Caltex may sell stake in petrol stations, as profit jumps
Caltex Australia is considering selling part of its convenience retail assets valued at $2 billion.
Caltex Australia says it is considering selling part of its convenience retail assets valued at $2 billion, even as higher costs kept its first-half profit at the lower end of its guidance.
The refiner and fuel retailer said it was exploring a potential real-estate partnership, which could include the sale of 15 to 25 per cent of its existing freehold site portfolio, with Caltex retaining between 25 per cent and 50 per cent stake.
Such a deal would enable Caltex to benefit from any increase in the market value of the petrol stations and pave the way for other potential transactions later, management said.
The company’s (CTX) branded convenience stores include names like Star Mart and Woolworths.
However, Caltex said a separate review of its infrastructure assets had concluded that it wasn’t worth pursuing any deals, despite strong interest from investors.
In July, Caltex said Woolworths would start wholesale food supply to over 700 existing Caltex convenience sites, as part of a 15-year fuel supply deal. The company mainly deals in the refining and supply of petroleum products and also operates convenience stores across Australia.
The move came as Caltex lifted its half-year benchmark profit by just 1 per cent after its fuel margin was hit by rising crude oil prices along with the increased costs of transitioning franchise retail sites to its own operations.
Replacement cost of sales operating profit (RCOP), which strips out the impact of oil price movements on inventories, rose to $296 million for the six months to June 30, at the lower end of recent guidance of $295m to $315m.
Net income, which accounts for the impact of oil prices on the value of stockpiles, rose 45 per cent to $383m from $265m, just short of Caltex’s June guidance of $385m to $405m.
Raw earnings from its Lytton refinery in Brisbane fell by 30 per cent to $105m from $149m due to a lower refiner margin.
Headline earnings from its fuels and infrastructure unit which accounts for the majority of Caltex’s business increased by 9 per cent to $314m.
A fully-franked interim dividend of 57c per share was declared, down from 60c a year earlier.
By 11.30am (AEST), Caltex shares were down 6.1 per cent to $31.27 in a firm Australian market.
Australia’s fuel market has undergone rapid change in recent years as several operators sold or closed refineries, in some cases converting them to import terminals. At the same time, petrol stations traded hands with companies including Exxon Mobil Corp exiting the sector and investors such as Swiss commodities trader Vitol building up a position.
One competitive threat to Caltex’s business disappeared this year when BP walked away from a $US1.3 billion acquisition of Woolworths’ service station network after it faced opposition from Australian regulators. The deal’s collapse enabled Caltex to ink a new strategic alliance and 15-year wholesale fuel supply agreement with Woolworths.
Still, other risks remain. Investors are watching closely to see if the recent initial public offering of Viva Energy Australia leads to any shift in strategy. Viva Energy, which continues to count Vitol as a major shareholders, supplies around 25 per cent of the country’s liquid fuel needs and is a major supplier of the bitumen that paves roads and chemicals used in mining, paint and adhesives.
With Reuters, Dow Jones Newswires
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