Caltex to cut jobs
Restructure planned
CALTEX Australia will cut jobs as part of a review of its operations as it looks to offset the impact of losing its supply contract with Woolworths.
The fuel retailer yesterday announced a restructure that would result in the loss of 120 jobs and deliver initial cost savings of about $60 million.
The review, dubbed Quan- tum Leap, will look at improving efficiency and earnings growth and Caltex chief executive Julian Segal did not rule out asset sales or demergers.
“At this stage the two businesses are very much interdependent but in time there could be a conclusion that those assets might be delivering more value to the business in a different structure,” Mr Segal said.
Caltex will merge its whole- sale, refining, and import functions into a fuels and infrastructure business, while its petrol and convenience business will make up a retail division.
Caltex is expected to face an earnings hit of up to $150 million when its 3.5 billion litres a year supply contract with Woolworths comes to an end this year, following a decision by the supermarket chain to sell its fuel stations to BP.
Caltex has sought to partly make up the gap by buying Victorian service station network Milemakers and Gull New Zealand’s network, with both expected to contribute between $50 million and $60 million in earnings.
The company’s net profit in the first half of 2017 dropped 17 per cent to $265 million.
But Caltex’s more closely watched replacement cost operating profit, which strips out oil price fluctuations, rose 21 per cent to $307 million — mainly on earnings from its Lytton refinery in Brisbane.
Earnings at the Lytton plant jumped to $149 million from $92 million a year earlier, as refiner margins averaged $US12.59 a barrel over the half year, compared with $US10.10 a barrel a year earlier. Underlying earnings from supply and marketing improved 6 per cent to $381 million.