On a replacement cost of sales operating profit (RCOP) basis, the oil and gas major is predicting profit of between of $160–$180 million for the first half of 2004 compared with $86.1 million for the first half of 2003.

On a statutory (historical cost) basis, Caltex expects to make an after tax profit in the range of $210-235 million for the first half of 2004 compared to $76.2 million for first half of 2003.

The current half year forecast includes expected inventory gains of $70 – 90 million (before tax) compared to inventory losses of $14.2 million (before tax) in the first half of 2003.

The improved profit is primarily the result of markedly stronger refiner margins and overall marketing margins that have remained steady in a changing environment.

The April 2004 year to date Singapore weighted average margin (for Caltex’s basket of products) was about US$7.42 a barrel compared to US$3.79 for the first half of 2003 due to Asian regional supply tightness from refinery shutdowns and solid demand, high Chinese petrol and diesel demand, and the buoyant United States economy’s influence on world product markets.

However, refiner margins in Australia during the first half of the year have been dampened by the strong Australian dollar (average US$0.76 cents to 30 April 2004 compared with US$0.62 cents for the first half of 2003).

Higher volumes resulting from the Caltex Woolworths venture, together with stronger diesel demand, resulted in higher sales, which have been met in the short term by increased imports and purchases from other Australian refineries.

The improved performance will assist Caltex in its ability to reinvest in the Clean Fuels Project announced on 25 February 2004, with the $295 million investment being met from operating cash flow.