Caltex Australia Swings to Full-Year Loss on Refinery Charge

Caltex Australia Ltd., the nation’s biggest oil refiner, swung to a full-year net loss after Asian competition and a strong Australian dollar forced it to write down the value of its plants by A$1.5 billion ($1.6 billion).

The company had a loss of A$714 million in the 12 months ended Dec. 31, compared with net income of A$317 million a year earlier, the Sydney-based company said today in a statement. Profit, excluding the effect of changes in oil prices and one-time items, fell 17 percent to A$264 million.

Caltex, half-owned by San Ramon, California-based Chevron Corp., is considering closing its two refineries after completing a review of the assets in about six months, the company said Feb. 16. The operator of the Kurnell refinery in Sydney and the Lytton refinery in Brisbane flagged earlier this month it would write down the value of those assets.

“The recent deterioration in the performance of the refining business unit due to the challenging external environment, including the ongoing strength of the Australian dollar, lower refiner margins and increasing costs, is expected to be sustained for a prolonged period,” Caltex said today.

The shares dropped 0.6 percent to close at A$12.90 in Sydney trading, while Australia’s benchmark index dropped 0.9 percent. Caltex has gained 9.6 percent this year.

Marketing Growth

The Caltex plants are among seven oil refineries in Australia, with others operated by Royal Dutch Shell Plc, BP Plc and Exxon Mobil Corp. Shell, Europe’s largest oil company, said last year that it would halt refining operations at its Clyde plant in Sydney before mid-2013, saying it was no longer competitive against Asian “mega-refineries.”

Caltex’s full-year earnings before interest and tax for its marketing business climbed more than 20 percent, driven by growth in sales of premium petrol, diesel and jet fuel. The division has posted an annual growth rate of more than 13 percent since 2007, Caltex said.

“The marketing business has had a fairly lengthy trend of volume growth and earnings growth,” Chief Financial Officer Simon Hepworth told reporters on a call. “Without promising that’s going to continue, it is reasonable to look at the historical trend. It’s a business with lots of opportunities.”

Caltex forecasts capital spending of between A$375 million and A$450 million in 2012, with most of the money earmarked for marketing. That compares with A$342 million in 2011. Caltex plans to allocate the funds to improving its retail stores, further developing infrastructure to distribute its products and seeking “smaller” acquisitions, Hepworth said.

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