Caltex Australia expects its first-half underlying profit to improve by as much as seven per cent, with a strong wholesale performance helping to offset lower retail fuel margins and the overhaul of its convenience store network.

The company has flagged an underlying profit for the six months to June 30 of between $295 million and $315 million, compared to $294 million in the prior corresponding period.

Convenience store earnings are expected to fall about 17 per cent due to rising oil prices and the cost of moving franchise stores in-house, but underlying earnings from Caltex’s fuels and infrastructure division – the larger of its two operations – are expected to rise about nine per cent.

At 1228 AEST on Tuesday, shares in Caltex were 97 cents, or 3.3 per cent, higher at $30.32.

Caltex said its reduced retail fuel margins stemmed from a lag between oil price increases and that cost being passed on at the pump.

It said crude oil prices were currently $US8 – more than 10 per cent – a barrel higher than at the end of 2017.

Extracted from The West Australian