Results summary	Six months ended 30 June
2003	2002
Replacement cost of sales result
Operating profit (RCOP) after tax	$86.1 million	$63.7 million
Earnings before interest and tax	$153.5 million	$129.3 million
Earnings per share	31.9 cents	23.6 cents
Statutory result
Net profit after tax (including inventory gains/losses and significant items)	$76.2 million	$130.4 million
Earnings per share	28.2 cents	48.3 cents
Net debt	$855 million (43% gearing)	$1,036 million (52% gearing)
Dividend	4 cents	Nil

• Profit after tax on RCOP basis $86.1 million up 35.1%
• Debt reduced to $855 million and gearing to 43%
• Dividend resumed, 4 cents a share

Caltex Australia Limited recorded a significantly improved result for the first half of 2003 as a result of robust refiner margins and sound marketing margins. The replacement cost of sales operating profit (RCOP) after tax was $86.1 million, up 35% on the $63.7 million profit in the first half of 2002. The company also continued to reduce debt and improve gearing.

Caltex Chairman Dick Warburton said the RCOP figure, which strips out the impact of crude oil price movements, presents a clearer picture of how the business is performing than the statutory (historical cost) profit.

"The RCOP reflects how the company is performing in key areas we can influence such as refining operations, costs and volumes, in addition to the margins available from the market. It is one of the primary measures we look at in considering the issue of the dividend," Mr Warburton said.

When the oil-price driven inventory losses are included, the statutory after tax profit for the half year ended 30 June 2003 was $76.2 million compared with $130.4 million in the first half of 2002. Regional crude oil prices fell during the period (averaging US$29.47 a barrel in December 2002 and US$26.36 a barrel in June 2003). However, due to the pattern of crude price volatility throughout the period this resulted in a net inventory loss of $14.2 million compared with an inventory gain of $105.9 million in the first half of 2002.

The company continued to rebuild its financial strength by reducing debt to $855 million at 30 June 2003, down from $1,036 million at 30 June 2002, reducing gearing to 43% (30 June 2002: 53%). Earnings per share increased to 31.9 cents on an RCOP basis (30 June 2002: 23.6 cents).

"The Board recognises that sufficient progress has been made in improving the financial strength of the company to resume dividend payments," Mr Warburton said. "The Board declared an interim fully franked dividend of $10.8 million, or 4 cents a share. The record date is 12 September, with the dividend payable on 3 October.

"The Board's objective is to pay dividends commensurate with Caltex's need to fund investment in new plant for the manufacture of clean fuels to meet government standards that come into effect in 2006 and build its retail network. This will be done at the same time as achieving a long term capital structure that will allow Caltex to withstand the volatility of oil prices and margins that characterise the industry."

Caltex Managing Director Dave Reeves said the focus, hard work and commitment of Caltex employees during the first half of 2003 had contributed strongly to the company's improved result and reputation as a reliable supplier of quality petroleum products and convenience goods.

"Caltex continued to work systematically towards its goal of incident free operations with the introduction of a comprehensive company-wide Loss Prevention System during the first half of the year," Mr Reeves said. "This system is now being rolled out across the company.

"Strong Singapore refiner margins averaging US$3.34 a barrel for the first half of 2003 (compared with US$2.70 a barrel for the first half of 2002) were largely offset by high crude premiums and freight charges compared with the same period last year. Uncertainty surrounding Iraq and continued demand in Japan for electricity from oil-fired power plants replacing off-line nuclear plants led to high regional crude oil premiums in the first half of 2003.

"The program to improve Caltex refinery reliability and safety performance is progressing well. As a result, there were no disruptions to supply during the period. At the Lytton refinery in Brisbane, the reliability of its power supply was boosted with the commissioning in May of a new external substation along with the installation within the refinery of automatic motor control restarts to 300 pieces of equipment that feed the refinery's process units.

"Marketing margins remained strong while at the same time total transport fuels sales increased compared with the first half of 2002. Caltex's share of the national transportation fuels market increased to 29.7%, up from 28.3% in the first half of 2002.

"Lubricants and specialties volumes remained flat but margins were stronger and industrial, automotive and base oils expanded their customer base compared with the same period the previous year. In the non-fuel retail area, Star Mart convenience store sales increased by 5.2% and smaller Star Shop sales by 6.2% on a like for like basis compared with the same period the previous year.

"In May, Caltex launched a trial of a 10 per cent ethanol/petrol blend at five Caltex and Ampol service stations in Cairns. E10 Unleaded contains ethanol produced from Queensland sugar cane. Results to date are encouraging, with E10 Unleaded representing 20 to 25 per cent of total unleaded petrol sales. A clearly-labelled 10 per cent ethanol blend is also sold at Bogas service stations in country New South Wales.

"Caltex has made significant progress this year in its preparations for production of cleaner fuels at both refineries in line with new government standards being introduced through to 2006. Detailed feasibility studies are under way to revamp the existing diesel hydrotreaters at both refineries to produce lower sulfur diesels and construct new hydrogenation plants for lower benzene in petrol. Approval of the estimated $250 million funding for the project will be determined by the Board in the first quarter of 2004.

"In June 2003, Caltex refineries started production of ultra low sulfur diesel ahead of its mandated introduction in 2006. Ultra low sulfur diesel contains a maximum of 50 parts per million (ppm) sulfur and currently attracts a 1 cent a litre lower rate of excise than low sulfur diesel that contains a maximum of 500 ppm sulfur.

"On 28 March 2003, Caltex welcomed an announcement by the ACCC that it had dropped its investigation into the company and other oil majors relating to allegations of a breach of the Trade Practices Act made by an anonymous so-called 'whistleblower'."

A number of significant, positive policy decisions were made by the Commonwealth Government in the half year: the excise incentive for early production of ultra low sulfur diesel commenced on 1 July 2003; the May Budget announced a program for reform of fuel taxation through 2012, including production subsidies for the early production of 50 ppm sulfur premium unleaded petrol and 10 ppm sulfur diesel from 2006 and 2007; ethanol was limited to a maximum 10% in petrol from 1 July 2003 and legislation introduced to allow for mandatory labelling; the Dawson inquiry made numerous recommendations consistent with Caltex's submission; and a draft Oilcode has been prepared. Regulatory issues in the second half of the year will focus on standards for cleaner petrol and diesel after 2006, regulation of cleaner fuels incentives and Oilcode.

Outlook

"Caltex will continue to focus on the drive to achieve incident free operations, building financial strength through further debt reduction, improved gearing and higher earnings through revenue enhancement and cost savings," Mr Reeves said.

"We are pleased with progress made in reducing debt and expect Caltex to make continued progress towards a strong and sustainable long term capital structure.

"Caltex and Woolworths Limited announced on 21 August they had agreed plans for a 50/50 joint venture that will expand Caltex branding and deliver its quality fuels to approximately 300 more outlets while gaining the benefits of Woolworths' buying for the joint venture and Caltex convenience stores. The joint venture will build its network up to 450 service stations located adjacent or near to Woolworths' stores. Caltex will manage these sites. Woolworths' petrol pricing policy will apply to the joint venture sites and Woolworths will continue its redemption discount fuel offer to its customers. Subject to execution of final transaction documents, the joint venture is proposed to start operations prior to Christmas 2003 following regulatory and third party approvals. It will be EBIT positive from day one.

"The outlook for crude oil prices for the balance of the year is expected to be driven by supply side considerations, the rate at which Iraq can resume crude oil exports, and how quickly economic activity in the world's largest economies return to higher levels of growth.

"Singapore refiner margins since 30 June have been strong averaging US$4.59 per barrel due to the strength of petrol margins in Asia."

Media contact:	Analyst contact:
Richard Beattie	Harvey Ward
Manager Corporate Affairs	Manager Investor Relations
Phone: 02 9250 5224	Phone: 02 9250 5166
Pager: 02 9214 1146	email: hward@caltex.com.au