CALTEX Australia will not pay a final dividend following a sharp drop in annual profit, largely due to the negative impact of foreign exchange rates.
But Australia's only listed oil refiner and marketer says it is cautiously optimistic that earnings will lift in 2009.
Caltex shares were down 95 cents, or 9.9 per cent, at $8.65 at 12.37pm (AEDT).
Net earnings on a replacement cost of sales operating profit (RCOP) basis - which smooths out fluctuations in the oil price to give a clearer picture of the company's performance - plunged 58 per cent to $186 million in fiscal 2008, down from $444 million in 2007.
Revenue increased 24 per cent to $23.647 billion on to higher crude oil prices in the first half of the year and increased sales.
Its performance was affected by the falls in the Australian dollar and the crude oil price in the second half, and lower refinery production.
Chief executive Des King told a teleconference that the overall result was in line with guidance.
Mr King said $210 million, or 80 per cent of the company's $258 million earnings drop was due to the collapse in the Australian dollar against the greenback.
"It had a very big impact on our US payables over 2008," he said.
While Caltex said in a statement that the economic slowdown may affect both marketing growth and regional US dollar refiner margins in 2009, Mr King said he was "cautiously optimistic" that earnings will lift in 2009.
He said it was "highly unlikely" the dramatic fall in the Australian dollar in 2008 would occur again this year, although its weakness would bolster Caltex's refiner margin in Australian dollar terms.
"I think the Australian dollar will be much more stable in 2009," Mr King said.
"Although refiner margin will be volatile and will be under pressure in the region due to weaker economic growth ... (it) will be supported by a lower crude price and Aussie dollar."
Mr King said the performance of the marketing business would slow this year after a "phenomenal" performance in 2008 but would be an increasingly important division in coming years.
Caltex plans to expand the marketing business to keep its title of leading fuel and convenience operator in Australia, through its Caltex Woolworths branded service stations.
Non-fuel income was up 3.6 per cent in 2008.
"The sales at convenience stores are an increasingly large part of our revenue," Mr King said.
"The gross revenue from non fuel income in 2008 was up to $159 million.
"It was a very significant part and will continue to grow."
About one third of Australia's transport fuels continued to be imported, he said.
"At Caltex, for example, in 2008, we sold 14.4 billion litres of transport fuel and we produced 9.8 billion litres, so marketing way outpaced our refining."
Mr King said last year's production was disappointing, falling 1.1 billion litres from 10.9 billion litres in 2007, due to planned and unplanned refinery shutdowns.
He said Caltex aimed to produce more than ten billion litres in 2009.
Suspending the final dividend was a difficult decision, he said, but the company needed to be conservative with cash.
Caltex said the move reflected an RCOP loss of $10 million in the second half of 2008.
It was in line with the company's dividend policy of a full year payout ratio of 52 per cent, given an interim dividend of 36 cents was paid last year, Mr King said.
Santos profit jumps, well placed
Investor nominates 4 to board at Gaylord
Gaylord expects slow start to ‘09
