Caltex has announced that it is still on track with its plan to shut down its Kurnell refinery in Sydney by mid-2014 despite better margins and a weakening Australian dollar.
According to AAP reports published via Yahoo News, while the company’s first half profit dropped 13 per cent to $171 million, the result was at the higher end of Caltex’s guidance range for profit on a replacement cost basis.
Analysts say there is an uncertain outlook for Caltex, as it winds down refining operations and possibly face rising costs on imported oil due to a weaker currency. Some analysts even predict that the company will also close its Lytton refinery in Brisbane.
“The refining business is highly volatile, sometimes they get excellent numbers, sometimes they don’t and more times than not, the `don’t’ numbers influence them more than the good numbers,” said IG market strategist Evan Lucas.
Caltex’s refining business reported a loss of $43 million in the first half of 2013, down from a $2 million profit last year.
The Kurnell refinery will be converted into a fuel import terminal, costing hundreds of jobs in the process. Chief Executive Julian Segal however says their retail stores and fuel distribution business would drive growth in the second half of the year. He said the growth in their marketing and distribution operations will be due to more motorists using premium fuels.
“Caltex is the Australian transport fuel market leader, supplying 30 per cent of these fuels,” Mr. Segal said.
“But there are opportunities in geographies where we are not as strongly represented, and in products, we have demonstrated we can grow market share in lubricants that are high margin products.”
The marketing and distribution business of Caltex delivered a $365 million profit, in line with last year’s record $367 million.