Australia’s largest listed oil refiner, Caltex Australia, has warned about a tough outlook, while restoring dividend.
It joined Fairfax Media yesterday in restoring payments to shareholders.
Caltex shares jumped in yesterday’s wider market rebound of 1.8%.
They initially rose 47c to $10.45, but retreated to end around $10.08, a rise of 10c on the day.
2009 net profit bounced to $314 million, up from $34 million in 2008 when the sharp rise and fall in oil prices and the value of the Australian dollar played havoc with the company’s costs, while the credit crunch and recession impacted demand adversely.
Although oil prices recovered in 2009, the peak was just over half the $US147 a barrel reached midway through 2008. The stronger value of the Australian dollar from mid year helped trim the impact of the rising cost of oil.
But the lower prices meant a fall in 2009 revenues, down around 26% to just under $18 billion.
The company was cautious about the outlook in its release to the ASX.
"Due to depressed global demand and the expected growth in global refining capacity that has led to global refiner margins remaining under pressure, the short term outlook for Caltex remains challenging,’’ Caltex said in a statement.
"However, the exposure that Caltex has to the mining, agriculture and transport industries in Australia, and the anticipated long-term growth in demand for diesel, jet fuel and premium fuels point to a positive medium-to-long term outlook for the company,’’ it said.
It said that operational performance across the business last year "was strong notwithstanding difficult financial conditions".
"2009 saw Caltex have its best safety result ever. Refining reliability was good with no significant unplanned refinery shutdowns.
"Transport fuel production was 10.2 billion litres, compared with 9.8 billion litres for 2008."
Caltex said it would pay a fully-franked final dividend of 25c a share, up from last year when no final dividend was paid.
It didn’t pay an interim dividend for the June half year.
Caltex did not close the lid completely on ambitions to take over 302 Mobil service stations for which it has bid about $300 million, only to be blocked by the Australian Competition and Consumer Commission (ACCC) in December.
The company said it was considering its response.
But it also said it was looking for acquisitions elsewhere, such as offshore.
Engineering group UGL Ltd (formerly United Group Ltd) is maintaining interim dividend, despite a 15% fall in first half profit.
UGL said in a statement to the ASX that it will pay 29c a share for the first half to shareholders, unchanged from a year ago.
The company’s shares rose 57c, or more than 4%, to $14.64, after being up nearly 5% at one stage earlier in the day.
UGL said net profit for the first half was $55.274 million, on revenue down 10.6% in the half at $2,073 billion.
UGL said its profit guidance was "broadly in line" with its net profit in 2008/09 and "in line with our previous guidance".
"UGL is in excellent shape and we are very well placed to resume growth," UGL chief executive officer Richard Leupen said in the statement.
“This is one of UGL’s strongest trading results, particularly considering the challenging economic climate and that we expensed the cost of a long-running arbitration," he said.
"By almost every key measure the businesses have performed well. UGL is well placed to meet its full year profit forecasts with a substantial amount of work already sold for the remainder of the year.
“In view of the economic conditions, revenue of $2.1 billion was a highlight, and confirms that UGL continues to benefit from the stable and recurring nature of our $8.8 billion order book, the strength of our diversified earnings model and our ability to secure and successfully execute large scale projects.
“Particularly encouraging is that we have secured a total of $2.9 billion of new projects in the year to date, and we have over $1 billion of work at the preferred tenderer stage – both of which underwrite our order book well beyond 2011.
"The performance of our Property Services business, particularly in the USA and Australia was also very pleasing.
“UGL’s operating cash flow of $121 million is also pleasing. We have again reduced gearing to 18% and our strong balance sheet gives us the increased flexibility to pursue a number of growth opportunities which we are actively considering.
“We have managed our overheads and reduced the cost base where possible.
"Spending in all our sectors of property services, infrastructure, transport and resources are now starting to pick up and we are witnessing the resumption of major projects and higher tendering activity in Australia, Asia, the Middle East and the US.
"The continuing trend of outsourcing non-core services by blue chip companies and governments will further enhance our recurring revenue base in the years ahead." Mr Leupen said.
Mr Leupen said UGL also was reviewing "several organic and acquisition opportunities" that complement the company’s existing operations, and against the background of "a strong balance sheet and a record cash position".
