Now who would be surprised that Caltex Australia (CTX) is poised for a record full-year profit for 2015 thanks to the move out of refining (except in Brisbane), with its strong refining margins, and an increase in marketing profits?
After all Caltex’s update came only two days after the ACCC said petrol retailers were doing well with the best profit margins for years.
Caltex is one of the biggest retailers in the country and has made a concerted effort to move deeper into this sector by shutting its Kurnell refinery in Sydney and converting it to an import and distribution terminal
As a result, shares in Caltex surged as much as 11.7% to $38.49 in early trading, before easing to end the day up nearly 6% at $36.50.
CTX 1Y – Caltex flags higher profits
The reason for the surge was the Caltex telling the ASX that net profit for its 2015 financial year (which is calendar 2015) is set to rise to between $615 million and $635 million, excluding one-off items, up to 29% higher than last year’s $493 million.
The company’s preferred bottom line net profit, (which includes changes in the value of inventories) should be between $560 million and $580 million, sharply higher than the $20 million reported in 2014, according to guidance given Caltex on Thursday.
The sharply improved outlook for Caltex comes just two days after the Australian Competition and Consumer Commission (ACCC) said its latest survey of petrol prices showed a fattening of profit margins, with petrol retailers enjoying their highest margins on retail petrol and diesel sales since price monitoring started in 2002.
The Commission said retail prices had not followed crude oil prices lower to the same extent, leading to higher profits for the petrol companies at the expense of Australian motorists,leading to claims by some critics of price gouging by retailers.
Caltex said yesterday that the higher figures reflect higher profits in supply and marketing that includes the new Ampol Singapore operation that sources crude and fuels for the Australia since the closure of the company’s Kurnell refinery in Sydney.
Cost cutting (including more than 500 jobs losses) and efficiency improvements seen through Caltex’s cost cutting program also helped.
Caltex said that earnings before interest and tax in refining and marketing are expected to be about $670 million, or $675 million on an underlying basis, about 5% higher than 2014. The gain comes despite total sales volumes of fuel falling 5%.
The company’s sole remaining refinery, the Lytton plant in Brisbane, is expected to deliver record earnings before interest and tax of about $400 million, up from $218 million in 2014. Refining margins have been particularly strong this year, set to average about $US16 a barrel, Caltex said. That’s up from just over $US10 a barrel in 2014.
