..somebody has to pay that horribly unfair Auckland Region Fuel Tax .....and the Jafas don’t appreciate it and still moan their heads off.....as Fred would say they don’t know how lucky they are
Printable View
Its highway robbery right on taxcinda's, opps sorry Jacinda's, doorstep in Wellington. No wonder she thinks the fuel companies are "fleecing" Kiwi's.
As Coutts suggests just up the road where there's a Gull they are forced to play nice.
I really didn't imagine they would stoop that low to raise prices before a 10 cent discount day. Suppose that makes me a little commercially naïve and / or makes Z extremely manipulative and possibly deserving of regulatory oversight. If such a thing is on public display for those that take note to have noticed, it really makes you wonder how dirty things are behind the scenes.
Maybe there is something in Jascinda's determination to bring more competition into the wholesale market and I wonder what the Govt will do about it ?
Has she got some brownie points to be won back from the public after this week or what !
So in terms of notable next events to chart a path to this being possibly de-risked.
First up we have the half year results, (which last year were announced on 1 November). I think at that point ZEL would have a better handle on how the change in loyalty scheme is affecting margins, (they will have full month impact for August and September and indicative impact for October by then), and what the full year prognosis is for that so its highly likely we'll get a full year guidance update at that point.
Then there's the final recommendations of the fuel study, sorry can't remember when that's going to be released, can anyone help with a timeline on that ?
Did it go something like "This year next year sometime never"?Quote:
Then there's the final recommendations of the fuel study, sorry can't remember when that's going to be released, can anyone help with a timeline on that ?
;)
This week’s announcement reports on both lost volume and reduced margins .....double ouch
Sept quarter stats will be interesting .... esp their market share.....which hasn’t been growing of late.
Maybe their ‘strategy’ is a bit wonky ....takes more than a few buzz words and cool presentations to win.
Z industry lingo is rather confusing for plebs but like me
When I read this in the June quarter stats I thought it was quite positive - The percentage of fuel sold on discount decreased during the quarter .... ...sort of suggests less discounting ...good
From last week’s announcement re their margin problem maybe that Statement in July meant something else.
I was really impressed with their earlier presentation when it said instore weekly sales were up 10% year on year as its instore where the "fleecing" really does goes on.
Fuel margins and volume must be under really intense pressure to get a downgrade of that magnitude barely a month after the new loyalty scheme has started.
I'm going to call it and remember who did it first. This is NOT their last downgrade of the FY20 year ! Mark my words.
It seems that the millions of AIRPOINTS members aren’t doing their bit.
Wasn’t that a game changer .....at least the excitement when it was announced suggested so
IMHO this is the crux of Z's margin/profitability issues.
Put simply Airpoints/Flybuys etc only serve to confuse price comparison and the public are are increasingly sceptical that they provide any value (or reason to buy Z over other fuel suppliers.)
(Airpoints/Flybuy's are also relatively more expensive/inefficient for a company to run as compared to cut price offers.)
As a result I suspect fuel companies that offer a clear simple price saving are the companies that consumers are increasingly switching to (and Z's margin issues are evidence of this.)
Saudi oil production cut by 50% after drones attack crude facilities
“Fearing the worst, I expect that the market will open up $5 to $10 per barrel on Sunday evening. This is 12 to 25 cents per gallon for gasoline.”
https://www.cnbc.com/2019/09/14/saud...-wsj-says.html
tend to use whatever discount gives us the lowesr price, if we get flybuys/airpoints that is a bonus and with Z not the cheapest around our way most of the time.
In recent times tended to use Caltex(while still a member of AA fuel plan) or BP or Pak n save fuel, can't remember the last time I used Mobil, occasionally Z
A lot of new cheap stations being built ,will not use Z but only basic discounted fuel . Wont touch share.
Exactly, wonder if they even know about the PLX Fuel App? And all the goodies for loyalty programmes.
https://www.7eleven.com.au/fuel-app
Plexure worked with 7-Eleven to develop the Fuel Price Lock App, which has transformed the way customers buy fuel and convenience items.
http://www.plexure.com/why-plexure
There’s over 300,000 punters who’ve downloaded the Z App
Apparently your coffee is ready and waiting for you if one uses the app.
A high oil price is good for Z — isn’t it?
AA says we need to brace for petrol hikes next week
so far, around 5 for a permanent risk premium in crude should be it, considering the current oil glut. To cover global risk and with global debt in default, long bonds seems to be a better option to cover risk. Euroschatz Cash trading at the 200 MA on the daily time frame...and net long gold taking profit on the short side at 1379.7
Think that’s being a bit optimistic the market still believes what SA is saying that they will have the facility back up and running in the short term - not sure if you have seen the videos but it looks a lot worse damage than SA are reporting public ally anyway ....
[QUOTE=peat;771570]Pak N Save uses fuel supplied by Z (in case you didn't realise)[/QUOTE
I knew they changed from BP to Mobil or other way around, did not realise has changed again, not used them for a little while, as local Caltex was the cheapest around most of the time (before discounts). Z still a couple of cents dearer most days than the Pak n Save which is more or less next to them.
Cameron Bagrie economist reputedly saying could go to $3 - bit OTT I think, other sources saying 10cents if it is longer term.
Will be interesting to see how fast they put it up - good excuse too!
https://www.nzherald.co.nz/business/...ectid=12267969
Oil up 19pc last I saw - these things tend to overshoot though, does not help us in the short term (price wise)
Disc: Not holding at present
And the nzd collapsing won’t help pump prices
Think there's some sweet spot range, from memory $50-60 USD per barrel.
With yields collapsing, that would be beneficial for Z, if they could refinance cheaper? Problem would be, with a continous slow debt default, would be good to lock in yields at a point where they have bottomed out...like maybe at negative 25%?
Maybe someone can answer this question re: the profit downgrade of 60m. Could the real reason for the downgrade be that Z has to pay now relatively more for its existing debt?
No - clearly stated, retail margin pressure = ~ $50m downgrade effect and refinery margin pressure ~ $10m impact.
Z have come out swinging in terms of their position regarding the draft fuel report. http://nzx-prod-s7fsd7f98s.s3-websit...992/307703.pdf
A very brief skim read, (sorry don't have any more time today than that) would tend to indicate Z have conceded some change in key area's is needed including wholesale fuel arrangements.
As stated last week, I suspect there is more to come from retail margin pressure and Govt regulatory pressure than what has already been provided for in the $60m downgrade. Further, the commercial effect of any ground that ZEL may have conceded in their submission is yet to make itself apparent in lower profits going forward.
More here http://www.sharechat.co.nz/article/2...uel-reporthtml
That statement re CC Report is almost an invitation to the other players to ‘get together’ and make pricing simpler .....hmm .....code for?
code for... increased transparency going forward which usually leads to lower margins doesn't it ?
For example having to put the premium grade fuel on the price board will shine the spotlight on how margins for 95 and 98 Octane have been creeping up significantly in recent years, one of the ComCom's points of significant criticism.
i seriously wonder if not only the rise of Gull and Waikato but also the Gaspy app is creating pressure on petrol suppliers who are pushing the envelope in terms of margins, and thus helping to condense those margins.
It is now so much easier to compare all types of the different fuel prices at different stations.
Indeed. And when travelling around the country, with Gaspy its even possible to compare between towns along your route and optimise where you fill up on that basis too. (e.g. travelling to Wellington, make sure you have enough in the tank to get back to Levin for example).
Just landed an email in my inbox stating BP has removed minimum spend ($40) to avail regular or any special discount under AA Smartfuel scheme.
Still need to spend $40 minimum to accumulate discount rewards, no minimum to redeem them. A very, very small extra bit of pressure on other competitors, nonetheless.
Agree that Gaspy (or however you spell it) is placing more pressure on margins and the minnows are nibbling away at market share.
ZEL talk a bit about the long term prognosis for EV's to eat into fuel volume in their submission on the fuel price enquiry today...not something you read about in their other presentations to shareholders...Hmmmm
hmmm indeed .....Z presentations give themselves the warm fuzzies (which are passed onto shareholders) but reality is another thing
A few other popular companies do this as well .....suppose thats how the world works these days ....but not that hard to separate out the reality from the dreams
Yeap, these days you need good FA, TA and for many companies DA (Deciphering analysis) of their creative corporate speak.
Reality is starting to bite for ZEL shareholders now. Despite an aggressive rebuttal of certain aspects of the Govt's fuel study analysis and extensive submissions today on same and yet another analysts briefing to explain all this, the market keeps on marking this one down for the third day running now.
Risky time to be a ZEL shareholder. Next step in clarifying all this is probably the half year result (reported last year 1 November).
Disc: Intending to stay on the sidelines until at least 1 November 2019.
I agree, this squeeze may just be the beginning. Margins must have been high for the last few years. How could the entrance of new players be explained otherwise?
So for now living with a big mistake - 1253 shares at 6.54 - but margins can only go so low. The question is how low?
The Com Com reckons margins should come closer to a 8.3% return on cost of capital. Z is ranking at 23%. So somewhere in there is a point where Z becomes an attractive buy.
ZEL saying today their return on capital employed on selling fuel is just 11%. They go on to say that the fuel study incorrectly includes their profit on retail sales from their stores.
Weekly retail store sales are from memory up 10% year on year to circa $37K per store. ZEL must make a LOT of money from pies, icecreams and coffee and they infer as much from their fuel price study submissions today. Instore retail non fuel sales....that's where customers really are "fleeced".
ZEL will be hoping Jascinda and her team doesn't take any issue with the retail store side of their operations where the fleecing really does go on and that the fuel price study correctly excludes any profit from that side of their operations...but what if the Govt take a view that all aspects of ZEL's operations are one integral business and regulate a maximum return on invested capital ?
I still see plenty of regulatory risk here even after the recent fairly hefty share price correction, risks seem comfortably outweighed by possible returns to me.
$4.50 would be required to get me interested in investing anytime before further clarity is forthcoming on or about 1 November.
ZEL really make "quite a big meal" about the fact that they're a Kiwi company employing Kiwi people and that profits stay in Kiwi hands...a really big patriotic play in their submission on the fuel price enquiry today. I think that carries about as much weight as a butterfly to be quite frank.
Perhaps ZEL should now be called a "Consumer Unstable".?...............lol.
LOL still a consumer staple but obviously subject to regulatory oversight.
Remember when Rob Muldoon capped interest rates at 8% ?...that was a big hit with consumers. Jascinda must be really desperate to regain some political capital after last weeks almost complete self destruction of her credibility, (what sexual assault complaint ?, is there a single person in N.Z. who really believes she knew nothing ?), so the fuel companies better look out, Jascinda is on the warpath !
Fuel Gross Margin $700m. ...Non Fuel Gross Margin $81m
Lots of money in bakery and pies and coffee etc
I do not think there was a sexual assault. They should have gone to the police. Z needs to be moderated . Do not buy the shares.
The good old Com Com exhibiting their ineptness once again by doing a half baked ,full of errors job. Look for an egg on face backtrack in the not too distant future. Lol
I take it Mr Bennett will come out fighting against this report.
I think it says the oil companies need to do less thinking about resilience and actually spend some money to ensure there is always enough jet fuel (as a minimum)
Whoops - can’t spend too much else divie will be cut
https://www.stuff.co.nz/business/115...should-step-in
but who are the people who need the resilience of supply?
and if they wont contribute (which they wont of course) then it can only be through the pricing mechanism that the cost of the infrastructure is apportioned correctly.
Apparently z increased price by 10 cents to 245.9 but others didn’t follow so lowered it a fraction to 241.9
A few kms away Caltex and Waitomo at 208
Still filling up at Z (am I one of the few by recent comments in this thread?), geographically convenient for me and I find their pay at pump better than BP (my other main option). My time is more valuable than the pump price differentials. I also sometimes contribute to the "pies and coke" fund. I have also held Z stock on an off over the years so cannot rule that out for 'clouding' my opinion. Currently 'on' and not selling.
In the end the com com final report will recommend X amount of things, and if the govt will implement Y of them - with Y being significantly less than X and potentially 0. Look no further than tax working group for a baseline of all the political hullabaloo eventuating to no real change at the end of the process.
Which means many investors - myself also as top up oppourtunities - will be looking closely at this as a continued yield play.
amazing how quick petrol companies are to raise prices. yet we have had numerous instances of oil falling 5 dollars a barrel lately and petrol prices never moved or if they did it was a week or two later by only a few cents lol.
I go to the local transport company, and pay with my card. When I filled up Friday, diesel was 132.9 which aligns with cheapest in say Tauranga. Card then gives an extra 6c/litre discount.
Compare that to the main street in town, yesterday it was 173.9 - and they'll take the opportunity today to lift further for sure.
Always 40c/litre difference at least. So who is making money???
https://www.stuff.co.nz/business/115...-wait#comments
ZEL tried to increase prices 9 cents per liter today but was forced to backtrack after BP only went up 6 cents.
Meanwhile based on actual input costs if they are sustained GULL say pricing will need to go up by about 6 cents per liter but they are holding off until at least this Saturday.
I think its pretty clear who is trying to lead the market higher and most quickly and I am absolutely certain others are taking notes too.
More than 300 comments to this article for those that want to have a good trawl through what others are thinking.
Close at 534 today
Getting close to 4 year lows
They won’t be touting that total shareholder return chart in their presentations for a while I reckon.
oil prices plummeting
Oil drops 6% after Saudi energy minister says supply will be fully restored by end of September
https://www.cnbc.com/2019/09/17/oil-...i-attacks.html
be interesting how quick they are to drop pump prices , took 2 days to jump them.
BP have 10 cents off today (if you have right card or whatever). That’ll cost them plenty after yesterday’s price rise
Z making even more — they canned their promo
Good for Z shareholders
So ZEL should lead the market lower with a 6 cent price drop tomorrow. I think there's more chance I'll see a herd of pink pigs fly past my office window.
GULL are going to come out of this smelling like Roses. Holding the price until at least Saturday this week and absorbing the very temporary increase in oil costs.
The commission’s draft report last month found all the players were earning at least twice the 8.6 percent return it estimated as the upper bound for the industry’s weighted average cost of capital. Gull was the highest at about 28 percent, followed by a grouping of Waitomo, NPD and GAS at almost 25 percent, and Z Energy at almost 23 percent. Mobil and BP came in at close to 20 percent and 18 percent respectively.
How does Gull keep such a high margin, yet no one would say, they are expensive, I certainly don't. Could it be, that the costs of maintaining complicated bonus schemes are high?
Gull importing fully refined fuel to Tauranga port (as I understand it) and trucking it to retailers.
Many unmanned stations and obviously they don't need dozens of executives on many hundred's of thousands each to help to put together huge presentations to shareholders full of heaps of choice buzzwords. Just a really simple, modestly capital intensive and no corproate B.S. operation.
Which is why none of the big boys are keen to take Gull on.
I passed my local Z yesterday on the way to work,they had put their price up to 2.29 a litre from 2.17 the day before,a massive 12c a ltr!.I didn't notice if they had reduced prices during the day,but it does indicate that no-one seems to know what they are doing at Z
The poor Aussies have it hard - "Oil may get to $2 and that may be the straw that breaks the economy's back!".
https://www.abc.net.au/news/2019-09-...ction=business
Personally, I think the effect of the drone strikes has been overdone. The Americans had to bomb the Ploesti oil installations heavily and repeatedly during WW11 before any lasting damage was inflicted.
Z and BP won't reverse price rise on Wednesday despite oil price drop
Z chief executive Mike Bennetts said when it increased its prices on Tuesday it "didn't reflect all of the increase in the price of the barrel, as we had planned to move the price by 3 cents on that day anyway".
"We took on the other 3 cents because we know it's hard when prices go up so we wanted to keep it affordable as we could," he said
https://www.stuff.co.nz/business/115...er-inventories
probably why the price was up today extra profits from the price increase
WTF ????? Not only does this not make any commonsense it looks very much like duplicitous propaganda.Quote:
Z chief executive Mike Bennetts said when it increased its prices on Tuesday it "didn't reflect all of the increase in the price of the barrel, as we had planned to move the price by 3 cents on that day anyway".
"We took on the other 3 cents because we know it's hard when prices go up so we wanted to keep it affordable as we could," he said.
They just can't seem to stop shooting themselves in the foot.
Time to switch to Gull.
P.S. Local Mobil this evening had reversed the 6 cent increase earlier this week and is running a 10 cent discount day.
$2.05 for 91 Octane is not too bad inclusive of the thievery Auckland transport levy of 11.5 cents per liter and all the other Government taxes and levies.
I drove to Welly and back today and saw 241.8c in Pauatahnui, and it wasn't from a Z
But its only 202 in Whanganui. Driving down this coast what I notice is that the prices are so variable. Even in the same town there is a lot of variation ,(though not as much as in different towns)
I'm seeing about 6c variation for the no frills option , Gull is cheapest and then Z and the others are a couple of cents dearer even after any discounts that may be available.
I think the competition is actually quite tight most places but where it isn't they screw ya. I don't know enough about it to suggest a solution but surely it doesn't cost 40c a litre to move fuel from Whanganui to Pauatahanui
Gulls CEO calls other fuel companies "jumping the gun and being over the top". That's fighting talk for someone who's usually fairly conservative.
https://www.msn.com/en-nz/news/natio...cid=spartandhp
Wonder if Jascinda has noticed the $2.40 per liter rort right on her doorstep in Wellington ?
No decent ports there so transport costs must be "astronomical" and that must explain the huge prices right ?
Z and BP come in for sharp criticism from the AA as well https://www.stuff.co.nz/business/115...-difference-aa
Gull looking to muscle in on the massive Auckland Jet fuel market. http://www.sharechat.co.nz/article/3...w-entrantshtml
The AA guy is all talk . They have a fuel discount scheme with one of the majors do they ever do any of their members a favour ...... NO .
So as we know where Gull & Waitomo have gone , within close proximity the majors compete ....But further away you still get stuffed .
Time the AA backed the little guy and rewarded all their members with a decent scheme with a company that wants to actually deliver a decent result to the consumer IE : Cheaper fuel.
Fair enough and I agree, he's all bark and no bite :)
Pretty good dead cat bounce today. MEOW :)
That dead cat has had another bounce today. Must have a bit of Snow Leopard in it, seems to have bounced pretty good.
Think I'll still wait for the Taxcinda steamroller though to flatten things down again.
Z Energy rose 0.9 percent to $5.55 on a volume of 2.3 million shares. The fuel retailer has been recovering having shed as much as 19 percent during the course of a week after it issued a profit warning on unprecedented discounting by its rivals and as investors weighed up the impact on fuel prices of recent attacks on Saudi Arabian processing facilities.
THE EXCITING PART OF THE STORY
"It's got down to a level that gets yield investors really excited," Williamson said. Z is trading at a gross dividend yield of about 10.9 percent
I don't think much of his maths capabilities.
Company guidance is 48-50 cps in fully imputed dividends, mid point 49. Grossing 49 up for imputation credits = 49 / 0.72 = 68.06 / 555 = 12.3% Gross yield.
With all the issues the company is facing that I've previously alluded too, that's not enough to get me back on board at this stage and I will need to see the company de-risked in terms of the conclusion to the fuel price enquiry and the jet fuel storage and supply situation at Auckland airport.
I also think the CEO is doing a superb job at shooting the company in its foot with his recent public relations double speak.
I think its clear enough the minnows are very gradually nibbling away at their market share and compounding the long term headwinds is the very slow, (albeit at glacial pace), but inexorable shift to electric vehicles. These things must be factored in when looking at yield.
I leaned my lesson with sunset industries with relying on the yield of NZME and others have learned this very harsh lesson through SKY.
Attachment 10776
Beautiful gap for people who like to play them, but not for the fainthearted. Overall trend pointing downwards - and while the share might be at this stage a plaything for traders, it appears to be quite risky for long term investors.
Not my cup of tea ...
https://www.stuff.co.nz/business/116...ation-closures
Mark 5 December 2019 down in your diary as the date the Com Com come out with their final report.
Then the grandstanding by Jascinda after that in her usual way to try and tell us that fuel companies are fleecing us when its perfectly obvious who is really fleecing us.
This one is a real political hot potato with an election next year. Regulatory risk is something that I think one ignores at their peril...
At least have the decency tospell her name right.
Both govts have added fuel taxes pretty well equally and its user pays for you jafa's , fair enough too.Too many years of not enough infrastructure and roading spend is all coming home to roost. health , housing, environment , water.as well.This govt is having to take on the lot due to past do nothing govts
My review of fuel excise levies shows National's rate of increase broadly matched the inflation rate in the previous nine years, (no real increase in inflation adjusted terms), whereas Labour have dramatically upped the ante since they got into power under the auspices that fuel excise increases are not tax increases. Time for a Tui eh JT :p
Another media write up about the two-day public hearing held by Com Com in Wellington.
http://www.sharechat.co.nz/article/e682f06a/loyalty-scheme-members-not-exclusive-customers-fuel-inquiry-hears.html
Z saying their return on invested capital will only be about 7% this year. Heck that's bad and not supportive of tens of millions required for shoring-up additional much needed infrastructure around crucial Jet fuel supplies is it ! Govt set to regulate on that as well ? Life seems to be getting tougher for Z.
Tide finally starting to go out ?
The real point is not National or Labour BUT that we are a small country and Markets do not work. Look at electricity , supermarkets , fuel etc. The ideas need to change.
Gull expansion plans in the South Island. https://www.stuff.co.nz/business/116...outh-of-oamaru
have Z dropped there petrol prices? i see oil is below the saudi attack level
I think low crude prices would be beneficial to Zenergy, as low pump prices will keep consumers happy and keep concerns regarding Zenergy's margins in check
So, lower crude prices = higher possible margins?
Yes other issues aside, I think U.S$50 - $60 is the sweet spot for Z.
Daughter went for an internship with Z. Quizzed them hard on why she should work for a company that contributes to global warming. Was surprised and impressed with response, that if she wants to help the env, join Z as they are investing serious money in transitioning the company away from fossil fuels.
I have a daughter with the same sentiments. But they (the clever young ones with an environmental conscience) ought not limit their scope to organisations doing the right thing.
Your daughter can have a bigger influence with an employer that is currently BAD environmentally! Her opportunities to make a difference is limited with organisations that are already pristine.
Half year profit announcement due on 31 October.
My friend pointed out to me that Z now offer the ability to stack discounts (buy $40 of fuel which is less than 20 liters) and accumulate the 10 cents off each time for later purchase of 50 liters.
My mate reckons you can really accumulate a great reward over 2 months and this new thing, (they didn't offer stacking before the change in loyalty program that Caltex had) will really hurt their margins going forward. His whole family are in on the thing and Pete reckons he'll get 50 liters of fuel for free every two months !
I suspect ZEL are unaware exactly how much this is going to cost them in terms of their margin as more and more people make the switch at ZEL to stacking on 10 cent off days. With the Government on their case with margins, (final fuel study report out early December), as well as the minnows nibbling away at market share, Gull trying to muscle in on their jet fuel supply contract and the slow but unstoppable shift to EV's, there's quite a few obvious headwinds and its a hard stock to like despite the prospective yield. Value trap ?
It'll be interesting to see how profitability is holding up and the forward guidance change, (if any).