Caltex profits plunge $258m


Caltex Australia records massive $258 million slump in profits, as a declining Australian dollar and refinery shutdowns bite into the company's bottom line.

Caltex Australia has recorded a massive $258 million slump in profits, as a declining Australian dollar and refinery shutdowns bite into the company’s bottom line.

The fuel refiner recorded a $186 million after tax profit, down from $444 million in 2007 in its full-year results released today.

The rapid fall in the value of the dollar was responsible for a $210 million drop in profits, which suffered in value on the back of the global financial crisis.

"The Australian dollar fell from an average of 82 cents in September [2008] to an average 68 cents in October," a statement from Caltex says.

"This one month alone accounted for approximately one half of the total $210 million decline."

The company also bemoaned reliability issues at its Kurnell and Lytton refineries, with the latter plagued with problems throughout last year.

However, Caltex says its "robust" supply chain allowed it to continue to deliver products, reducing the impact both refineries had on the market.

But the significant fall in revenue will force the company to slash expenditure across its business, and Managing Director Des King has warned of substantial cost cutting measures.

"We have always been cognisant of the need to maintain a strong balance sheet given we operate in a cyclical industry. We will maintain our focus on cost control, cash flow and debt management," King says.

The company says "cashflow improvement initiatives" throughout 2008 helped it offset the impact of the economic downturn.

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