In morning trade the Caltex Australia Limited (ASX: CTX) share price has dropped lower following the release of an update on its Caltex Refiner Margin (CRM) and the performance of its Convenience Retail business.
At the time of writing the fuel retailer's shares are down 2.5% to $27.87.
What was announced?
In February Caltex recorded a CRM of US$7.34/bbl. Whilst this was an increase on January's CRM of US$6.61/bbl, it was notably lower than the prior corresponding period's US$9.95bbl.
However, sales from production in February came to 549 ML. This was an increase on the 466 ML achieved in January and the 475 ML recorded a year earlier.
It also meant that management could reaffirm its 2019 production guidance of around 5.8BL. This includes the impact of the Lytton refinery shutdown to rectify performance issues caused by the external electricity interruption during January.
Convenience Retail update.
Management advised that Retail Fuel Margins in the first quarter have softened due to the rebound in the crude oil price and competitor activity.
As a result, the company expects a Total Fuel and Shop Margin range of $160 million to $170 million in the first quarter of 2019. This will be $35 million to $45 million less than achieved in the prior corresponding period.
Management remains optimistic on the future, though.
It said: "While Q1 looks challenging, Caltex notes that short term trading conditions are not necessarily a reliable indicator of the full year result. External drivers such as movements in underlying crude and product prices, and changes in competitor pricing strategies can result in material variances between periods."
Should you invest?
Whilst I'm a fan of Caltex and think it has a massive opportunity in the convenience market over the coming years, I'm not a fan of the lack of consistency in its performance.
In light of this, investors may be better off with companies such as Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) instead.
