Caltex profits tipped to rise

FUEL refiner and marketer Caltex Australia says its fullyear underlying profit is expected to rise up to 18 per cent on stronger marketing and refining results.

But the results are lower than forecast, suggesting headwinds will be stronger than expected in the second half.

Caltex yesterday said its replacement cost operating profit — the standard profit indicator for the refining industry because it strips out the impact on fuel stockpiles of price changes — would rise to between $600 million and $620 million this year.

That compares with a $524 million tally last year at Caltex, which operates on a financial year to December.

Deutsche Bank analysts had been expecting full-year profit by that metric to clock in at $659 million, while analysts at another investment bank, Citi, had been tipping a $625 million tally.

“Retail margins have been lower in the second half of 2017 compared to the first six months on the back of increased retail competition and a rising commodity price environment,” Caltex said in a trading update yesterday.

“Non-fuel income is forecast to be lower due to the ongoing operational impact of franchise conversions.”

Net profit at Caltex, which is led by chief executive Julian Segal, is expected to range from $620 million to $640 million, up from $610 million last year.

This includes a $15 million loss on significant items, including $15 million of after-tax costs on restructuring and a franchisee assistance fund, offset by profits on the sale of Caltex’s fuel oil business.

Net debt is expected to be about $900 million at the end of this month, up from $454 million a year earlier because of acquisitions, including the Milemaker buyout in Victoria and Gull New Zealand purchase.