Caltex Aust cuts payout as FY profit sags

Caltex Australia has cut its final payout on a “disappointing” full-year result weighed down by weak retail margins, soft economic conditions and unplanned outages at its Lytton refinery. 

The convenience store, petrol station and refinery firm also announced chief financial officer Matthew Halliday will become interim chief executive next week as current boss Julian Segal prepares to stand down amid an $8.8 billion bidding war for the company. 

Caltex said it had been unable to find a permanent successor to Mr Segal as the takeover battle played out between Britain’s EG Petroleum and Canadian Couche-Tard.

Mr Segal had announced his impending retirement in August and will now leave the role on March 2. 

Fuels and infrastructure head Louise Warner has been named interim chief operating officer. 

“Given our recent announcements regarding the receipt of revised and new proposals to acquire Caltex, it is not possible for us to complete this search at this time,” chairman Steven Greg said. 

“The interim appointments we announce today will ensure we can continue to engage with interested parties on a potential transaction, while continuing to execute our strategy.”

Caltex last week announced EG Group had entered a competing bid to a twice-improved $8.8 billion offer from Alimentation Couche-Tard Inc.

EG Group offered $3.9 billion in cash for Caltex’s convenience store business and separate shares in a new, listed infrastructure and refinery company made up of Caltex’s remaining assets.

For 2019, Caltex Australia’s profit on a historical cost basis was down 31 per cent to $382.8 million, slipping from $560 million a year ago despite an improved second half, as “the Australian economy remained weak”. 

Operating profit on a replacement cost of sales basis fell 38 per cent to $344 million, above the midpoint of the $320 million to $360 million guidance offered in December. 

The fuels and infrastructure segment delivered earnings of $450 million, including an above-guidance $380 million once the Lytton effect is stripped out, which was down 21 per cent on the prior year. 

Total fuel and infrastructure fuel sales volumes increased by 3.0 per cent to 21.1 billion litres in 2019, driven by a 36 per cent increase in international sales volumes. 

However, Australian sales volumes, which includes convenience retail and Australian wholesale fell by 3.0 per cent to 16.3 billion litres, with jet volumes down 4.7 per cent amid margin pressure from elevated freight costs. 

Convenience retail delivered an earnings result of $201 million, down 35 per cent on 2018 but in line with the guidance of $190 million to 210 million in earnings.

“Retail fuel volumes in 2019 were impacted by economic weakness in addition to a more competitive retail fuel market,” the company said in its release to the ASX. 

Petrol margins strengthened in the second half but diesel margins, which were more heavily affected by a weak economy, remained soft.

Total fuel production was 5.8 billion litres, a 6.0 per cent decrease on 2018, reflecting impact of the unplanned outages, planned turnaround and inspection shutdowns, and the economic decision to reduce feedstock purchases. 

Revenue from ordinary activities ticked up 3.0 per cent to $22.3 billion.

The company will pay a fully franked 51 cents per share, down from 61 cents a year ago. 

Shares in the company were trading 0.52 per cent lower at $34.29 by 1020 AEDT amid a wider downturn for the benchmark ASX/200. 

AAP

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