Caltex in $260m share buyback after deciding against retail shake-up

Angela Macdonald-Smith
Feb 26, 2019
AFR
Caltex will return $260 million to shareholders through a buyback despite posting lower full-year profit due to pressure on refining margins and costs involved with the revamp of the convenience retailing business.
The buyback comes after Caltex decided against a sale and leaseback transaction for a $300 million-$500 million portfolio of retail sites, which it flagged as a possibility in August.
The company said on Tuesday it concluded such a restructuring “was not financially compelling”.
Margins have declined for fuels made at Caltex’s Lytton refinery in Brisbane. Eric Taylor
“Caltex will continue to explore opportunities to maximise the value created from these assets,” it said.
Chief executive Julian Segal said Caltex made “significant progress” last year in executing its strategies to develop the fuels & infrastructure and the convenience retailing businesses, “setting the company up for long-term success”.
Net profit excluding the impact of oil prices on the value of inventories, the figure most closely watched by the market, dipped 12 per cent to $558 million in the year ended December 31, but beat the top end of revised guidance given in December.
Bottom line earnings dropped 10 per cent to $560 million, also modestly above revised guidance. Sales jumped 34 per cent to $21.7 billion.
Caltex declared a final dividend of 61¢ a share.
The results and the off-market buyback, expected to complete in the June quarter, “demonstrate our progress on transforming our business, our commitment to growth and our continuing focus on delivering returns to shareholders,” Mr Segal said.
Earnings before interest and tax from the fuels & infrastructure business were $570 million, in line with guidance. While earnings from the Lytton refinery in Brisbane were lower due to lower Asian refining margins and an unexpected plant outage, EBIT was up 21 per cent in the rest of the business thanks to higher fuel sales volumes both in Australia and overseas.
EBIT in the convenience retail business was $307 million, just ahead of the guidance range.