In today’s business wrap, Z Energy’s quarterly earnings hit by the lockdown, Briscoes cost cuts help out and the big US share trader Robinhood faces scrutiny
Business is tough
Low refining margins, reduced revenues and price discounting are being blamed by Z Energy for a $57 million drop in ebitda for the quarter . The country’s largest fuel retailer yesterday reported $38 million of pre-tax, interest and depreciation earnings in the three months ended June 30 compared to $95 million in the same period last year. During the quarter, which included the period of the Level 4 lockdown, the company said it incurred an $11 million loss in the month of April.
The company expects pre-tax earnings for the six months to September of $85 million to $100 million, compared to $182 million in the same period last year. While petrol and diesel volumes are back to year earlier levels, Z said discounting remains a “significant factor” in retail trade. Jet fuel volumes in late June had not recovered and were still 70 percent lower than pre-covid levels.
CEO Mike Bennetts said Z Energy’s strategy of increasing retail volume in a competitive market while reducing operating expenses is having a positive impact. The company is also benefiting from investments it made in the past three years in its digital platforms and improving the experience of its customers, he said. Z Energy shares gained 2.9 percent yesterday to close at $2.83.
In trouble, again
Former high flyer Mark Bryers, who founded the failed property investment company Blue Chip, has been arrested in Australia as part of a joint agency investigation into a A$17 million fraud. Australia Federal Police yesterday executed search warrants at 10 locations in what they described as a “coordinated strike against a transnational and serious organised criminal syndicate using labour hire and payroll companies associated with the building and construction industry to defraud the Commonwealth.”
The formerly bankrupt Bryers, who has lived in Australia since 2006, is alleged to have been involved in a syndicate of underworld figures that included the wife of a jailed drug boss. A dozen people, including Bryers, are now facing charges and appeared in court yesterday.
Bryers was responsible for the 2008 collapse of Blue Chip, a business he founded, that left around 2,000 investors out of pocket to the tune of $84 million. Blue Chip was also investigated by the Serious Fraud Office, which decided there wasn’t enough evidence to pursue a prosecution, while saying the firm operated in a “moral vacuum.”
We’re all good
Cost saving measures implemented by Briscoes as a result of Covid-19, have positively impacted the business according to the company’s latest update. CEO Rod Duke said that while it remains unlikely the company would achieve last year’s half-year sales and profit, it now expects the first half results to be closer to last year than indicated in its previous announcement.
Briscoe Group will provide its 2nd quarter sales update on July 31 and expects to release its half year results on September 8. Briscoes shares closed up 2.1 percent at $3.37.
Big plans for Central Otago
The tiny Central Otago town of Tarras might be about to become the country’s newest airport, if Christchurch Airport has its way. The company says it has spent $45 million to purchase a 750-hectare parcel of land with a view to creating a new ‘world class’ airport near the Central Otago farming community famous for producing local identity Shrek the sheep. CEO Malcolm Johns said the proposed airport will have a 2.2-kilometre, jet-capable runway, on a site at the junction of State Highways 8 and 8A, between Wanaka and Cromwell.
The proposal for another airport is part of an ongoing debate over the positioning of a new facility to better link the Queenstown-Lakes and Central Otago regions with the rest of NZ and the world – particularly given limited expansion capacity at the existing Queenstown airport both in terms of its runway and terminal facilities. While a recent report suggested the expansion of airport facilities would provide a significant benefit to Wanaka, not everyone supports such a proposal. The plan is likely to be vigorously opposed by local community groups who have raised concerns about the impact on the town, which many locals do not want to become another Queenstown.
US airline United Airlines lost $US1.6 billion last quarter — a three-month outcome that was slightly better than analysts’ dire expectations. The company’s revenue plunged nearly 90 percent compared with a year ago. It’s just the latest result for an industry facing a devastating financial outlook with no end in sight as Covid-19 cases continue to spike in many areas of the United States.
United said it had been able to slow the rate at which it is burning through cash, even though many of its planes remain in storage and ticket sales have slumped. The airline is haemorrhaging an eyewatering US$40 million a day, though this is actually down from the US$100 million a day the company was losing in April. United expects its daily cash burn to fall to around US$25 million a day during the next quarter.
Expansion plans on hold
American share trading platform Robinhood has halted its planned launch in the UK as the popular stock trading app faces fresh scrutiny in its home market. The company said the UK debut of its product has been postponed indefinitely, and all global expansion plans have been put on hold. Retail investing has seen a surge in popularity in recent months, with no-fee platforms like Robinhood allowing novice investors to get into stock trading at a moment of major volatility.
The growth here of Sharesies has seen a similar rate of adoption with many millennials opening accounts to get in on the current sharemarket investing craze. However, US lawmakers have pressed Robinhood to improve safeguards on its app following the apparent suicide of a 20-year-old student who misinterpreted a negative account balance of US$730,000. Sharesies will be eyeing the latest valuation of Robinhood which has managed to attract significant interest from investors in recent months raising another US$320 million, giving it a valuation of $8.6 billion (NZ$13.23 billion)
Environmental corporate warrior
In a move designed to up the ante in corporate environmental leadership, Apple has pledged to become fully carbon-neutral by 2030. The commitment covers its entire supply chain and the lifecycle of all its products, including the electricity consumed in their use.
The company is aiming to achieve the goal on multiple fronts including low-carbon product design, using recycled materials where possible, and developing new techniques such as a carbon-free aluminium smelting process. It also plans on using renewable energy, including projects funded by and built for Apple directly, which in total provide 1GW of capacity to the company’s corporate operations. It will also focus on carbon removal, through forest planting in Colombia, China, Kenya and the US.
The majority of the progress, Apple says in its latest environmental progress report, will be made by cutting its carbon emissions directly. But the last 25 percent will come from “carbon removal solutions” such as forest planting and mangrove swamp restoration.