Caltex Australia Ltd has more than doubled its full year dividend after a solid net profit for the year to December 31, sending the shares to a new 52 week high during trading yesterday.
The shares jumped by more than 7%, or $1.01c, to a new 52 week high of $15.33.
The market liked the confident outlook and the fact that the result was better than the company’s own forecast late last year.
An upbeat view of 2011 added to the momentum with Caltex directors saying its outlook is positive due to growth in the mining, agriculture and transport sectors.
Caltex said net profit rose 49% (on its preferred replacement cost basis -RCB) to $302 million for the 12 months to December 31, 2010.
On an historical cost basis, Caltex said underlying profit before one-offs for 2010 fell to $318 million from $324 million a year earlier, slightly better than its own forecast in December for an underlying profit between $300 and $310 million.
Revenue over the full 2010 year rose 5% to $18.67 billion.
The company has declared a final dividend of 30cs per share, fully franked, bringing the total dividend for 2010 to 60c a share, more than double the 25c a share paid in 2009.
Caltex said it had achieved record sales volumes of transport fuels, particularly premium fuels, and finished lubricants in 2010.
Premium fuel sales jumped 55% to 1.836 billion litres in 2010.
Caltex said the strong Australian dollar eroded Caltex Refiner margins by $94 million before tax, however a foreign exchange hedging program offset the losses.
"The growth trajectory for marketing is expected to continue in 2011," Caltex said in a statement.
"This growth will be further enhanced as infrastructure projects currently underway are completed in 2011."
Caltex said it expected excess supply in the Asia Pacific to slowly decline, as the growth in demand from non-OECD countries offsets falling demand from OECD countries.
"Caltex therefore remains optimistic in the medium term for a slow recovery in US dollar refiner margins," the company said.
"In the medium to long term, the outlook for the company remains positive due to the exposure Caltex has to the mining, agriculture and transport industries in Australia."
The floods in Queensland and NSW had cost the company $5 to $10 million, due to an unplanned shutdown of the Lytton Refinery in Brisbane.
"Production volumes declined in the first half of 2010 due to higher planned maintenance across Refining compared to 2009, but production improved to near record levels of 5.5 billion litres in the second half with refinery utilisation in excess of 78%.
"Production of petrol, diesel and jet fuel for the full year was 9.8 billion litres, in comparison to 10.2 billion litres in 2009," the company said yesterday.
The company said net debt at 31 December 2010 was $544 million, compared with $487 million in 2009.
Engineering and contracting group, UGL is another industrial that has boosted interim payout to shareholders after a reasonable profit performance in the December half year.
The company told the ASX yesterday that underlying profit was up 16% in the half year to just over $68 million.
Directors also said they expect full year net profit to grow by 10% to 15% for the full 2011 financial year.
Net profit for the six months to December 31 was $65.03 million, up from $55.16 million in the first half of the prior year.
That was struck on 3.2% rise in revenue for the half year to $2.14 billion.
As a result of this solid outcome, directors boosted the interim dividend to 32c fully franked from the 29c a share paid for the first half of the 2009-10 financial year.
Chief executive Richard Leupen said in the statement the majority of revenue was secured for the second half of the year, putting UGL on track to deliver 10% to 15% profit growth in 2010/11.
"This is a satisfactory performance for UGL in what remains a challenging market in some sectors," Mr Leupen said.
"The profit and revenue growth has allowed us to increase returns for our shareholders, highlighting the effectiveness of our diversified business model."
Mr Leupen said UGL had almost $7 billion of weighted and qualified opportunities across the resources, infrastructure, property services and transport sectors.
Like Caltex, UGL sees big gains ahead from its resources business.
The rail business increased sales revenue by 15%, driven by strong demand for locomotives and freight wagons from the resources sector in Queensland and Western Australia and an improving passenger market.
Sales in the resources division grew by 50%, but experienced margin erosion on major projects and higher bid costs, with bidding activity at record levels.
The infrastructure business delivered 3% earnings growth in the first half year, with power, telecommunications and rail infrastructure performing well and presenting future growth opportunities.
"A mix of maintenance related work and major construction and engineering projects positions the business well for the second half," the company said.
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