Caltex Australia is counting on the impending closure of its Sydney refinery to reduce volatility in its earnings, after annual profit fell by 28 per cent.

The company plans to shut the Kurnell plant in Sydney’s south by the end of 2014, and convert it to an import terminal to receive refined fuels from Singapore.

Chief executive Julian Segal said the closure of the terminal would help make the company’s earnings more predictable.

Caltex’s net profit for 2013 dropped to $332 million as a result of a lower Australian dollar and a reduced refiner margin -the difference between the price of crude oil and Caltex’s refined fuel products.

“Our exposure to refining-related externalities such as refiner margin and unplanned incidents will reduce,” Mr Seagal said.

“We expect this to result in lower volatility in our earnings and cash flows.”

Over the year, the Australian dollar fell from $US1.05 in April to around 90 US cents in December.

But Caltex also says the lower Australian dollar will help lift its refiner margin and its earnings over the longer term.

Caltex’s refining and supply business recorded an earnings loss of $171 million for the full year due to the Australian dollar’s slide and a lower refiner margin.

But it posted four per cent earnings growth in its marketing business, which includes its retail and commercial sales divisions, to $764 million.

The company’s net profit is on a replacement cost basis, which excludes the effect of changes in world oil prices and reflects the company’s underlying performance.

Caltex Australia shares were up 40 cents, or 1.95 per cent, at $20.89 at 1455 AEDT.