Caltex Australia has appointed chief financial officer Matthew Halliday as interim chief executive as Julian Segal is to step down in the middle of a $8.8 billion takeover battle for the fuels supplier.
The company, which announced a 38 per cent plunge in benchmark net profit for the full year, wasn’t able to complete a search for a permanent replacement to Mr Segal with all the takeover activity, said chairman Steven Gregg. Mr Segal flagged his retirement last year.
“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,” Mr Gregg said.
Caltex’s longstanding head of fuels and infrastructure, Louise Warner, who was widely seen as the lead internal candidate for the CEO role, has been named as interim chief operating officer. Mr Halliday joined Caltex less than a year ago after nearly 20 years at Rio Tinto.
RBC Capital Markets analyst Ben Wilson described the appointment of interim executives to succeed Mr Segal as “a pragmatic response” to the situation.
Caltex’s underlying replacement cost operating profit dropped to $344 million, from $558 million in 2018, just above the mid-point of Caltex’s guidance in December for between $320 million and $360 million.
The result was dragged down as expected by lower refinery earnings, tough competition and a soft broader market.
The bottom line figure, which includes the value of stockpiles, fell 32 per cent to $383 million in the year ended December 31, from $560 million a year earlier.
Caltex, which is the subject of rival takeover bids from Canada’s Alimentation Couche-Tard and British private firm EG Group, declared a final dividend of 51 cents a share, down from 61 cents for the second half of 2018.
Couche-Tard is carrying out due diligence on a proposed $8.8 billion cash offer, while EG Group is waiting to see if its target’s board will grant it access to its accounts for a complex combined cash and scrip bid that would see Caltex’s fuels and infrastructure business separately listed on the stock exchange.
Caltex said on Tuesday it was still considering EG Group’s proposal and noted there was no certainty that any deal would emerge from the two conditional offers.
Mr Segal described the results for 2019 as “disappointing”, pointing to lower margins for refining in Asia, weaker retail fuel margins, unplanned plant outages and softer economic conditions.
“Despite this, the underlying performance of our business has been resilient and we have continued to build on the solid foundations we have in place for future growth,” he said.
“Caltex continues to respond to the tough operating conditions with a focus on capital discipline and reducing costs, while also progressing its growth strategies.”
The fuels and infrastructure business recorded earnings of $450 million, down from $570 million in 2018. Convenience retail earnings fell to $201 million from $307 million.
RBC’s Mr Wilson said the result was in line with expectations.
Caltex said it was continuing to progress an initial public offer of a property spin-off, targeted for mid-2020 that would release “significant capital”. The property IPO would only proceed if no takeover deal goes ahead.
Extracted from AFR