Caltex Australia has begun a review of its refineries as the strong Australian dollar contributes to a fall in its refiner margins.
The fuel refiner and supplier said political turmoil in Libya and natural disasters in Japan had led to its US dollar refiner margin falling to $US7.82 in the six months to June 30, from $US9.67 in the first half of last year.
The high Australian dollar had reduced its local currency margins, Caltex also said, and its continued strength meant the refiner margin environment would be uncertain.
“Current conditions are challenging but we need to keep a cool head,” chief executive Julian Segal told a briefing on Monday after the company released its interim results.
Mr Segal said Caltex had begun a review of its refineries regarding their role in maintaining continuity of supply to customers.
The company also said a program aimed at delivering cost and capital efficiency gains would continue to deliver results.
Caltex plans to outsource some in-house maintenance activities at its Kurnell and Lytton refineries in NSW and Queensland, and a provision of about $7 million for associated retrenchment costs will be recognised in its second half accounts.
On a historical cost basis, Caltex’s net profit for the six months to June 30 of $270 million was up 91 per cent, thanks to a significant increase in the crude oil price during the period.
However, on a replacement cost basis, net profit was down 24 per cent at $113 million, partly due to operational disruptions including extreme weather that hampered production levels.
Calculating profit on a replacement cost basis removes the impact of inventory revaluations due to oil price fluctuations to give a better view of underlying performance.
A 4.3 per cent increase in transportation fuel sales was driven by growth in commercial diesel, jet and premium fuel.
The company declared an interim dividend of 17 cents per share, fully franked, down from 30 cents per share for the first half of 2010.
Caltex also said the government’s proposed carbon pricing scheme would cost it $5 million to $10 million in the first year.
Shares in Caltex closed steady at $9.84.
