Z Energy, which now also owns the Caltex stations, controls around half of New Zealand's retail fuel market.

Z Energy insists it is committed to Fly Buys, hours after its chief executive floated the possibility of pulling out of New Zealand's largest loyalty programme.

On Thursday the fuel retailer announced it was overhauling its loyalty offering, which will bring an end to its long running agreement with Countdown supermarkets where shoppers are offered discount vouchers.

The company announced on Thursday that from the end of July, customers would no longer be able to redeem discount dockets offered in Countdown Supermarkets.

KEVIN STENT/FAIRFAX NZ Fly Buys at a cross roads? Major participant Z Energy has signaled that it may pull out of the programme if it is not granted more flexibility.

Chief executive Mike Bennetts said the company needed to overhaul its offer to customers because of changing desires.

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"What used to excite customers three or four years ago no longer does," Bennetts said on Thursday.

DAVID WHITE/FAIRFAX NZ Z Energy chief executive Mike Bennetts said a deal to offer discount vouchers through the Countdown supermarkets constrained its ability to offer discounts elsewhere.

"All of us, banks, supermarkets, fuel retailers are all trying to find the right way or the right combination of ways to make us more attractive."

Bennett said that part of the reason for ditching the deal with Countdown was because it constrained its ability to offer discounts elsewhere. Bennetts said the agreement with Fly Buys also constrained its ability to do commercial deals.

So, was Z ruling out pulling out of Fly Buys?

"No. It is one of the options we have," Bennetts said.

"Clearly there's lots of participants in the market or technologies in the market that we all get to have a look at. There's quite a lot happening, some of it in public, some of it not in public."

After the comments were published, Z Energy issued a statement in which Bennetts claimed he had been misreported and the company was sticking with Fly Buys.

"In the context of a conversation around changing loyalty programmes in New Zealand it has been completely misreported that Z is considering pulling out of Fly Buys," Bennetts said in a statement.

"Fly Buys is a very important part of Z's loyalty offer and I want to categorically state that Z is completely committed to Fly Buys," he said.

While Fly Buys was "not at all" losing its appeal with some of Z's customers "it has a series of offers that is inconsistent with what some of our customers are looking for" Bennetts said.

Z wanted greater flexibility in its agreement with Fly Buys.

"We have to find a way to have the best of both worlds, that we continue to offer Fly Buys to those who really value it and we offer alternatives to those who want something else. We haven't been able to do that in the past."

Launched in 1996, Fly Buys is New Zealand's largest loyalty scheme, claiming to be in 75 per cent of Kiwi households. Participants include New World, BNZ, Contact Energy, Noel Leeming, Mitre 10, Unichem and State Insurance.

Loyalty New Zealand, which operates Fly Buys, has not responded to requests for comment.

Bennetts told a press conference that the deal with Progressive was "losing its effectiveness".

Where now 12-13 per cent of its customers used the discount vouchers, it was previously up to 16 per cent, and reflected a larger volume of fuel.

"We've both agreed it's not working for us in the way it has in the past," Bennetts said, adding that its agreement with the supermarket chain prevented it from offering other discounts elsewhere, prompting the decision.

"Clearly ... customers are more into what I'd call 'instant gratification', and it's all about the price itself, rather than some of the other things we do," Bennetts said.

Z would not comment on what will replace the Progressive deal from the start of August, with Bennetts not wanting to tip off his rivals.

The changes to the loyalty scheme come as Z reported net profits after tax of $64 million for the year to March 31, up from $7m in the previous financial period.

Operating earnings were down $3m to $238m, however stripping out the one-off cost of $25m associated with buying Chevron, earnings climbed to $263m.

The board declared a final dividend of 18.1 cents per share, giving a total dividend of 26.6c, up 10 per cent on the previous period.

During the year Infratil, which jointly bought the company from Shell, exited its stake in the company.