The plunge in global oil prices has boosted the half year profit of Caltex Australia (CTX), no matter if you use historic accounting or replacement cost (the company’s preferred method).
The company, whose US parent Chevron sold its remaining 50% stake at the start of the year, said first-half earnings more than doubled as profit was boosted by inventory gains and the performance of the Lytton refinery in Brisbane, plus the rising share of premium fuels it was selling.
The company told the ASX yesterday that unaudited ‘historical cost’ profit after tax rose to $375 million for the six months to June 30 from $163 million in the first half of 2014.
The result included about $28 million from a property sale in Western Australia and a product and crude oil inventory gain of $95 million (from lower priced oil being sold as higher priced products).
And on the preferred “replacement cost operating profit basis”, earnings after tax for the half year rose to $251 million, excluding significant items, against the $173 million in the first half of last year.
The news would have normally boosted the company’s share price, but in yesterday’s big sell-off (thanks China) Caltex shares lost 1.4% to $32.89.
CTX 1Y – Caltex first half profit jumps
The Lytton refinery is now its only manufacturing operation in Australia after the company closed its Kurnell refinery in Sydney as part of a transformation into an “integrated transport fuel supply chain business”, with Ampol Singapore now the largest source of refined product for its customers.
As part of this change, the company put the cleaners through the company late last year and in early 2015, retrenching around 400 or more employees.
Caltex is therefore now primarily a marketer and distributor of oil products, especially petrol and diesel.
Its supply and marketing business is its core and that reported earnings before interest and tax (EBIT) rose to $294 million, from $276 million a year earlier, while the Lytton refinery EBIT increased to $154 million from $40 million.
Transport fuel sales volumes slipped slightly to 7.8 billion litres, reflecting the timing of the loss of one major supply contract and the start of a new larger long-term deal, Caltex said.
Major maintenance at Lytton in May and June saw sales from the refinery in the first half fall to 2.4 billion litres from 2.8 billion litres. Caltex said that its strong operating performance in the first four months allowed the company to take advantage of favourable refining margins.
Caltex pointed out that the changing mix in the retail market was helping profit. it’s selling more premium product, such as higher octane petrol.
"We continue to successfully grow sales of premium fuels in Retail across both petrol and diesel, offsetting the decline in unleaded petrol and E10,” the company said yesterday.
