Operating expenses were up due to increased maintenance costs caused by shutdown activity, as well as higher shipping and employee costs.
Other factors reducing underlying performance included the stronger Australian dollar, lower production caused by refinery shutdowns and time lags in recovering higher crude prices from the market.
"This profit reduction was partially offset by stronger marketing margins and significant growth in sales volumes of transport fuels and lubricants," Caltex said.
Caltex announced a net profit on a replacement cost basis of $149.6 million in the first half compared to $176.1 million in the previous corresponding period.
On a historical cost basis, net profit rose 4% to $232 million. Both the historical and replacement net profit figures do not include significant items, which included a one-off tax credit of $20.9 million. Including significant items, net profit on a historical cost basis fell by 25% to $253 million.
Net debt at June 30 was $533m, up from $447m at December 31, 2004. But Caltex said core debt still remained in the gearing target of 20-255 and it expected debt to fall below $500m next year.
The company said it was focusing on strengthening its refining capabilities, market position, and increasing employee safety.
"The coming months will see critical developments with the completion of the clean fuels project and progress with improvement projects linked to higher refinery utilisation and a reliable crude oil and fuel supply chain," said managing director Dave Reeves.
"The company has confidence that these will be managed successfully and develop capabilities to capitalise on favourable markets."
The firm said refiner margins remain strong, offset by market pricing lags and a stronger Australian dollar.
"The outlook for refiner margins for the remainder of 2005 is positive as global refining capacity remains tight," Reeves said.
Revenue increased 23% to $7.62 billion reflecting increased product prices, sales volumes and margins across all marketing channels.
But total expenses on a replacement cost basis rose by 25% to $7.39 billion due to higher cost of sales and operating expenses.
Earnings before interest and tax on a replacement cost basis fell by 18% to $226 million.
The board declared an interim fully franked dividend of 15 cents per share for the six month period to June 30, 2005, compared to 14 cents in the previous corresponding period.
