Caltex, Woolies in new marriage of convenience

FUEL retailer and refinery group Caltex Australia is shaking up its convenience store offering after signing a new supply deal with Australia’s biggest supermarket chain.

CALTEX Australia will slow the rollout of its The Foodary convenience store brand after signing a new fuel and food supply deal with Woolworths.

The fuel refiner and retailer will launch the first of its new Metro convenience stores in partnership with Woolworths early next year and says it has a good idea where the first 50 will be located.

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The update came as Caltex yesterday handed down flat first-half results, with high petrol prices prompting motorists to stay away from the bowser — and buy less fuel when they did visit.

Caltex will also sell a stake of 15 per cent to 25 per cent, worth $300 million to $500 million, in its portfolio of freehold petrol stations.

Caltex has a long-standing fuel retailing agreement with Woolworths.

The group is rolling out a deep restructure of its retail arm, buying out its franchise network and launching a new convenience store offering focused on fresh food, coffee, baked goods, ready-made meals and parcel pick-up.

The heightened focus on the nation’s $20 billion convenience store sector comes as more fuel efficient cars, electric vehicles and car-sharing services weigh on the outlook for growth in fuel sales.

Caltex owns and runs 790 petrol stations.

It is in the process of buying out close to 500 of those outlets that are run by franchisees as it takes control of its entire network.

The group launched its first Foodary store at the start of last year.

At the time, it was facing a potential hit to its bottom line from Woolworths’ plan to sell its petrol station business to British titan BP.

Woolworths instead extended its deal with Caltex in July after the Australian Competition and Consumer Commission declined to approve the BP transaction.

As part of the new deal, Caltex will open 250 Metro convenience outlets to be developed with input from Woolworths.

The fuel group yesterday said it was reviewing the Foodary business but the model would remain a key part of its increasingly important convenience offering.

It launched 14 Foodary sites in the six months to June, taking the network to 37.

Caltex plans to roll out 250 Metro convenience outlets at its petrol stations.

“Given that we have 750 sites and the plan is to roll out 250 Metros, The Foodary format remains very relevant to the broader network,” chief financial officer Simon Hepworth said.

Most of Caltex’s petrol stations provide a retail offering under the Starmart banner.

Convenience sales at Starmarts converted to the Foodary offering had surged between 40 per cent and 60 per cent, while fuel sales had increased by 5 per cent, Mr Hepworth said.

Net profit at Caltex rose 45 per cent to $383 million for the six months to June compared with the same period a year earlier,

Net profit on a replacement cost basis, which strips out the impact of oil price fluctuations, rose 1 per cent to $296 million.

Retail fuel volumes fell 2.6 per cent to 2.46 billion litres during a period in which petrol prices hit a four-year high.

Petrol volumes fell 6.4 per cent to 1.24 billion litres — with the average “fill size” down 2 per cent — while retail diesel sales rose 2.1 per cent to 1.17 billion litres.

Shares in the group tumbled on the revelations, closing 7.9 per cent, or $2.62, lower at $30.68.