Caltex to IPO servo sites as petrol margins rise

Simon Evans

Nov 25, 2019

AFR

Petrol group Caltex Australia is planning an Initial Public Offering of up to 49 per cent of 250 freehold petrol and convenience retailing sites in a property trust structure, and has also revealed that profit margins in its petrol business have improved in the second half of 2019.

The IPO is planned for the first half of 2020, with Caltex to retain the controlling interest in the new entity. The 250 ”core” sites make up about half of the 500-strong petrol and convenience store retailing network.

Caltex chief executive Julian Segal said the time was right for the property IPO after a comprehensive review of the group’s network.

Caltex chief executive Julian Segal  David Rowe

“Caltex is focused on unlocking value in our portfolio for shareholders and the segmentation of our network following our Convenience Retail network review has allowed us to consider a range of options to release capital from our high-quality property assets,” Mr Segal said.

The company said the property trust would receive rental payments of between $80 million to $100 million from Caltex in the first year.

A further 50 other sites are set to be sold off by Caltex.

The company also said on Monday that better fuel margins in the second half of calendar 2019 had led to a forecast for Convenience Retail earnings before interest and tax for the full year of between $190 million to $210 million. This represented an increase of between $20 million to $40 million over the first half 0f 2019. Caltex had also generated market share gains in petrol retailing, and total fuel sales volumes from the Convenience Retailing arm was now expected to be about 4.8 billion litres in 2019.

Mr Segal said Caltex had been able to shrug off the weaker economy.

“Despite the softer conditions from ongoing Australian economic weakness, Caltex has continued to outperform our competitors in the retail fuel market by leveraging our fuel supply chain expertise and our high-quality retail network,” he said.

Woolworths’ Ian McDonald and Caltex’s Joanne Taylor at the first co-branded Metro convenience store in Sydney.

Woolworths, Caltex raise the bar with first co-branded store

Earlier this month, Woolworths and Caltex said a new chain of stores selling fresh food, groceries and fuel would raise the bar in the $8.5 billion convenience sector and change the way people shop.

Australia’s largest supermarket chain and the nation’s leading fuel retailer unveiled the first of about 250 Caltex Woolworths Metro stores earmarked to open over the next few years under a long-term supply agreement.

The first pilot store, in the Sydney suburb of North Ryde, carries about 2500 packaged grocery products as well as sandwiches and salads, along with fruit, vegetables, meat and prepared meals.

The stores, a mini Woolworths Metro in a Caltex service station, are designed to appeal to time-poor customers who can shop for food and fuel on the way to or from work.