Takeover target Caltex Australia will bring forward and extend the planned shutdown of Lytton oil refinery to ward off an expected hit to refining due to the pressures on demand amid the coronavirus pandemic.
Within weeks, the global oil refining industry will need to cut output by 30 per cent or more as the virus pandemic keeps much of the world at home, with little need to drive or fly, resulting in the deepest and fastest drop in fuel demand.
In February, the ASX-listed firm’s interim chief executive Matthew Halliday said profit margins at its refinery had come under pressure as the oil industry battled the economic impacts of the coronavirus.
The planned shutdown of Lytton refinery is now set to start in May 2020, with operations likely to restart once margin conditions recover, the company said in a statement on Monday.
The shutdown had been previously planned for August.
Caltex said it was well placed to carry out the sale of a 49 per cent stake in core freehold retail sites, marking the divestment of a second tranche of sites for alternative uses, and to issue hybrid capital securities in the second half of 2020.
The convenience store, petrol station and refinery firm has been evaluating takeover offers from rival bidders Canada’s Alimentation Couche-Tard and Britain’s EG Group, even as it works to boost margins for its businesses.
Caltex cut its outlook for group capital expenditure for 2020 to below $250 million from the previously stated target of about $300 million.
The company also said it would be unable to provide an updated production forecast for Lytton for 2020.
The company did not mention details of the earlier forecast.
Its shares were up 83 cents, or 3.61 per cent, to $23.83 at 1040 AEDT.