Oil refiner and marketer Caltex Australia has reported a better than expected underlying full-year profit as Australian petrol prices lagged falls in the price of crude oil, and as it logged strong marketing and refining performances.

The company’s 2014 after-tax “replacement cost operating profit”, which strips out the effect of crude price movement on inventories, surged 48 per cent to $493 million, up from $332m in 2013 and well ahead of guidance of between $450m and $470m.

“The overall result reflects another record marketing profit and the impact of favourable externalities, which have benefited the supply chain result,” Caltex said.

“The sharp decline in Brent crude oil prices towards year end was a major contributor to the stronger refiner margin in the second half as product prices have not fallen as quickly as the crude price, increasing the seven-day lag, whilst reducing the refining yield loss.”

Caltex took advantage of the low oil price by running its Lytton refinery in Brisbane, which it kept open in a recent refining review that shut down the Kurnell refinery in Sydney, at record rates.

caltex refinery

The company’s “historic cost operating profit”, which includes the non-cash effects of oil price moves and other significant items, slumped 96 per cent to $20m, from $530m the year before. Guidance was for profit of between $90m and $110m.

The bigger-than-flagged fall from December 11 guidance was because of the continued slide in the oil price.

Caltex will pay a final dividend of 50c, an increase on 2013’s final dividend of 17c.

The group also said it expects the coming year’s capital expenditure to match 2014’s capex. Caltex is targeting a spend of between $455m and $510m, compared to 2014’s investment of $503m.

Chief executive Julian Segal’s total 2014 remuneration rose to $5.69m, from $4.19m the year before.

Extracted in full from The Australian.

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