Woolies runs out of gas

Woolworths chief Brad Banducci says the supermarket giant will work towards exiting its petrol station network via a sale or new share market listing.

WOOLWORTHS chief Brad Banducci says the supermarket giant will work towards exiting its petrol station network via a sale or new share market listing despite penning a new supply deal with Caltex.

Caltex Australia, which will use Woolworths to supply food to 700 of its stand-alone petrol stations, has also indicated it would not be interested in a stake in any float of the Woolworths petrol station network.

Woolworths yesterday announced it had signed a new 15-year supply deal with Caltex, which will provide motorists with more places to earn the supermarket’s loyalty points and use its discount fuel vouchers.

Caltex, which already supplies Woolworths’ petrol business with fuel, will also introduce the supermarket giant’s Metro convenience store offering at up to 250 of its petrol stations, with 50 to be up and running within the next two years.

The deal will hand Woolworths an $80 million a year earnings boost.

Caltex had warned that losing the Woolworths fuel supply contract would tear a $150 million a year hole in its earnings. The move by Woolworths to renew its arrangements with Caltex follows the competition watchdog indicating it would block a $1.8 billion sale of the supermarket giant’s 534 petrol stations to BP.

Mr Banducci yesterday said he remained convinced Woolworths was not the “natural owner” of a petrol station network and he would pursue a trade sale or initial public offering that would see the business listed on the stock exchange as a new company.

“We just think we’re not the natural owner and others who are more global or looking at the trends are much better placed to operate it,” he said.

Under the new deal, motorists will be able to earn Woolworths loyalty points at more than 700 stand-alone Caltex sites for the first time. Sites will begin offering loyalty points on purchases within 12 months.

The change means Woolworths shoppers will be able to earn reward points at about 1235 petrol stations.