Petrol giant Caltex Australia reported on Tuesday that half-year profit fell by 54 per cent, with managing director and CEO Julian Segal calling the result disappointing.
The fuel company will sell 50 petrol stations in a bid to reduce financial costs, and is currently reviewing another 240 stations.
Caltex head office will also be moved from Sydney’s CBD to the suburbs by 2021, with an opportunity to rent a four-storey building in Alexandria.
The company also said it won’t be able to deliver on its 2018 deal with supermarket giant Woolworths to create 250 retailers, which was expected to lift earnings by A$120 million to $150 million by 2024.
“Economic weakness, soft retail fuel margins, lower refining margins and outages have impacted our performance. Fuels & Infrastructure continues to deliver underlying growth and reliable cash flows and Convenience Retail has regained market share while remaining disciplined in a tough retail fuels market,” said Segal.
“We are responding to the tough conditions through a focus on capital discipline and by sustainably reducing our cost base. We are also progressing our retail strategy, leveraging learnings from our work to date and a review of our company-controlled network to ensure our offer is tailored to meet individual site and local area customer requirements. Caltex has a history of adapting to operating conditions to continue to succeed and we will remain agile to deliver for our shareholders.”
Net profit on a “replacement cost” basis came in at A$135 million for the six months to June 30 compared with June’s guidance of between A$120 million and $140 million. The petrol chief said that it plans to cut costs by A$100 million a year.
“For the remaining sites in our company-controlled network, there is further work to be done to determine the best way to capture value, while ensuring Caltex maintains its ~2,000 site strong StarCard accepting network,” said Caltex.