Australia's Caltex shares dive as bleak economic conditions hit profit
* Says slowing economy hampering growth
* Rising oil prices hit refining margins
* Caltex, Viva Energy shares biggest decliners
(Adds analyst comment, division forecast)
By Nikhil Nainan
June 20 (Reuters) - Caltex Australia on Thursday
said it expects first-half profit to be less than half of what
it was a year earlier, sending its shares down a fifth as the
petrol station owner grapples with slowing economic growth and
Caltex forecast adjusted operating profit after tax of A$120
million to A$140 million ($82.6 million to $96.4 million) for
the six months to June 30. That compared with A$296 million
reported a year prior.
"The downgrade is enormous," said Jun Bei Liu, a portfolio
manager at Tribeca Investment Partners.
The gloomy outlook sent shares of the petrol station and
convenience store owner down 24% to A$20.52, their lowest in
more than five years. Rival Viva Energy Group Ltd also
fell more than 12% to a four-month low.
"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," said Julian Segal,
managing director and chief executive.
Australia, which has not reported a recession since the
early 1990's, is growing at its slowest pace in a decade, with
unemployment on the rise and consumer spending under pressure.
The predicament prompted the country's central bank to cut
interest rates to a record low earlier this month, its first cut
in nearly three years.
The commentary from Caltex today is not inconsistent with
what other domestic-facing companies have been saying, Tribeca's
Liu said, citing sectors ranging from retail to aviation.
"Weaker domestic economic activity has impacted domestic
demand, including from the transport, agriculture and
construction sectors," the company said in a statement
Oil prices have also squeezed Caltex's profit margin on the
back of global growth and geo-political worries.
At its Lytton refinery, earnings before interest and taxes
(EBIT) will likely be zero to A$10 million, versus A$105 million
in the same period last year, Caltex said.
The fuel supplier also said the average Caltex Refiner
Margin for the first five months of the year was $8.22 a barrel,
compared with an average of $10.06 in the first half of 2018.
EBIT at its convenience retail division is likely to be
about 50% lower compared with a year prior, at A$75 million to
A$85 million, Caltex said.
($1 = 1.4520 Australian dollars)
(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Stephen Coates and Christopher Cushing)
First Published: 2019-06-20 03:06:09
Updated 2019-06-20 03:58:53
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