Caltex Australia Limited (ASX: CTX), is a leading Australia based importer, refiner and marketer of fuels and lubricants. It has over 2,000 self-owned or affiliated sites, making it Australia’s leading transport fuel supplier.
On May 9th, 2019, the company presented its First Quarter Trading update for the period ending March 2019. The Fuels & Infrastructure (excluding Lytton) EBIT amounted to $104m. This was a marginal dip from $106m in the pcp. However, Lytton segment was under pressure, with Lytton EBIT coming in at $5m from $51m in 2018. Considering the low earnings from Lytton, a major segment of the company, the Fuels & Infrastructure (F&I) EBIT amounted to $109m from $156m in pcp. The Convenience Retail EBIT was $40m as against $90m in the pcp. The Group RCOP EBIT was $138m as against $238m in the pcp.
The HCOP NPAT decreased to $57m from $172m in pcp. However, the average Caltex Refiner Margin in April amounted to US$10.96/bbl, above the 1Q 2019 average of US$7.53/bbl. The CRM sales from production was at 440ML. The planned shutdown of the Lytton refinery FCCU reduced the CRM by approximately US$0.60/bbl.
The company stated that it has opened 59 Foodary sites and would launch the initial Caltex Woolworths Metro pilot sites in 2H 2019. CEO and MD, Julian Segal stated that the company is focussed on the execution of strategies for successful delivery in 2019.
The company also conducted its 2019 Annual General Meeting. Chairman Steven Gregg informed shareholders that Director Trevor Bourne would be leaving the company after 13 years of service. Joanne Taylor, is appointed as the new Executive General Manager, Convenience Retail and Matt Halliday, is appointed as Chief Financial Officer.
Further, giving his review on the 2018 performance and strategy for growth, Steven said that the major highlights of the year were expansion of global business, growth in local sales volume, retention of fuel supply contract with Woolworths and The Foodary roll-out.
International supply volumes in 2018 were 3.5 billion litres, up 39% from 2017 - through supply to Gull, Seaoil and other international customers. He also highlighted that the petrol and convenience retail sector is another potential growth opportunity for the company.
The company had announced in February to transition remaining franchisee retail sites to company operation by the end of 2020, and it has already transitioned almost 200 stores.
On the financial and economic front, Managing Director and CEO, Julian Segal stated that the company’s after-tax profit was $560m (down 9% from pcp). Despite challenges the fuels & infrastructure business achieved EBIT outcome in line with guidance of $570m. The Convenience Retail business EBIT was $307 million, 8% down pcp.
At the corporate level, the Board made the decision to increase the dividend pay-out to between 50% and 70%. The company had also announced an off-market Buy-back of approximately $260m, benefiting shareholders and contributing to EPS and ROE.
The main priorities for 2019 are to grow global and local sales, roll-out initial metro pilot stores in 2H19 and maintain strong investment grade credit rating.
Share Price Information:
As on 9 May 2019 at 3:07 PM AEST, the stock is trading A$25.840, up 0.623%. It has provided a YTD return of 2.03%.
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