Caltex has followed the string of recent profit warnings from the retailers ahead of reporting season and is set to record a fall in first half earnings.
The key cause is a heavy loss in its oil refining business, due chiefly to weaker margins and the costs of closing and converting a refinery.
However the outlook is positive, with overall transport fuel sales up and the refinery losses justifying the focus away from refining towards marketing and fuel imports.
Caltex has forecast a profit in the range of $155 million and $175 million for the six months to June 30, compared to $171 million in the same period last year.
The profit is on a replacement cost basis, which strips out oil price changes and aims to reflect underlying performance.
When oil price changes are included, the historic cost first half profit after tax is expected to fall from $195 million to between $150 million and $170 million.
The costs of the closure later this year of Caltex's Kurnell refinery in Sydney, and its conversion into an import terminal, was partly blamed for an expected $65 million to $85 million loss in the oil refining business.
That has blown out from a $43 million loss 12 months earlier.
There are fears Kurnell's closure along with several recent refinery closures will lead to Australia importing all of its transport fuel within a decade, threatening security of energy supply.
There were other adverse factors for Caltex's refining business, with refiner margins - the difference between the price of crude oil and its refined fuel products - forecast to be down 23.5 per cent from the first half of the previous year.
However that would be largely offset by the favourable impacts of a weaker Australian dollar, Caltex said.
The company's shares traded wildly during the day rising 11 cents to $21.70.
That is below last month's year-high $22.76, but the stock is still up more than eight per cent for the year.
OptionsXpress market analyst Ben Le Brun said he was surprised the shares were not punished for a profit downgrade, although said the costs associated with Kurnell were expected.
Caltex's marketing business, which also includes its retail service stations is expected to lift earnings to between $390 million and $395 million in the first half, up from $365 million in the same period in 2013.
Fuel sales are expected to have grown by 3.5 per cent, driven by sales of premium grade petrol and diesel and jet fuel offsetting a long term demand decline in unleaded.
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