The paper "Caltex Australia Limited Financial Markets" is a perfect example of a finance and accounting case study. Caltex Australia Limited deals with oil refinery as well as the marketing group and has about 30% market share. It has two refineries which are situated within Queensland and NSW, in addition to several distribution points all over Australia. Caltex Australia Limited also has a national network of service stations which are branded as Caltex or Ampol. US ChevronTexaco refining joint enterprise owns about 50% of the company (Bob 54-55). Caltex Australia Limited is the leading company in the market within strategic refinery of petroleum on top of being the leading distribution industry within Australia.
It runs two key refineries at Kurnell in Sydney and also at Lytton in Brisbane. The company is still investing to make sure that it sustains market leadership. The extent of the market business facilitates the company in taking advantage of the developing essentials of the industry. The marketing operation is involved in the promotion and sale of Caltex products using a global network of about 2,000 Caltex, Caltex Woolworths, Ampol branded services stations and also branded resellers.
Moreover, marketing makes sales directly to a big number of commercial clients (Archibald 10-15). Risk Profile Australian Stock Exchange normally has a four-tier risk rating system which includes, very high, high, medium and finally low. The risk rating is based on, a company’ s management track record, forecasting risk, industry risk as well as a financial risk. It also consists of cash flow assessment. Caltex risk profile Code Last % Chg Bid Offer Open High Low Vol CTX 10.760 0% 10.790 10.880 0.000 0.000 0.000 0 Investment/Strategic analysis The backbone of Caltex Australia Limited’ s strategy is the lifting refinery usage rate. This enables it to have full advantage of the scarcity of refinery capacity within Australia.
Refiner margins may be volatile however high refinery usage rates as well as strong market activities are vital when it comes to driving operating cash flow and earnings as well. This makes it possible to reduce debt levels and also improve the return on equity and also to the shareholders. Caltex Australia Limited’ s union with Woolworths strengthens volume growth. For instance, Caltex Australia had an NPAT down 95% to $34.26 million for the year ended 31 December 2009.
The profits from normal activities were $23.65 billion which increased by 24% when compared to the previous year. Moreover, both basic and diluted EPS were 12.7 cents in comparison to 239.4 of the previous year and the net operating cash flow was $380.21 million in comparison to $595.4 million of the previous year. The final dividend that was declared was 36 nil, which took the full-year dividend to 36 cents in comparison to the previous year which was 86 cents (Archibald 13-18). Choosing Caltex Australia Limited Caltex Australia Limited stands out as the sole petroleum refining and marketing company that has been listed on the Australian Stock Exchange.
Furthermore, it has the highest market share of about 32% of the national market within convenience retailing. In addition, it has between 28% and 37% of the market share when it comes to refinery products like gasoline, diesel and also jet fuel. Still, Caltex Australia Limited also has the top position in terms of capacity among all Australian refining companies. The key clients to this company include the Australian commuters, key transport groups, mining companies as well as the aviation industry.
The share price returns are comparatively high and hence investing in Caltex Australia Limited is a worthy investment. Moreover, Caltex Australia Limited has shown stability in both it's business operations and share market. This is why I chose the company as part of my investment strategy.
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Bob, Tippee. International petroleum encyclopedia. Michigan: Penn Well, 2009.
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Business review weekly. Caltex Australia Limited. Volume 17, Issues 25-29. California: Business Review Weekly, 2009.