Caltex posts profit, but refinery review still ongoing

Australia’s largest remaining oil refiner, Caltex Australia, posted higher profits in the second half because of higher volumes of products sold and strong demand for premium products. The company’s net profit for the first six months ending June almost doubled from the same period a year ago, from A$141.65 million (US$134.9 million) to A$270 million (US$257.1 million). Earnings were squeezed by lower refining margins, it said. Fuel volumes rose 4.3%, benefiting from continued growth in commercial diesel fuel, jet, retail and premium fuels. Finished lubricants growth was buoyant, with volumes up more than 14%. However, the company’s accounting method of “replacement cost of sales operating profit,” which removes the effect of the rise and fall of crude oil prices on earnings, has actually resulted in a fall in net profit to A$113 million (US$107.6 million), from US$149 million (US$141.9 million), from the same period a year ago.The company had earlier decided to review its refining operations in Australia. The review has put its Kumell refinery located south of Sydney under a cloud. Caltex said that central to the review was sustaining continuous supply relations with its customers. “What’s driving the review is continuity of supply and reliability of supply,” said Julian Segal, managing director and chief executive. “It is still in the early stages. We’re not close to making any decisions,” he said. (August 23, 2011)