Caltex Australia announces its financial results for the twelve months ending 31 December 2017, with a Replacement Cost Operating Profit (RCOP) of $621 million, up 18% on the previous corresponding period, and marginally above the 2017 profit guidance of $600 million to $620 million.
The improved result was driven by another strong operating performance from the Lytton Refinery, capitalizing on strong refiner margins and the continued growth in its Supply and Marketing business. The acquisition of Milemaker and Gull NZ for a combined total of $424 million were completed during the period.
As part of the continued transformation of Caltex Australia, the Company commenced operating two separate but interconnected businesses on 1 January 2018: Fuels & Infrastructure (Supply, B2B, Refining and Infrastructure) and Convenience Retail (Petrol & Convenience). The 2017 results discussed in this release are based on the prior operating structure of Supply & Marketing, and Refining. Caltex will report its half year 2018 results on the basis of its Fuels & Infrastructure and Convenience Retail businesses in August 2018.
Caltex Australia has now rolled out 26 of the new format “The Foodary” pilot stores (23 as at 31 December 2017). The Company has also completed the review of the operating model for its Convenience Retail business and today announces that it will aim to move to company operation of all of its retail franchise sites by mid-2020.
- Full year historic cost operating profit (HCOP) NPAT of $619 million, up 1.5% (including $12 million after tax inventory gains and $14 million in significant item losses after tax)
- Full year RCOP NPAT of $621 million, up 18% (excluding significant items)
- Reported Supply & Marketing EBIT up 3.3% to $733 million. Underlying EBIT (excluding externalities) up 5.1% to $776 million (up 2.1% excluding the impact of acquisitions during the year)
- Lytton Refinery EBIT of $308 million, up 50% on a strong operational performance, capitalizing on strong refiner margins
- Milemaker ($95 million) and Gull NZ ($329 million, Caltex’s first offshore fuels & infrastructure expansion) acquisitions completed
- Announced 20% equity investment in SeaOil Philippines (expected completion by end of first quarter 2018)
- Final dividend 61.0 cents per share (fully franked) declared, up 17%, taking FY 2017 dividends to $1.21/share (up 19%)
Supply and Marketing delivered an EBIT result of $733 million. This result includes unfavorable externalities of $43 million, comprising a net realized loss (after hedging) on foreign exchange of $26 million (2016: a realized loss of $4 million) and a price timing lag loss of $17 million (2016: a price timing lag loss of $25 million). The underlying Supply and Marketing EBIT increased 5.1% to $776 million, excluding externalities (+2.1% excluding the impact of acquisitions made during the year). Acquisitions added approximately $22 million EBIT during the year.
Total Australian transport fuel volumes increased 3.4% to 16.2 BL, with commercial B2B volumes increasing 7.5% to 7.6 BL. Retail transport fuel volumes were flat at 8.6 BL. By product, total diesel volumes increased 7.3% to 7.7 BL, while total petrols decreased 2.8% to 5.7 BL, broadly in line with industry trends.
Commercial diesel volumes grew 9.2% to 4.4 BL due to retention of core B2B customers, increased resource and commercial activities. Jet volumes increased 6.2% to 2.8 BL, reflecting strong market activity particularly across the East Coast and Caltex securing increased volumes from new and growing carriers.
In Convenience Retail, growth across Caltex’s premium Vortex diesel (+7.2% to 2.3 BL) more than offset modest declines across its premium petrol range (Vortex 95 down 2.1% and Vortex 98, down 1.3%). Total retail diesel volumes of 3.3 BL were 4.9% above prior year (2016: 3.1 BL).
Caltex now has 26 new convenience retail stores operational under “The Foodary” format. Whilst there is significant variation by site (driven by site location, timing of opening, nearby competitive offers), the early results are encouraging, with strong customer feedback and an average non-fuel sales uplift of 35%. There have been some significant learnings with on-going development work around our fresh supp chain and labour model. Caltex intends to launch between 50 and 60 “The Foodary” sites and 5-10 Nashi high street convenience sites in 2018 at a capital cost of approximately $100 million, ahead of a wider roll out in later years. PWKD28022018
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