Z Energy has cut its full-year earnings guidance after rising oil prices and a weaker New Zealand dollar slashed its first-half operating profit by 21 percent.

Those impacts, new taxes and weaker retail spending have prompted the company to lower its forecast earnings before interest, tax, depreciation, amortisation and changes in financial instruments to between $400 million and $435 million.

In July the company cut its forecast by $30 million to a range of $420 million to $455 million.

“Given the volatility in crude prices and exchange rates, we are taking a cautious view on the second half of the financial year,” chief executive Mike Bennetts said today.

“Margins typically come under pressure when crude prices rise steeply, as prices at the pump lag behind the increases in the price of crude oil, and customers are sensitive to new, higher price points.”

The country’s biggest fuel retailer today said ebitdaf in the six months through September fell to $175 million on a replacement cost basis, down from $221 million a year earlier. Net profit fell 31 percent to $72 million on the same basis.

While overall fuel volumes rose 5 percent to 2.2 billion litres, due to higher exports and sales to other distributors during a refinery outage in May and June, petrol volumes fell 6 percent to 626 million litres as high pump prices prompted consumers to use less and to shop around more for discounts.

Z said those margin pressures slashed about $26 million from its earnings, while the extended refinery shutdown trimmed another $11 million from its margins and another $18 million from its share of earnings through the refinery.

Reduced operating expenses and on-going business improvements lifted earnings by about $10 million.

Bennetts said the operating environment during the period – in which crude oil prices jumped 25 percent, the New Zealand dollar fell 9 percent, and new national and regional taxes were imposed – was the “most challenging” the company has faced in its eight-and-a-half year history.

Gross fuel margins fell by $30 million to $305 million – or 15.5 cents a litre from 17 cents a year earlier – due to increased price competition, the change in product mix, and having to import fuel to cover the refinery outage at “distressed” prices.

A notable reduction in impulse or discretionary spending at the chain’s shops left non-fuel margin unchanged from a year earlier at $38 million, the company said.

Bennetts acknowledged the 12.5 cent dividend declared was less than the company had indicated, but reflects the tough conditions. It will be paid on Dec. 11 to shareholders registered at Nov. 23. Z Energy paid an interim dividend of 10.4 cents per share a year earlier.

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