Marsden Point may stop refining oil and just import fuel, while Silver Fern Farms reports best profit in a decade on meat sales to China. And should the Reserve Bank do $50b of QE?
Up for review: Refining NZ, which operates the country’s only oil refinery at Marsden Point near Whangarei, will undertake a strategic review to determine the optimal business model and capital structure for its assets. Chairman Simon Allen said the company was challenged by low refining margins globally and Asian region oversupply. One of the options being considered it to convert to pure fuel importing, rather than refining crude oil. The company expected to give an update in June.
More refined: Investors responded positively to the news, pushing Refining NZ shares up 15 percent to 99c, though the shares are down more than 50 percent from a high of $2.08 six months ago.
Bumper profit: Silver Fern Farms posted a net profit of $70.7 million for the year to December 2019, up from $5.8 million on the previous year due to higher red meat exports into China.
China syndrome: The company, jointly owned by China’s Shanghai Maling Aquarius Limited and farmer-owned Silver Fern Farms Co-operative, reported revenue of $2.6 billion for the year, up from up from $2.4 billion in 2018. Silver Fern Farms chair Richard Young described the performance as the “strongest financial result in the past decade.”
Big QE II?: ASB Bank economists reckon the Reserve Bank could hike its quantitative easing programme by as much as $17 billion at its monetary policy meeting next month, saying the bank needs to “go harder”. The RBNZ initially announced a $30 billion twelve-month programme of government bond purchases, which amounted to about half of the entire nominal government bond market at the time, but subsequently decided to add Local Government Funding Agency bonds to its QE mandate, totalling $3 billion. That would take total QE to $50b.
Cap in hand: How times have changed. Gone are the days when media bosses ruled the roost and could strike fear into those who tried to cross them. Yesterday NZME and Stuff bosses appeared before Parliament’s epidemic response oversight committee to plead their case for more Government advertising dollars. Despite the Herald in recent days increasing the amount of content behind its paywall, NZ Herald Editor-in-chief Shayne Currie and Stuff CEO Sinead Boucher argued the Government should be spending less on social media and supporting local media instead. NZME shares are languishing at 21c, down more than 60 percent on a year ago.
Ticked off: Former Prime Minister and ANZ New Zealand Chairman John Key might be off the Reserve Bank’s Christmas card list this year after the bank received a big ticking off from the Reserve Bank for using a series of unapproved internal models dating back years to calculate how much capital it needs, on top of the unapproved Operational Risk Capital model (ORC) it was censured for last year.
Must try harder: The failure to get its ORC model approved, revealed in May last year, led the Reserve Bank to demand two independent reports. The first published in December last year found ANZ’s New Zealand directors had failed to take the necessary steps to assure themselves the bank was compliant, while the second report by accounting firm Deloitte, which also authored the earlier report, revealed unapproved models ranging from wholesale credit to credit cards and other failures required as conditions of ANZ’s banking licence in NZ.
Not the first time: It’s an embarrassing revelation for ANZ NZ’s directors after last year being ordered by the RBNZ to switch from using an internal ORC model to using the standardised model. The RBNZ said it would work with ANZ to rectify the issue.
Oil price slide: The International Energy Agency has predicted that global oil demand will slump by 29 million barrels per day in April — to levels last seen in 1995 — as the Covid-19 lockdown depresses demand. It also warned that output cuts (such as last week’s Opec+ deal to remove 19.5m bpd) won’t offset this slump in demand. For 2020 as a whole, the IEA predicted demand would slump by 9.3m barrels per day.
Expensive tastes: Cauliflower prices rose more than 60 percent in March, as prices for a wide range of vegetables also increased in the month according to data from Statistics NZ. Prices for vegetables last month rose 7.4 percent, mainly influenced by rises for broccoli, cucumber, cauliflower, capsicums, and carrots. Food prices were up 0.7 percent overall, with most other staple foods holding steady.
White gold: Cauliflower prices rose 64 percent to a weighted average price of $5.75 per kilo, though this was still below a peak of more than $8 per kilo in March 2018.
Free beer please: A beer swilling 93-year-old woman in the U.S. got her wish after posing with a sign in the window of her home pleading for more Coors Lite beer while she was in lock down. The photo went viral and has since been viewed more than 5 million times. No surprises that brewers Molson Coors were happy to oblige and personally delivered 150 cans to the sprightly nonagenarian who said she has a beer every night because “….it has vitamins in it, it’s good for you, as long as you don’t overdo it.”
One way to go…The company said they will continue to deliver free beer to the elderly resident whenever she needs it or plans to throw a party.