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Caltex reports lower half year profit

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Caltex Australia today announced a profit after tax (excluding significant items) on a replacement cost of sales operating profit (RCOP) basis of $149.6 million for the first half of 2005, compared with $176.1 million for the first half of 2004.

Caltex recorded significant gains in market sales volume and marketing margins compared with the first half of 2004. Petrol sales increased 5%, benefiting from the rollout of the Caltex Woolworths jointly branded network, and diesel and jet sales rose by almost 7%.

Non-fuel income increased by 10%. The results were achieved despite the negative pressure of a stronger Australian dollar and the effect of time lags in recovering significantly higher crude prices from the market.

Caltex managing director Dave Reeves said the Caltex first half 2005 result reflected a strong operational performance across the business, with marketing strategies and refining improvement programs delivering further benefits.

"These results reflect the continued strong underlying financial performance of the business. We have increased sales volumes and margins across all marketing channels. We have achieved high refinery production rates outside planned maintenance shutdowns. And our refiner margins remain strong, offset by market pricing lags and a stronger Australian dollar," Mr Reeves said.

Strengthened market leadership

Mr Reeves said Caltex was seeing excellent results from strategies launched last year to enhance its market leadership position by improved performance across all business segments.

"Total transport fuels sales volume continued to expand and was 5.8% higher in the first half of 2005 compared with the first half of 2004," he said.

"This was partly driven by the rollout of the Caltex Woolworths jointly branded network which marked its first anniversary on 1 May. It currently stands at 458 sites, 118 contributed by Caltex, with a potential further seven Caltex sites to be converted by the end of the year. There has been an average 80% increase in fuel sales at Caltex contributed sites.

"Diesel sales volume grew by 6.8% in the first half of 2005, compared with the same period for the previous year. Jet fuel sales increased by 6%. Premium fuel sales increased by 34.4% compared with the first half of 2004 boosted by the NSW rollout of Caltex's new high octane premium unleaded petrol Vortex 98.

"There was also growth in base oils sales volumes, which were 4.7% higher in the first six months of 2005 compared with the first half of 2004. Non-fuel income increased by almost 10% compared with the same period last year. Caltex is now the number one convenience retailer in Australia with a 31% market share and shop sales that continue to grow."

Significant year for refining business

Mr Reeves said 2005 is a significant year for the company's refining operations, with a high level of planned shutdown activity for routine maintenance and preparation for clean fuels. Improved operational efficiencies substantially offset the impact of the shutdowns on production levels.

"Our previously announced investment to expand production of high value products is yielding good results," he said. "We have been able to re-rate our crude unit capacity by demonstrating record levels of throughput at both refineries which has previously been a major constraint. In addition to operating improvements, project planning for the previously announced capital investments is progressing.

"One of the two crude units at the company's Kurnell refinery was shut down for 26 days in February for planned maintenance and the Lytton refinery successfully completed a 50-day full refinery shutdown in May/June, the first in four years.

"The diesel hydrotreating units at both refineries will undergo major rebuilds during the second half of 2005 in preparation for the transition to cleaner fuels.

"As announced on 12 August 2005, the company has applied to the Australian Government for a short-term variation to the clean fuels standards deadline of 1 January 2006, as part of a contingency plan to ensure certainty of supply to customers. Caltex currently has the most significant clean fuels investment in the Australian industry, with four major processing units either being significantly modified or newly constructed."


Caltex Chairman Dick Warburton AO said the Board declared an interim fully franked dividend of $40.5 million, or 15 cents a share. The record date is 9 September 2005 with the dividend payable on 30 September 2005.

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