(EnergyAsia, Feb 28) — Caltex Australia Limited has reported a sharply higher after tax operating profit
of A$352.5 million for 2004 compared with A$199.7 million for 2003. (US$1=A$1.25).

Managing director Dave Reeves said 2004 was a year of record profits primarily due to stronger refiner margins. The company had also benefited from the marketing business’s record transport fuels sales volumes, increased lubricants sales volumes and
stable marketing margins.

“The higher refiner margins reflect the continued rapid growth in demand
for refined products in the region, particularly in China,” said Mr Reeves.

“The Singapore weighted average refiner margin (for Caltex’s basket of products) was US$6.15 a barrel in 2004, compared with US$4.45 a barrel for the full year 2003. The Caltex refiner margin (which includes the crude/product freight differential, product quality and crude premiums and product yield from the average barrel of crude) averaged US$6.60 a barrel in 2004, up from US$4.91 a barrel for the full year 2003.

“However, the benefit from the higher average refiner margins was partially offset by a stronger Australian dollar which averaged 74 US cents in 2004, compared with 65 US cents in 2003. Because refiner margins are denominated in US dollars Caltex eceives less refiner margin in Australia as the Australian dollar strengthens.

“The improved earnings enabled Caltex to further reduce its net debt to A$447.2 million at 31 December 2004 compared with A$624.4 million the previous year, and gearing to around 21% (compared 34%).  This resulted in lower net borrowing costs of A$41.1 million, compared with A$61.4 million in 2003.”

When oil-price driven inventory gains are included, the company said profit after tax for the year ended 31 December 2004 (excluding significant items) was A$458.8 million (2003: $208.8 million).  After-tax inventory gains were A$106.3 million compared with A$9.1 million for the previous year.

Caltex said a significant after-tax gain of A$113.5 million arose in 2004 as a result of entry into the new tax consolidation regime. The value of refining and pipeline assets has been reset for tax purposes which has resulted in a A$113.5 million decrease in deferred tax liabilities, with the offset being a non-recurring tax credit to current year earnings.

“The cash flow benefit will be realised over 20-25 years, which is the effective life of the revalued assets,” it said.

Caltex chairman Dick Warburton said the board had declared a final dividend of A$67.5 million or 25 Australian cents a share adding to the interim dividend of 14 Australian cents per share paid in October 2004.

“Returns to Caltex shareholders in 2004 were again outstanding. Shareholders benefited from the share price rising 135% during the year from A$4.62 to A$10.86. In addition to capital growth, investors were also rewarded with fully franked dividends of 39 cents a share declared in respect of the financial year 2004.

“Caltex repeated its 2003 performance in 2004 as one of the best performing shares in the ASX 100 index and also gained inclusion in Standard & Poor’s ASX 100 Index in July 2004.”