Petrol retailer Caltex expects its first-half result to fall broadly in line with last year’s record number as margins in its refinery operations slide.

The ASX-listed group said it anticipates logging a net profit of between $245 million and $260m, against the $251m amount recorded last year.

Its historical cost profit number is tipped to come in between $310m and $330m, short of the $375m figure noted during the corresponding period in 2015.

On a pre-tax basis, the firm sees its supply and marketing operation delivering profits of $345m to $360m, up from $315m a year ago, aided by strong demand for premium fuels.

“Total sales volumes of transport fuels for the first half of 2016 are up marginally at 7.7 billion litres,” the firm said in a statement.

“We continue to successfully grow sales of premium fuels in retail across both petrol and diesel, offsetting the decline in unleaded petrol and E10, together with increased jet fuel sales.

However, the pre-tax profit at its other core unit — the Lytton refinery — is tipped to slump from $154m to a range of $85m-$95m due to a return of margins toward ‘normal levels’ more than offsetting a rise in volumes.

“For the first five months of 2016, the average realised Caltex Refiner Margin was $US9.80 per barrel. This compares unfavourably to the 2015 first half average of $US16.00 per barrel, as refiner margins return towards more normalised levels,” Caltex said.

“Sales from production from the Lytton refinery in the first half is expected to total approximately 2.9 billion litres, up around 20 per cent from the same period last year.”

Caltex shares are down 18 per cent on the year-to-date, underperforming a 3.6 per cent decline in the broader market.

The announcement follows JP Morgan this week raising its view on the firm’s shares to ‘overweight’ from ‘neutral’.

Extracted in full from The Australian.