Greenergy International Ltd., which supplies almost one quarter of the U.K.’s road fuels, reported an 82 percent rise in profits on cheaper feedstock and as sales increased amid a growing market share.
Profits in the year ended April 14 climbed to 25.3 million pounds ($39 million) versus 13.9 million pounds a year earlier, according to an annual report. Sales increased to 10.9 billion liters (2.9 billion gallons) of fuel from 9.9 billion liters, taking its U.K. market share to 23.2 percent. The London-based company supplies petrol and diesel to supermarkets and has Tesco Plc (TSCO) as a minority shareholder.
“Our petrol manufacturing margins were significantly stronger this period than the previous year due to lower raw material costs,” Greenergy Chief Executive Officer Andrew Owens said in the report, which was posted on the closely held company’s website yesterday.
Greenergy, with Royal Dutch Shell Plc (RDSA) and Royal Vopak NV, agreed last month to buy Petroplus Holdings AG’s Coryton refinery in the U.K. for conversion to a storage site. The Swiss refiner filed for insolvency earlier in the year after banks froze credit lines.
“This investment will create the U.K.’s first deep water fuel import terminal, making it possible to bring in diesel economically from the most modern refineries anywhere in the world,” Owens said in a June 26 statement.
Greenergy may make an initial public offering if additional capital is required for further “opportunities,” according to the annual report.
Greenergy, which mainly uses naphtha as feedstock in petrol, or gasoline, was able to capture higher margins because the naphtha is trading near to the biggest discount in almost seven years.
“This year, the price of naphtha fell relative to petrol, making it a cheaper component than at any time in the past five years,” the company said in the report. “The outlook for the next twelve months is for relatively cheap naphtha to continue to support our petrol manufacturing margins.”
Naphtha cost $228 a metric ton less than gasoline on June 22, the biggest gap since September 2005. The spread known as the reforming margin narrowed to $158 a ton yesterday, according to data compiled by Bloomberg.
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