Caltex reported a net profit for the year to December 31, 2004 of $458.8 million on an historical basis, including inventory gains and excluding significant items – well up on the $208.8 million reported in 2003. On a replacement cost of sales operating profit (RCOP) basis, profit was $352.5 million for the full year 2004 compared with $199.7 million for 2003.
Caltex managing director Dave Reeves said the big jump in profit was mainly due to stronger refiner margins.
"The higher refiner margins reflect the continued rapid growth in demand for refined products in the region, particularly in China,” Reeves said.
"Market opportunities have emerged from changes in the dynamics of supply and demand in Australia and the Asian region and we are taking steps to further grow shareholder value."
The company said it planned to significantly increase investment across its operations, spending an additional $300 million more dollars over the next three years on areas with high potential to increase earnings.
Around $180 million will be spent in 2005 on the Clean Fuels Project, according to Reeves.
“The project, scheduled for completion in the fourth quarter of 2005, will enable our refineries to produce some of the cleanest fuels in Australia and the world,” he said.
"In addition, a review of our supply planning systems and refinery configuration has shown that we should increase diesel production after the introduction of cleaner fuels, upgrade lower value product to higher octane petrol, de-bottleneck refinery operations to remove production constraints, and invest in tools and people to lift our supply chain capability."
Caltex said it expected investment costs would be largely offset by the benefits of higher production during implementation, with full benefits being realised during 2008.
"These initiatives will enable Caltex to lift production of transport fuels by approximately 20% over 2004 levels when complete,” the company said.
"The benefits derived from this program are expected to be in excess of $150 million per annum (before interest and tax), in line with our previous estimates."
The company also said it planned to invest more in marketing.
"Investments include building or upgrading terminals in key locations, strengthening our branded reseller network by consolidating our equity interests in selected businesses and upgrading the service station network in line with the new brand positioning," Caltex said.
It was likely that its net debt would temporarily exceed $500 million during 2005 but it would return to target levels during 2006 as the outlook for refiner marketing margins remained sound, the company said.
During the year, Caltex also had a one-off gain of $113.5 million after tax due to entering a new tax consolidation regime.
Caltex declared a final dividend of 25 cents per share, fully franked, up from 14 cents in the previous corresponding period. Total dividends for the year were 39 cents per share, up from 18 cents in 2003.
Caltex announced it was changing its dividend payout ratio after 2005 from 20 to 30% of RCOP after tax and significant items to 40 to 60%.
