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Des King,MD pf Caltex Australia said this week that Caltex Australia might cut
fuel production if profits from the operations fell below the cost of
running its refineries.
The reaction to the news by investors was immediate and Caltex Australia shares, which dropped 7 per cent to $12.38.
"Our stated guidance for production to be in line with 2007 is still
achievable," Mr King told shareholders at the company's annual meeting
in Sydney. "However, we may consciously choose to reduce production should margins not outweigh the working capital costs. We still anticipate production volumes to be strong relative to recent years."
Caltex Australia - which operates two refineries and has a national
network of about 2000 service stations - said earnings fell 34 per cent to
$131 million in the first quarter of this year, reflecting weaker
profits from fuel production and a shutdown at its Kurnell refinery.
Mr King said unplanned shutdowns at the diesel hydro-treater unit at
the Lytton refinery in Brisbane and the catalytic cracker at Kurnell
were expected to cut second-quarter earnings by $30 million to $35
million.
Caltex Australia, which is 50 per cent owned by oil giant Chevron,
produced 10.9 billion litres of transport fuels - including petrol,
diesel and jet fuel - in 2007.
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