Caltex will barely break even at its only oil refinery this half, as the fuel supplier warned investors to expect a slump in benchmark profit, sending its share price plunging.

Shares in the petrol and diesel supplier sank 24 per cent in early trading to $20.52, its lowest since February 2014, as investors digested the advice that the net profit figure most closely watched by the market would more than halve for the six months to June.

Profit on a replacement cost basis would drop to $120 million-$140 million, down from $296 million posted in the first half of 2018, Caltex advised on Thursday.

Caltex shares were down $5.725 at $21.25, a five-year low, at 10:08am AEST. Shares in listed rival Viva Energy were down 7.4 per cent at $2.075 at the same time.

Earnings before interest and tax at the Lytton refinery in Brisbane will be between zero and $10 million, down from $105 million, Caltex said, confirming the weakness in refining profits that has been plaguing the sector since the latter part of 2018.

Chief executive Julian Segal insisted Caltex had “delivered a fair underlying performance in a very challenging market”.

“The industry continues to experience difficult macro-economic conditions arising from the slowing Australian economy, low refining margins and high crude prices combined with a low FX [foreign exchange] rate,” he said.

Mr Segal added that despite the negative climate and “heightened” competition in fuel retailing, Caltex had gained market share in the retail market and maintained its share in the wholesale sector.

The difficult external environment adds to investors’ worries about the progress of Caltex’s convenience retailing revamp.

Earnings before interest and tax from Caltex’s convenience retail business is expected to slump to $75 million-$85 million, down from $161 million in the June half last year.

EBIT from the fuels and infrastructure business, which includes the refinery, would be between $190 million and $210 million, down from $314 million for the first half of 2018. Caltex said that excluding the refinery, earnings were only slightly lower and would have improved were it not for about a $40 million hit from the revised fuel supply contract struck with Woolworths.

Extracted from AFR