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 margin pressure.

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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