Under its Refining and Supply business, CTX operates two major refineries, at Kurnell in Sydney, and Lytton in Brisbane. In 2014, Lytton will be the only refinery following the planned transformation of Kurnell into purely an import terminal.
The Marketing business sees CTX sell through its retail arm petroleum, motor oil lubricants, diesel and jet fuel. CTX also operates convenience stores, fast food stores and service stations throughout Australia.
Currency Slams Profit
|>>||CTX reported a 13% drop in 1H13 replacement cost after tax profit (excludes the impact of fluctuating oil prices) to $171 million.|
|>>||The group blamed poor performance in its Marketing and Distribution division, which suffered a $5 million wipeout from the sharp drop in the AUD/USD in May and June.|
|>>||Because CTX pays for its crude in US dollars, it was hit hard by the significant depreciation in the Aussie dollar.|
|>>||The group reported a net exchange loss of $39 million due to the impact of a fall in the AUD/USD from 104 US cents to 93 US cents from late April to the end of June.|
|>>||Loss of premium petrol sales in the key Sydney market due to a pipeline outage at Kurnell also hurt Marketing and Distribution earnings, in addition to the Refining and Supply business.|
|>>||Marketing and Distribution EBIT of $367 million was flat on-year, whilst Refining and Supply suffered an EBIT loss of $43 million.|
CTX has been a significant casualty of the collapse in the Aussie dollar. The company has been forced to pay more for its crude, hurting overall profitability.
Moreover, it said that refining margins were likely to come under pressure in the 2H13 amid increased competitive pressures and comparatively weaker demand growth.
The loss of premium petrol sales in Sydney, along with expectations of weak regular petrol sales growth due to aggressive price competition from Coles Express, is also expected to hurt the downstream business.