By Ross Kelly
SYDNEY--Caltex Australia Ltd. (CTX.AU) said its refinery
business was continuing to come under pressure and weigh on
earnings.
Australia's only listed oil refiner and fuel marketer, which is
50%-owned by Chevron Corp. (CVX), said it expected net profit in
the six months through June of between 155 million Australian
dollars (US$146 million) and A$175 million. Caltex posted earnings
of A$171 million a year earlier.
The profit figure is on a replacement-cost-of-sales basis, which
is preferred by the company and analysts because it strips out the
value of Caltex's inventories.
Operating profit at the marketing division is expected to grow
by 7-8%, offsetting an anticipated loss at the refinery division of
A$65 million-to-A$85 million.
Caltex said it was on track to convert its Kurnell refinery in
Sydney into a fuel-import terminal in the fourth quarter. It also
owns the Lytton refinery in Brisbane, which it has decided to keep
running.
Australia's refinery sector is struggling to compete with large
new facilities in places such as India that are flooding the market
with cheap fuel. Royal Dutch Shell PLC (RDSA) and BP PLC (BP.LN)
have also announced Australian refinery closures or sales in recent
years.
Sellers of refined products, however, are benefiting from
sustained Australian demand for fuel such as gasoline, as the
economy continues to perform well relative to western peers.
Write to Ross Kelly at ross.kelly@wsj.com
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