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Caltex flags a fall in underlying profit

AAP logoAAP 14/12/2016

Fuel refiner and retailer Caltex Australia expects its underlying profit to fall by about 20 per cent because of weaker margins in its refining operations.

The company has forecast an after tax profit in the range of $500 million to $520 million for the 2016 calendar year, excluding the impact of changes in oil prices, much lower than its underlying profit of $628 million in 2015.

Caltex said slim refining margins have dented earnings from its Lytton refinery in Brisbane, which is expected to contribute $200 million in earnings before interest and tax, down from $406 million in 2015.

The company said less favourable external factors were behind the weaker refining earnings, including a stronger US dollar and lags in pricing, offsetting higher sales from production.

In Caltex's much larger supply and marketing operations, underlying earnings are expected to rise from 2015, with higher sales of premium petrol and diesel continuing to offset a decline in unleaded petrol, including the ethanol blended fuel E10.

"The increased penetration of premium Vortex products has been underpinned by targeted investment in growth, including new retail service stations and increased marketing spend," the company said.

Total diesel volumes in 2016 are anticipated to be broadly in line with 2015.

Meanwhile, Caltex said it was working to eradicate underpayment of staff within its service station network, including working with the Fair Work Ombudsman to terminate franchise agreements with franchisees found to have engaged in underpayment or other illegal conduct.

The company's shares were up 31 cents at $30.64 at 1245 AEDT.

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