FUEL prices are down, and profits for retailers may be starting to feel the pinch.
In a statement released to the ASX on Wednesday, Caltex predicted an unaudited half-year Historic Cost Profit after tax (HCOP) of between $310 and $330 million; a fall from last year’s corresponding figure of $375 million. Fuel companies have taken a hit in recent years, with prices falling amid slowing growth in China and worries regarding oversupply.
Despite its conservative profit outlook, Caltex – which supplies a third of Australia’s transport fuel – also announced that it predicted net earnings for the first half of the year to mimic the record numbers of 2015, falling within a $245 to $260 million margin.
While sales of unleaded petrol and ethanol-based E10 dropped for Caltex, overall transport fuels for the first half of 2016 increased to 7.7 billion litres. Caltex also claimed sales of premium fuels and jet fuel had increased, helping even out the decline in unleaded and E10.
“We continue to successfully grow sales of premium fuels in retail across both petrol and diesel, offsetting the decline in unleaded petrol and E10, together with increased jet fuel sales,” Caltex said in a statement.
The retailer said the average margin per barrel had shrunk to $US9.80 for the first six months of 2016, down from a first half average of $US16.00 per barrel for the same period last year.
While crude oil prices have plunged internationally, lower fuel prices have plumped demand, and allowed retailers to increase margins and sales, particularly with premium fuels.
Meanwhile, BP in New Zealand said it had recorded a decade-high profit of almost $130 million, despite sales dropping 16 percent.