Fuels supplier Caltex has advised of a “challenging” first quarter with weak refining margins, a shutdown at its oil refinery and a dip in convenience retailing returns.
Caltex’s margin on processing a barrel of crude oil into a barrel of petrol and other refined fuels edged up to $US7.34 a barrel in February, but the year-to-date margin remains almost 25 per cent below than for the same two months last year, the Sydney-based company advised on Tuesday.
The softness means Caltex will proceed with the shutdown of a crude unit at its Lytton refinery in Brisbane to rectify performance issues that have dogged it since a power supply interruption in January.
The impact of that shutdown is expected to be 200 million to 250 million litres, with full-year guidance still seen at 5.8 billion litres for the year.
Margins in fuels retailing have meanwhile softened, with Caltex citing the rapid rebound in crude oil prices and market competition.
The result will be a forecast “total fuel and shop margin” of $160 million-$170 million for this March quarter, some $35 million to $45 million less than in the first quarter of 2018. The “shop margins” are broadly in line with a year ago, adjusted for the late timing of easter this year, it said.
Some investors in Caltex already voiced concerns about the slow pace of Caltex’s convenience retailing revamp and the weakness of refining margins at the company’s full-year earnings results, although the sentiment was masked by enthusiasm for a $260 million share buyback.
Chief executive Julian Segal brushed off the criticism of the retailing restructuring, saying it was “progressing well” and has “forward momentum”
Extracted from AFR