Economic weakness, soft retail fuel margins, lower refining margins and outages have impacted Caltex’s performance in the first half of 2019, says Managing Director and CEO Julian Segal.
Mr Segal says that while the result is disappointing overall, Caltex is responding by focusing on capital discipline and reducing costs.
“Fuels & Infrastructure continues to deliver underlying growth and reliable cash flows and Convenience Retail has regained market share while remaining disciplined in a tough retail fuels market,” he said.
“We are responding to the tough conditions through a focus on capital discipline and by sustainably reducing our cost base. We are also progressing our retail strategy, leveraging learnings from our work to date and a review of our company-controlled network to ensure our offer is tailored to meet individual site and local area customer requirements.”
Convenience Retail network review
Caltex says it continues to progress its Convenience Retail strategy by leveraging learnings from the transition of retail sites to company-operations (500 sites and 5,000 employees), the roll out of 63 Foodarys and the review of the Caltex- controlled retail network.
Around 500 sites within the company-controlled network have been identified to deliver strong returns from an enhanced convenience offer, with clear opportunities to deliver growth through disciplined execution. Around 50 metropolitan freehold sites have also been identified as being able to deliver a higher value through alternative use and will be divested in tranches later this year.
For the remaining sites in the company-controlled network, Caltex says there is further work to be done to determine the best way to capture value, while ensuring Caltex maintains its ~2,000 site strong StarCard accepting network.
During the first half of 2019, Caltex continued the transition of franchise sites to company operations, a key enabler of the company’s convenience retail strategy. A total of 66 franchise sites were transitioned to company operations during the first half, bringing the number of company-operated sites to 584. More than 99 per cent of the network is slated to be company operated by the end of 2020.