Strong second half operational performance
underpins higher Caltex profit
February 23, 2007
- Replacement cost of sales profit $430 million, up 4%
- Final 2006 dividend 48 cents per share - full year (80 cps) up
- Record production and utilisation rates achieved by
- Increased sales volume of transport fuels
- Clean fuels plants commissioned and running well
- Achieved biofuels sales volume target
- Capital expenditure of $382 million
||Full year ended 31 December
|Replacement cost of sales operating profit
(RCOP)1 result(excluding significant items in
|- after tax
|- before interest and tax
|Historical cost result
|(net profit after tax, including inventory gains and excluding
significant items in 2005)
Caltex Australia Limited announced today an after tax profit of
$430 million on a replacement cost of sales operating profit (RCOP)
basis for the year to 31 December 2006. This compares with an RCOP
result of $414 million (excluding significant items) for the full
The profit equates to 2.2 cents per litre on average for all
petroleum products sold. (Full year 2005: 2.2 cents per
The profit of $430 million was made on total sales in 2006 of $18.4
billion. Total excise and GST on these sales was $6.6
Caltex Managing Director Des King said the strong operational
performance in the second half enabled Caltex to increase its year
on year underlying profit.
"Earnings in the period benefited from record refinery utilisation
and production that was underpinned by strong refiner margins
driven by the continued regional growth in demand for transport
fuels and tight supply," Mr King said.
"The Caltex refiner margin2
in 2006 averaged US$10.13 a
barrel, up from US$8.40 a barrel in 2005.
"Total fuel sales volumes increased in 2006 following a recovery in
the second half after being constrained by higher petrol and diesel
prices in the first half of the year. These higher prices at the
pump were mainly as a result of the large increase in Singapore
product prices which rose mainly as a result of higher crude oil
prices. The regional benchmark crude oil (Tapis) price in 2006
averaged US$68 a barrel compared with US$57 a barrel in 2005.
"Sales recovered when local pump prices for petrol eased in the
second half of the year in line with lower Singapore product
prices. Singapore is the nearest alternative source of petroleum
product supply for Australia, which now imports about 25% of its
transport fuel requirements.
average price of all petroleum products sold by Caltex (including
GST) was 12.8 cents per litre higher in 2006 compared with
. Of this increase, 12 cents per litre (cpl) was
oil prices and costs, and 0.8 cents per litre was higher taxes
(including GST), while the Caltex profit (RCOP basis) remained
unchanged at 2.2 cpl4
. Caltex has no crude oil
"Full year Caltex earnings were affected by the impact of the delay
in the completion of the Clean Fuels Project in the first half of
the year which constrained Caltex refinery production and increased
the requirement for imports of compliant products and exports of
"The $500 million new facilities to produce cleaner fuels at both
refineries were commissioned safely, smoothly and are operating
"There was very strong operational performance by the refineries in
the second half of the year and a solid contribution from the
marketing business which achieved stable sales volumes and margins
in an intensely competitive environment."
Final 2006 dividend 48 cents per share - full year (80 cps) up
Caltex Chairman Richard Warburton said the Board had declared a
final dividend of $129.6 million or 48 cents per share (fully
franked) making total dividends declared of 80 cents per share
after 32 cents per share paid in September 2006 (2005 total
dividends declared: 46 cents per share).
"This payment reflects the company's stated dividend policy of
lifting ordinary dividends to 40-60% of the RCOP (after tax
excluding significant items) from 2006 once the high capital
commitments of the Clean Fuels Project were completed," Mr
"The Caltex share price increased 18.7% in 2006, opening at $19.38
and closing at $23.00."
Refineries set new records
Mr King said production of all products by Caltex refineries in
2006 was a record 11.9 billion litres, up from 11.6 billion litres
in 2005. This included increased production of high value transport
fuels (petrol, diesel and jet fuel) to 10.2 billion litres up from
10.0 billion litres in 2005.
"The refineries set new utilisation and production records in the
second half of the year," Mr King said. "Average utilisation for
the refineries overall for 2006 increased to 78% (2005: 75%), and
averaged 85% in the second half of the year following the start-up
of the clean fuels plants and a maintenance shutdown at the Kurnell
"This improved performance reflected the ongoing benefits from the
refining performance improvement program launched in 2004 to lift
production of high octane petrol and diesel, improve throughput and
yield and increase revenue.
"The cost of the total program is estimated at $350 million. To
date, $63 million has been spent delivering ongoing benefits which
are reflected in improved utilisation and higher production
"The program consists of dozens of smaller projects and several
major projects, including a new diesel hydrotreater at the Lytton
refinery, large crude oil and diesel storage tanks at Kurnell and
octane optimisation projects.
"The projects are expected to increase production of transport
fuels to around 12 billion litres a year in 2009, up from 10.2
billion in 2006.
Marketing sales increase
"Caltex sales of transport fuels increased to 13.4 billion litres
in 2006, up from 13.2 billion litres in 2005.
"Caltex petrol sales grew 0.8% in a market which shrank by 1.6% in
2006. Sales volumes continued to be underpinned by the Caltex
Woolworths venture network. Caltex diesel volumes grew by 3.6%,
which was less than market growth, and jet fuel sales declined in
2006 compared with 2005 due to intense competition.
"Caltex strengthened its lead in Australian convenience store
retailing increasing its share to over 32% in 2006. Average weekly
same store shop sales were 5.9% higher than in 2005. Non fuel
income continued to grow with higher returns from the retail and
"There was good progress in the initial stages of a major terminal
infrastructure expansion and upgrade program to meet the expanding
need for imports, support regional market growth and ensure
reliability of fuels supply. As part of this program Caltex
invested $17 million in 2006 to improve safety, storage and
shipping facilities at its terminals in Victoria and
Biofuels network expands
"By the end of 2006 Caltex had Australia's largest network of sites
selling biofuels blends. The company achieved its target commitment
for 2006 under the Australian Government's Biofuels Action Plan and
will continue to meet its annual target commitments through to
"Caltex's E10 Unleaded petrol, blended with 10% ethanol made from
crops such as sugar cane or wheat, is now on sale at 137 service
stations in regional and metropolitan locations in Queensland, NSW
and the ACT.
"New Generation Diesel, launched by Caltex in October 2006, is
diesel enhanced with 2% biodiesel made from vegetable oils and
tallow. It is being distributed to over 160 NSW service stations
from Caltex's Newcastle terminal.
Building a strong foundation
"2006 was another year of major capital investment by Caltex, where
$382 million was spent (2005: $530 million) including $85 million
on the Clean Fuels Project. This represents 89% of the 2006 $430
million profit on an RCOP basis.
"In 2007 we will continue to invest in strengthening Caltex
refinery operations, supply chain and marketing network and
building the capability of the workforce. The company will be
focusing on continuing to improve safety, reliability, cost
efficiency and capital stewardship.
"The outlook for refiner margins remains strong while diesel demand
is expected to continue to grow by around 4% a year with continued
strong demand from the resources and transport sectors. Petrol
demand growth is likely to be flat."
Historical cost profit
On an historical cost profit basis (including inventory gains),
Caltex recorded an after tax profit of $466 million for the full
year 2006 compared with $574 million for the full year 2005. The
profit includes crude oil and petroleum product inventory gains of
$36 million (after tax) compared to inventory gains of $160 million
(after tax excluding significant items) in the full year
Caltex debt was $539 million at 31 December 2006 (31 December 2005:
$429 million) in line with expectations.
Group Manager Corporate Affairs
Phone 02 9250 5224
Pager 02 9214 1146
Manager Investor Relations
Phone 02 9250 5166
1The replacement cost of sales
operating profit (RCOP) excludes the impact of the fall or rise in
oil prices (a key external factor) and presents a clearer picture
of the company's underlying business performance. It is calculated
by restating the cost of sales using the replacement cost of goods
sold rather than the historical cost, including the effect of
contract-based revenue lags.
2The Caltex Refiner Margin (CRM) represents the
difference between the cost of importing a standard Caltex basket
of products to Eastern Australia and the cost of importing the
crude oil required to make that product basket. The CRM calculation
represents: average Singapore refiner margin + product quality
premium + crude discount/(premium) + product freight - crude
freight - yield loss.
3This analysis reflects a restatement in 2005 of a
portion of intercompany sales and cost of sales on consolidation.
There was no net profit impact arising from this restatement.
4This calculation is based on RCOP NPAT ($430 million)
divided by total Caltex sales including sales made to domestic
refiners (19.2 billion litres).