Caltex Australia to lift marketing as competition grows in transport fuels

ELIZABETH REDMAN AND MITCHELL NEEMS
FEBRUARY 24, 2014
BUSINESS SPECTATOR
CALTEX Australia expects the transport fuels market to continue to become more competitive, saying it plans to grow its marketing business and make its Lytton refinery more efficient.
On a replacement-cost basis, the group’s profit after tax fell by 28 per cent to $332 million in the year to December 2013, compared with $458 million in the prior year.
The results are in line with a forecast the group issued in December, saying it expected a fall of up to 30 per cent to $320 million to $340 million.
On a historical-cost basis, profit after tax surged by 830 per cent to $530 million in the year, compared with $57 million in the previous year, largely on the back of its Sydney bitumen business sale.
Caltex said the figure included significant gains of around $26 million after tax, particularly from profit on the sale of its Sydney bitumen business, and also includes a product and crude oil inventory gain of $172 million after tax, compared with an inventory loss of $92 million in the prior year.
Revenue increased by 5 per cent to $24.7 million, up from $23.5 million in 2012.
The group will pay a final dividend of 17c per share, fully franked, on April 3 to shareholders who are on the record on March 11.
In a separate statement, Caltex said it had entered into an agreement to acquire the Scott’s Fuel Divisions for approximately $95 million, including working capital and related acquisition costs.
The group said the deal encompasses the businesses known as Scott’s Agencies and Sabadin Petroleum.
Caltex Australia managing director and chief executive officer Julian Segal said the acquisition would complement the group’s existing national network.
“Strategically the acquisition is a good fit,” he said.
“It is consistent with our strategic pillars of offering a comprehensive and targeted offer to customers across products, sales channels and geographies.
Financially, the acquisition is expected to be earnings per share accretive by the end of its first full year of operation, under Caltex ownership.
Caltex said it would be funded via existing facilities.
“This acquisition continues Australian ownership and management of the Scott’s fuel business, which includes 28 retail sites and 18 depots,” Mr Segal said.