Caltex squeezed by oil falls
A squeeze on margins caused by the rise in oil prices from January’s lows is set to restrict Caltex to flat June-half earnings.
A squeeze on margins caused by the rise in oil prices from January’s smashed lows is set to restrict Caltex to flat June-half earnings.
In updated guidance released yesterday, Caltex said June-half profit would come in at between $245 million and $260m compared with the $251m in the previous corresponding period.
On a historical cost basis — including the impact of oil price moves — the June-half profit was forecast at between $310m and $330m, down from $375m previously when a $29m after-tax gain on a significant item was recorded.
Caltex said the earnings before interest and tax contribution from its Lytton refinery in Brisbane was expected to fall to between $85 and $95m for the half year, down from $154m in the previous corresponding period.
The fall reflects the oil price rise squeezing its refiner margin — in the first five months of the year at least — to $US9.80 a barrel. That was well short of $US16-a-barrel margins enjoyed in the previous period and reflects the return to what Caltex described as more “normalised levels’’.
The squeeze on margins has taken its toll on the group’s share price. While the shares were up 97c, or 3.1 per cent, at $31.87 yesterday, they remain well short of the $37.70 level at the start of the year, when oil prices were in free fall, eventually pulling up at $US33 a barrel in mid-January.
Oil prices have since recovered to about $US50 a barrel. The rapid rise from the January low was enough to wipe $20m from Caltex’s fuel margins in February alone.
The squeeze on margins was partly offset by a 20 per cent increase in sales from Lytton to 2.9 billion litres, with the previous period affected by a major maintenance program.
Earnings from supply and marketing operations are expected to be between $345m and $360m.
That compares with $315m in the previous half although that result excluded the $20m one-off supply costs incurred in support of the Lytton maintenance disruption.
Caltex’s total transport fuel sales volumes (including imports) for the June-half sales were up marginally at 7.7 billion litres.
“We continue to successfully grow sales of premium fuels in retail across both petrol and diesel,” Caltex said.
The company said that offset the decline in unleaded petrol and sales of the ethanol shandy E10.
Caltex’s net debt at the end of the June half is forecast at $700m, up from $432m at December 31 last year.
The increase reflects the impact of the recently completed $270m off-market share buyback.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout