Brian Robins
May 10, 2012
The Age
Caltex is closer to shutting down its Kurnell oil refinery, disclosing that it is continuing to lose money while also stating that it may opt for a mix of imported and domestically supplied products, signalling the possible retention of Brisbane’s Lytton refinery.
At this morning’s annual meeting, company chairman Elizabeth Bryan confirmed that the Lytton refinery was “better suited” to produce the mix of products demanded by customers.
“The optimal mix of product sources may include domestic and international competitor refineries as well as our own production,” she told shareholders.
“Refining has continued to lose money during the first quarter, with Kurnell representing the majority of the losses in 2011 and 2012 to date.
“This is expected to continue into the future. Therefore, the review is focused on the Kurnell operation.
“Lytton’s configuration is better suited to the product mix demanded by our customers.”
After launching a review of the viability of local refining last August, the company said in February it had launched a more detailed, six month review, with a final decision not expected until after the middle of the year.
“Before a final decision can be made, a number of matters have to be determined such as supply alternatives for our core business, the risks associated with each strategic option and the impact of possible decisions on a broad range of stakeholders,” Ms Bryan told the meeting.
Ahead of the final decision on the Kurnell closure, Caltex wrote down the value of its refining assets by $1.5 billion before-tax, pushing the group into the red for 2011, with a net loss of $714 million booked.
In the March quarter of 2012, the refining division lost another $60 million before tax, up from the loss of $39 million before tax in the first quarter of 2011.
Overall, the company posted a first-quarter net profit of $106 million, down from $194 million a year earlier. The 2012 March quarter profit included an inventory gain of $117 million, which covered losses elsewhere.
Sales in the quarter rose more than 2 per cent to 4.1 billion litres, buoyed by 26 per cent growth in sales of premium fuels with diesel sales up nearly 6 per cent, while jet volumes were up nearly 4 per cent and lubricant sales up 8 per cent.
The short-term outlook for the core marketing business remains positive, shareholders were told, while Singapore refiner margins for April have improved, which delivering a positive earnings result for refining in that month.
“We anticipate an improvement in the second quarter earnings for Refining compared to the first quarter, but believe the ongoing strength of the Australian dollar will continue to pressure the Caltex refiner margin in the medium to long term,” the managing director, Mr Julian Segel told shareholders.
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