Z Energy, the company that owns the former Shell retail network in New Zealand, says retail fuel margins are so tight other companies will be forced out of the market and it needs to offer more to survive.
Z Energy, formerly called Greenstone Energy, was formed by the Guardians of New Zealand Superannuation and local company Infratil, and is rebranding the Shell network it bought last year.
In its first full year to March 2011 Z Energy sold 2654 million litres of fuel and recorded earnings before interest, taxation, depreciation, amortisation and financial instruments (ebitdaf), based on current cost, of $167 million.
That compared to ebitdaf of $141m that Shell reported in the 2009 calendar year.
Chief executive Mike Bennetts said Z Energy's net profit was 2-3 cents per litre including the convenience store retail margins. By contrast, more than $1 of the pump price went to the Government in taxes and levies, he said.
"The returns in this industry are simply not strong enough to encourage or enable sustained investment, and as a result larger global companies are looking to exit the market. Over time the lack of investment will continue to erode supply security and customer choice."
Mr Bennetts said Z Energy believed it could grow by providing customers what they most wanted.
It had surveyed 17,000 people on what they wanted from the company but it could not deliver on those views straight away, he said.
Z Energy's first pilot petrol station opens next Friday in Greenlane, Auckland, trying to fine tune the model of delivering forecourt service, improved food and coffee and speed of getting in and out of the station.
There will be 10 pilot sites before rebranding the entire network of 220 sites.
NZPA