Ratings group, Standard and Poor’s Global has put the debt of Caltex Australia on credit watch negative in the wake of the company’s surprisingly poor half-year earnings downgrade last week.
S&P reaffirmed Caltex’s long term BBB+ rating but pushed the outlook to negative from stable.
A negative outlook means a further downgrade could occur in the next 18 months to two years.
S&P said that change of outlook was due to the challenging oil industry conditions, especially for the convenience retail business of Caltex which is where the company has been investing heavily.
Earnings in that business are now forecast to more than have.
Caltex said last week in the downgrade that it now expects its half-year replacement cost operating profit to be $156 million less than the result for the first half of last year.
It will come in around $120 million-$140 million, down from $296 million posted in the first half of 2018, Caltex told the ASX.
Its historical cost profit is expected to come in around $150 million to $180 million, less than half the $383 million for the June half of 2018.
Caltex shares closed at $24.11, down 0.16%, so the S&P downgrade, which Caltex noted after trading closed on Tuesday, had little impact.
But S&P did identify the problem analysts are having with Caltex and its immediate future – the performance of its convenience store business which was supposed to introduce stability to the balance sheet to offset the volatility of oil and petrol refining and distribution.
