Brian Robins
August 28, 2012
The Age
AVERSION to ethanol fuels is driving a fatter bottom line for Caltex as it increases its marketing push before the closure of Sydney’s only remaining oil refinery, at Kurnell.
The company posted a net profit of $167 million for the six months to June 30, down from $270 million a year earlier, although by stripping out oil price movements, the profit surged to $197 million from $113 million.
Caltex enjoyed strong growth in sales of premium fuels – both petrol and diesel – profiting from driver aversion to ethanol, as well as car maker demands that it not be used.
Impressive margins and profit growth have prompted Caltex to raise capital spending as it prepares for life after Kurnell, planned for 2014. Caltex is to nearly double capital spending to as much as $450 million this year from $242 million spent last year, with much of it to be outlaid on its marketing division.
Earnings fell in the June half to 61.8¢ a share from 99.9¢ as net profit fell to $167.3 million from $269.9 million. But using Caltex’s preferred accounting technique, earnings per share rose to 73.1¢ from 41.9¢ as profits increased to $197 million from $113 million.
Even though sales of petroleum declined another 1.5 per cent, in line with its continuing trend, sales of premium petrol rose 14 per cent and now make up 26 per cent of all petrol sales, with sales of premium diesel also strong, making up half of all diesel volumes.
The shutdown of Kurnell, with the decision to use it as an import terminal, is in line with the company’s view that there will be a large increase in regional refining capacity, particularly in China.
”Our refineries are small, and on current configurations are not competitive with larger Asian refineries,” managing director Julian Segal said.
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