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Australia Caltex Year Profit Up 3%, Misses Forecast

Caltex Australia, the country's only listed oil refiner and marketer, on Friday reported a lower-than-expected 3.25 percent rise in net profit, as lower refining margins and a strong Australian dollar offset record production volumes.

Caltex, which operates two refineries representing about 30 percent of Australian capacity, said net profit after tax was A$444 million (US$407.3 million) on a replacement cost of sales basis, which removes the effect of oil price movements.

The result was slightly below expectations of A$449 million, the median in a poll of nine analysts by Reuters Estimates. Caltex had in December cut its 2007 profit forecast to A$435-A$460 million, down from an earlier forecast of between A$450-A$500 million.

"There was a 17 percent drop in the Caltex refiner margin in Australian cents per liter terms compared to 2006," Caltex Managing Director Des King said in a statement. "The higher Australian dollar in 2007 had the net effect of lowering after tax profit by approximately A$40 million relative to the previous year."

Caltex said refiner margins were expected to be lower in 2008 and planned shutdowns would reduce refinery production in the first half of the year. Refiner margin is the difference between market prices for crude oil and the wholesale price of gasoline.

"2008 earnings will also be impacted by supply issues resulting from the unplanned refinery shutdowns in late 2007 and early 2008," Caltex said in the statement.

Caltex produced a record 12.1 billion liters of all products in 2007, compared with 11.9 billion liters a year ago. High value transport fuels, including petrol, diesel and jet fuel, accounted for 10.9 billion liters.

Caltex, which plans to invest A$1 billion between 2008-2010 on its refining and marketing operations, said costs to upgrade a diesel hydrotreater unit at its Lytton refinery in Queensland were expected to rise to about A$320 million, compared with an initial estimate of A$250 million.

The diesel unit is on track for completion in the first quarter of 2009 and will increase Caltex's capacity to produce extra low sulphur diesel by 40 percent.

On a historical cost basis, including inventory gains, net profit was A$646 million, compared to A$466 million a year ago.

The company declared a final dividend of 33 cents.

Shares in Caltex, 50 percent owned by U.S. oil major Chevron, have fallen 14.7 percent since the start of the year to Thursday's close of A$16.50, due to unplanned refinery shutdowns.