Caltex sees retail slip as refinery margins shrink

The group now expects a total fuel and shop margin range of about $160 million to $170 million for the first quarter of the year.

The fall in retail was first flagged by the market in February during the release of Caltex’s results.

During an analyst call, Bank of America Merril Lynch (BAML) retail analyst David Errington launched a spray at Caltex. He said the group’s convenience business was going backwards and disputed Caltex chiefs’ claims the company was on track to deliver growth in 2019.

“I can’t see how you’re getting uplift when you’re going backwards by $35 million a year. None of you guys will be around to be accountable for it,” Mr Errington said at the time.

Despite this early slump, Caltex remains confident for the rest of the year.

“While the first quarter looks challenging, Caltex notes that short term trading conditions are not necessarily a reliable indicator of the full year result,” the company said.

Caltex’s refiner margins also fell in February, dropping by 26 per cent year on year even as its sales rose by 15 per cent, from 475 million litres in February 2018 to 549 million litres in 2019.

For the financial year to date, Caltex’s refining margins are around $US7 ($9.86) a barrel, below its 2018 $US9.99 a barrel average.

Caltex said it will also shut down part of its Lytton fuel refinery for maintenance, causing a 200 million litre to 250 million litre production hit. However, it doesn’t forecast any change to its 2019 guidance levels of 5.8 billion litres.


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