Caltex Australia will sell 50 petrol stations and relocate from the Sydney CBD after earnings results, including a 54% drop in profit.
Caltex Australia has reported a 54 per cent fall in first-half profit and says its retail stores won’t be able to deliver on a promise to boost earnings by up to $150 million by 2024.
Company executives called the results “disappointing” and “unacceptable” and said they were taking steps to reduce costs, including by selling 50 petrol stations and moving the company’s head office out of the Sydney CBD.
At 1152 AEST, Caltex shares were down 4.7 per cent to a two-month low of $24.63.
Caltex said it had been hurt by weakness in refining margins amid higher crude prices and it was taking steps to reduce its cost base.
Net profit on a “replacement cost” basis came in at $135 million for the six months to June 30 compared with June’s guidance of between $120 million and $140 million.
The petrol station owner and convenience store owner reported a $296 million profit in the prior corresponding period.
“These results are disappointing and we are taking strong action to improve shareholder returns,” chief executive Julian Segal said.
“The results are not acceptable to us,” agreed chief financial officer Matthew Halliday in a call to analysts.
Mr Segal said Caltex was taking steps to reduce costs by $100 million a year, including by relocating Caltex’s head office outside the Sydney CBD in 2021.
The company is negotiating a lease on 9500 square metres of space on a yet-to-be-built four-storey building in the Sydney suburb of Alexandria, a spokesman confirmed.
Caltex said it was also lowering its capital expenditures this year to about $300 million, from the $320 million to $385 million previously indicated.
Caltex said it was still learning from its convenience retail strategy as it completed a buyout of its franchisees by 2020.
A review has indicated the company won’t be able to deliver on its forecast that a 2018 deal with Woolworths to create 250 market-leading retailers would boost earnings by $120 million to $150 million by 2024.
“Caltex will take the necessary time to ensure the disciplined execution of the strategy, and will provide further updates as the retail strategy is executed,” the company said.
It has transformed 63 petrol stations into “Foodary” sites with premium offerings.
Caltex said it would sell about 50 of its metropolitan freehold petrol stations after deciding they were worth more as alternative developments.
The company has decided to keep 500 of its 790 company-owned and operated petrol stations, and has still to review another 240 of them.
Caltex declared a 32 cents per share interim dividend, fully franked, down 43 per cent from last year.
CALTEX AUSTRALIA
* Half-year revenue up 1pct to $10.3b
* Net profit after tax down 54pct to $135m
* Interim dividend of 32 cents per share, fully franked, down from 57 cents a year ago.
Extracted from news.com.au