a sustainable business model.Z Energy is engaged in the marketing of petroleum based products.
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