Caltex Australia says the it expects the recent deterioration of its refining business to be sustained for a prolonged period.
The company, which earlier this month flagged the possible closure of its two Australian refineries, on Monday posted a net loss for the 12 months to December 31, 2011, of $852 million because of sharp writedowns in its refinery business.
The loss compares with a net profit of $302 million in calendar 2010.
The profit result was measured on a replacement cost basis, which excludes the effect of changes in the oil price and was Caltex’s preferred measure of financial performance.
The latest result included the $1.5 billion writedown in the value of its Kurnell refinery in Sydney and Lytton refinery in Brisbane announced on February 16.
“The growth in regional capacity will keep refinery utilisation well below the peak of the mid-2000s,” Caltex chief executive Julian Segal said. “This suggests that refiner margins are unlikely to improve significantly.
“It is in within this context that we will make our decision on our refineries.”
The future of the two refineries, which employ 800 people, was uncertain, as Caltex was undertaking a review into the refineries that was due to conclude in six months.
Mr Segal said calendar 2011 was a tough year for refining, given the strong Australian dollar, a higher crude oil price due to conflict in Libya and the Japanese tsunami, and unplanned shutdowns due to weather.
He said Caltex’s refinery improvement initiatives had made progress in reducing costs, however these gains had been more than offset by the impact of the unplanned outages.
“The refinery review is in progress and continues to evaluate all options, from investment to closure or some combination of this,” Mr Segal said. “While many believe that the announcement of the writedown of our refinery assets approximately 10 days ago takes us one step closer to a closure decision, I want to assure you that we still have many options under consideration.
“One thing is certain, the status quo is not sustainable.”
Caltex said the refinery unit suffered an earnings before interest and tax (EBIT) loss of $208 million in 2011.
By contrast, the marketing unit – which includes petrol stations, as well as jet fuel and mining, transport and industrial sales, posted a record $697 million EBIT, up 20 per cent on the prior year.
The company declared a fully franked final dividend of 28 cents per share, taking dividends for calendar 2011 to 45 cents, down from 60 cents in 2010.
Caltex closed down eight cents at $12.90.
