An expected squeeze on oil refining margins from rising global oil prices in recent months has hit earnings of Caltex, the country’s largest oil importer and refiner, despite it reporting a small rise in the volumes of petrol sold.
Caltex said yesterday in a statement to the ASX that total consumption would be up slightly to 7.7 billion litres.
Driving that small increase in consumption, are motorists buying more premium fuels (without ethanol) which sell with higher profit margins.
That is helping Caltex offset the continuing slide in unleaded and ethanol blends of petrol (E10).
At the group’s recent annual meeting, it signalled softer March quarter earnings, which it yesterday confirmed for the full six months to June. The company will release full results and the interim dividend on August 23.
Caltex told the ASX yesterday that pretax profit will fall to a range of $310-330 million, from $375 million a year earlier.
The pretax profit of its main business, the supply and marketing arm is expected to rise more than 10% to between $345 and $360 million.
But tighter refining margins have weighed on the performance of its Lytton refinery in Brisbane where the pre-tax profit is expected to fall to around $85-95 million, thanks to “lower first half refiner margins, offset by stronger production volumes”.
The average refiner margin was $US9.80 per barrel of oil, down from $US16 a barrel a year ago, it said.
The forecast includes a gain on inventories of about $70 million, which is down from the inventory gain of $95 million a year earlier.
On a replacement cost basis, the group’s preferred measure, Caltex said the net profit for the half is expected to come in at between $245-260 million.
In the same period a year earlier, net profit on this basis was $251 million.
Caltex said, "Net debt at 30 June 2016 is forecast to be $700 million, compared with $432 million at 31 December 2015.
Average debt during the six months to 30 June 2016 is expected to be around $600 million. This includes the impact of the recently completed $270 million off – market buy-back.”
Caltex shares rose 3.1% to $31.87
