The Caltex Australia Limited (ASX: CTX) share price has fallen 24% since the end of August and is down further today.
Caltex Australia is known for the popular fuel and convenience stores. The multi-billion dollar company also operates in the petroleum industry by buying, refining and distributing fuel products throughout Australia. It’s been in the business more than 100 years.
Caltex’s Trading Update
Caltex has released its trading update for the first quarter of 2019 at its annual general meeting (AGM).
Fuels & Infrastructure (excluding Lytton) EBIT fell by 2% to $104 million (click here to learn what EBIT means), however the Lytton EBIT fell from $51 million to $5 million. Convenience Retail EBIT dropped 56% to $40 million.
The results were in line with the updated provided in March, but the severe drop in earnings from Lytton, the revised Woolworths Group Ltd (ASX: WOW) fuel contract (now EG Group) and higher crude oil prices resulting in lower retail fuel earnings.
The fuel company said that whilst the quarter was challenging for refiner margins, the margins recovered in March and April from prior lows. The average average Caltex Refiner Margin (CRM) in April was US$10.96 per barrel, which was above this quarter’s average of US$7.53 per barrel with 440ML of CRM sales from production in April.
Caltex also said that the driver of the lower convenience retail EBIT was because of $38 million of a lower retail fuel margin and an $8 million unfavourable variance in profit on sale of assets. However, its Retail fuel business has regained market share over the last six months and remains stable year on year.
Caltex CEO and Managing Director Julian Segal said: “Our result shows the impact of both lower refiner margins and a challenging retail environment this quarter. It was pleasing to see conditions improve in April.”
I’m generally not a big fan of anything to do with petrol for the long term with the expected shift to electric vehicles, although that’s a long way off. So I’m not sure if it’s a buy today or not.
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