A decline in oil refiner margins has dented Caltex Australia's first quarter profit.
Despite this, investors drove Caltex's share price higher in a sign the market was expecting a bigger fallout from the weaker refiner margins, an analyst says.
Caltex made a net profit of $114 million for the first quarter of 2016, after incurring an inventory loss of $37 million.
The fuel refiner and retailer's net profit is lower than the $174 million profit made a year ago and its underlying profit is also down, at $151 million compared to last year's $162 million.
Chief executive Julian Segal noted the group's refining margin had slipped to $US10.65 per barrel for the three months to March, from $US15.65 a barrel a year ago.
"The lower refiner margin had an unfavourable earnings before interest and tax (EBIT) impact of approximately $A55 million when compared to the first quarter of 2015," he told shareholders at the company's annual general meeting on Thursday.
The lower refiner margins had largely offset an increase in sales volumes which were up two per cent to four billion litres in the quarter, he said.
Phillip Capital senior client adviser Michael Heffernan said the rising share price showed investors had expected declining refiner margins to hurt Caltex's profit more than they had.
"If the expectations are at a certain level and the result comes out better, then there's generally a positive effect even though the result is a negative one and I'd say this is precisely what's happened with Caltex," Mr Heffernan said. "The business is fraught with a bit of uncertainty given the oscillation of the oil price which can have an effect on any business related to it."
Mr Segal had also told shareholders that higher sales of jet fuel and the continued trend towards the group's Vortex premium grades of petrol and diesel helped balance out an ongoing decline in demand for unleaded petrol, including ethanol-based E10.
He reiterated the group's plan to expand its convenience services for consumers beyond grocery convenience or "picking up a snack", pointing to Caltex's recent investment in peer-to-peer car sharing business Car Next Door as an example of its initiatives.
In April, Caltex said it would reveal more details about its plan to re-invent itself but details were vague at the AGM.
It is understood, however, that Caltex wants to expand beyond pies and soft drinks to include more ready-made meals and healthier meal options.
Mr Segal has previously said the evolving service stations industry could one day include dry cleaning, hair cuts and bottles of wine.
He also has hinted at ambitions of developing an online ordering platform that targets commuters.
Shares in Caltex were up 61.5 cents, or 1.88 per cent, at $33.345 at 1342 AEST.
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