UPDATE: Caltex Forecasts Sharp Fall In 1st Half Profit, Shares Dive

Analysts cut earnings estimates on Caltex Australia Ltd. (CTX.AU) Friday after the oil refiner blamed currency volatility and planned maintenance shutdowns for a forecast sharp fall in its first half profit.

Shares in Australia's only listed oil refiner, 50%-owned by Chevron Corp. (CVX), plunged 7% after its guidance for first half operating profit before significant items of A$140 million-A$160 million fell short of analysts' forecasts.

UBS was expecting A$176 million and Macquarie A$178 million.

Given that Caltex disclosed a first quarter operating profit of A$130 million, the guidance implies it's only going to make A$10 million-A$30 million in the three months to June 30.

Gordon Ramsay at UBS said he was disappointed by the guidance, given the first quarter figure, stronger-than-expected regional refiner margins since January and Caltex's robust fuel production levels. Still, he kept a buy rating on the stock, noting its relatively low share market valuation and that significant maintenance has now been completed at its Lytton refinery in Queensland state.

Sydney-based Caltex, which owns two of Australia's seven operational refineries, said it expects to post a first half operating profit including significant items of A$130 million-A$150 million.

The profit slump is largely attributable to exchange rate volatility, Caltex said.

"Singapore refiner margins were stronger than expected due to the weakness in the Tapis crude price relative to other crudes," Caltex said.

"However, the higher average Australian dollar during the period, compared with the same period in 2009, negatively impacted the Caltex refiner margin," it said.

A recent sharp fall in the dollar also negatively impacted Caltex by pushing up U.S. dollar costs, prompting Caltex to take out foreign exchange hedging on 50% of its U.S. dollar crude exposure.

Macquarie cut its operating profit forecast for Caltex to A$159 million and kept a hold recommendation on its shares, saying it's encouraged by stronger Singapore margins this year amid expectations a regional fuel glut and lower demand could lower them.

"That said, it appears Caltex is struggling to capture some of this upside in the short term but should nevertheless benefit from the medium-term tightening that we expect in the Asian refining environment," Macquarie analyst Adrian Wood said.

-By Sydney bureau; 61-2-8272-4680; djnews.sydney@dowjones.com

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