“Associated restructuring costs of approximately $20 million (including redundancy costs, other cash and non-cash costs) will be recognised in the second half of 2017,” said Caltex on its company statement.
“The cost savings include headcount reduction of approximately 120 roles across both operational and support functions and other identified cost savings. While the headcount reduction will be phased, the majority are expected to take place over the next six months.”
The petrol giant has also announced a decline on its half-year net profit. The petrol giant’s income has slipped by 17 per cent to $265 million, squeezed by a crude oil inventory loss and expenses associated with a franchise employee assistance fund, according to AAP.
However, the more closely watched replacement cost operating profit (RCOP), which strips out the impact of crude oil price fluctuations, has risen 21 per cent to $307 million, while revenue increased 20 per cent to $10.16 billion.
“Although we are in the initial stages, we are encouraged by the market acceptance, the quality of the product offering and the favourable impact on fuel volumes, particularly premium fuels. We will continue to take a sensible, measured approach to the convenience retail implementation and the associated capital commitment required to grow,” according to Caltex’ company statement.
The petrol giant currently has 10 new convenience retail stores and plans to further add 10 more by the end of the year. Caltex said they are still continuing to make solid progress on its convenience retail program and with the company’s operating model review, which has identified an initial $60 million annual cost saving.
“This reflects significant M&A and other major project costs (including Caltex’s company operating model and retail franchise network audit reviews) as well as investing in capabilities that better position Caltex for the future. Full year corporate costs are expected to be within a range of $100 million to $110 million,” according to Caltex’ statement.
“In 2016 we launched our new vision, the ‘Freedom of Convenience’, announcing our intention to continue our transformation from being the leading provider of transport fuels to a much more diverse organisation that operates across complex supply chains and the evolving retail convenience marketplace.”
Lytton Refinery has also delivered an EBIT of $149 million in the first half of 2017, compared with an EBIT of $92 million for the first half of 2016. Sales has during the first half of the year has totalled to 3.0 billion litres, broadly in line with the record first half 2016 performance (2.9 billion litres).
Caltex said this reflects a continued strong operational performance. Strong operational reliability was offset by a mini-turnaround at Lytton’s Benzene Hydrogenation treater unit (BHU), resulting temporarily in a higher mix of base grade petrols.