Caltex plans new stores

CALTEX Australia will buy out its network of almost 500 petrol station franchises as it sharpens its focus on the nation’s $20 billion convenience store sector.

Announcing the move yesterday, the fuel retailer said it had nothing to do with the scandal over worker underpayments that triggered an internal review of the division and an investigation by the Fair Work Ombudsman.

Caltex will spend $100 million to $120 million to take control of 471 franchise sites and 25 company-leased sites by the middle of 2020.

The Australian arm of the oil titan owned and operated 314 sites across its network of 810 stations at the end of last year.

Caltex announced the restructure as its handed down a net profit of $619 million for the year to December — up 1.5 per cent from 2016.

Net profit on a replacement cost basis, which strips out the impact of oil price fluctuations, rose 18 per cent to $621 million.

The result was above the company’s forecast and came as it booked higher margins at the Lytton refinery in Brisbane.

Caltex is taking back control of its petrol station network as it launches a new convenience store offering focused on fresh food, coffee, baked goods, ready-made meals and parcel pick-up under “The Foodary” brand.

“Controlling and operating our core business is the most effective way of achieving our strategic objectives,” chief executive Julian Segal said yesterday.

“We have a set of very important assets. We realise there is an opportunity to reinvent convenience — that is a very wise decision but a complex one.

“The only way for us to successfully deliver on this strategy … is to take control of the operations.”

Caltex has opened 26 Foodary pilot stores, including two that do not sell fuel.

The push into the fastgrowing convenience sector comes as Caltex works to cover a potential hole in its earnings created by Woolworths’ plan to sell its petrol stations to BP.

That deal would end the grocer’s long association with Caltex, although it is in jeopardy after the Australian Competition and Consumer Commission late last year declined to approve it.

BP — which has sought legal advice about the ACCC’s decision — is planning to roll out a Woolworths fresh food and ready-made meal offering across its network.

The rise of more fuel efficient cars, electric vehicles and car-sharing services also means fuel retailing is becoming less attractive to Caltex as a growth platform.

Australia’s convenience store sector was worth $20 billion in 2016.

Major franchise chains including Caltex, 7-Eleven and the Retail Food Group have been rocked by wage underpayment scandals in recent years.

“The decision to take the operations into Caltex had nothing to do with the franchisee underpayment issue,” Mr Segal said.

“It has to do very much with our strategy.”