Caltex witnessed Decline in its Retail Fuel Margins for Q1 2019

Leading transport fuel supplier, Caltex Australia Limited (ASX: CTX) has been facing soft market condition due to the rapid rebound in the crude oil prices and lowering down of prices by its competitors. Due to these reasons, the company’s forecast Total Fuel and Shop Margin has declined by around $35-45 million to $160-170 million for Q1 2019 as compared to the previous corresponding period.

On 19 March 2019, the company has provided an update on Caltex Refiner Margin and Convenience Retail trading performance. As per the company’s update, the February 2019 CRM was US$7.34/bbl which was higher than January 2019 CRM of US$6.61/bbl but lower than the CRM of February 2018 (US$9.95/bbl).

Further, the CRM sales from production in February 2019 was 549 ML which was higher than 475 ML of February 2018. Year to date, the average CRM was US$7.00/bbl with CRM sales from production totaling 1,014 ML (January to February 2018: 1,032 ML).

The company has confirmed that the FCCU unit at its Lytton refinery is going to shut down in order to rectify performance issues which were caused by the external electricity interruption during January. The FCCU expected impact on production is between 200 ML and 250 ML.

While providing the Convenience Retail update, the company informed the forecast Total Fuel and Shop Margin range of around $160?170 million in Q1 2019 which is approximately $35?45 million less than that what was achieved in Q1 2018.  The company will provide a Q1 trading update at the Annual General Meeting which is scheduled to happen on 9 May 2019.

The company recently released its full-year results for 2018. In 2018, the company reported a solid underlying business result which included an F&I (ex-Lytton) EBIT of $409m, up 21% on pcp. Further, the company reported Lytton EBIT $161m which was 51% lower than pcp, impacted by the external margin. In the last three years, the company has allocated more than $2.2 billion of capital to inorganic growth and shareholder returns, while maintaining EBIT ROCE of around 20%.

Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock of Caltex Australia Limited closed at A$27.540, by the end of the trading session as on 19 March 2019, down by 3.538% during the day’s trade with a market capitalization of ~$7.45 billion. The counter opened the day at $27.900 and reached the day’s high of $28.390 and touched a day’s low of $27.170 with a daily volume of ~2,131,360. The stock has provided a year till date return of 13.43% & also posted returns of -3.15%, 11.65% & 1.13% over the past six months, three & one-months period respectively. It had a 52-week high price of $33.650 and touched 52 weeks low of $24.500, with an average volume of ~ 1,170,044.


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