--Caltex 1H profit up in line with expectations
--17c/share dividend at lower end of guidance
--Shares fall 1.5%
(Recasts first the paragraph to add dividend; adds analyst
comment in the sixth paragraph.)
By Ross Kelly
SYDNEY--Caltex Australia Ltd. (CTX.AU) Monday reported an
expected rise in first-half profit but declared a conservative
dividend payout to preserve capital for a restructure distancing it
from oil refining.
Australia's biggest oil refiner, 50%-owned by Chevron Corp.
(CVX), this year decided to shut its Kurnell refinery in Sydney by
2014 as it struggles to compete with larger facilities in Asia that
can pump fuel more cheaply.
Net profit in the six months to June 30 rose to 197 million
Australian dollars (US$205.2 million) from A$113 million a year
earlier, on a replacement-cost-of-sales basis--a smoothed measure
that excludes the value of its stockpiles.
The figure was in line with company guidance of A$185
million-A$205 million and benefited from a more reliable
performance from refineries after unplanned mechanical problems
marred the comparative period.
An interim divided of 17 cents a share equated to about 23% of
net profit, at the lower end of recently lowered 20%-40%
guidance.
"With Caltex looking to simultaneously close Kurnell and grow
the marketing business, the pressures on the balance sheet will
undoubtedly grow," analysts at Macquarie Group said.
The closure of Kurnell, involving the loss of 330 jobs, will
bring the number of refineries operating in Australia down to five
from seven at the start of this year as Royal Dutch Shell PLC
(RDSB) shuts its Clyde refinery in Sydney.
Caltex expects to make provisions in calendar 2012 of about
A$450 million to cover employment benefits, dismantling and
remediation expenses. It will also invest about A$250 million
converting Kurnell into an import terminal.
The company is raising A$525 million from an issue of hybrid
securities it hopes will placate ratings agencies concerned about
pressures on its balance sheet. Standard & Poor's in July put
the company's BBB+ credit rating under review for a possible
downgrade. It said a potential hybrid issue, in the absence of any
dividend adjustment or other funding levers, may not be sufficient
to protect its current rating.
At 0320 GMT, Caltex Australia shares were down 1.5% at A$15.26,
underperforming a 0.3% rise in the benchmark S&P/ASX 200
index.
Poor performances from its refining business are tarnishing an
otherwise strong showing from its fuel marketing business. The
company is experiencing rising or broadly consistent demand for jet
fuel, diesel fuel from miners, and gasoline from motorists in an
Australian economy that's still growing faster than most of its
developed peers.
It has decided to keep its other refinery, Lytton in Brisbane,
open and may inject "modest investments" into the facility.
Profit on a historical cost basis, which includes the value of
stockpiles, fell 38% to A$167 million.
Write to Ross Kelly at ross.kelly@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires