Caltex takes over retail franchises
PETROL retailer Caltex has taken ownership of more than 100 convenience store franchises as part of a plan to take over all 433 outlets and restructure the company to establish a new retail division.
Shareholders at the company’s general meeting yesterday were told it would in future report profits from two separate businesses, its traditional fuels and refinery division and the new convenience store division.
The move by Caltex to bring its petrol stations under its control followed findings of widespread workplace breaches by its franchise operators.
Caltex chief executive Julian Segal also said the company had made significant progress to replace the expected loss of a $150 million a year supply contract with Woolworths later this year.
New income, which so far had added $22 billion to earnings before interest and tax in the year to December, had come from the purchase of the Milemaker service station network in Victoria and Gull service stations in New Zealand, he said.
In addition, Caltex entered a new partnership with a Philippines based fuel company in March and had identified $60 million in annual cost savings, Mr Segal said.
“While we continue to supply Woolworths under the existing agreement, we have made significant progress in replacing the potential loss of revenue,” he said.
Last year Woolworths contracted to sell its network of service stations to rival oil company BP, although that deal has still not been finalised.
Within the company’s traditional fuel division, Mr Segal said commercial diesel volumes increased 9.2 per cent, transport fuel was up 3.4 per cent and jet volumes increased 6.25 per cent last year.
Responding to a shareholder question, Mr Segal raised the possibility of installing electric charging stations at the company’s service stations.
However, the key focus for the company in the year ahead will be its new convenience store division, he said.
The establishment of the new division follows findings by the Fair Work Ombudsman of widespread breaches of workplace laws and underpayment of staff by the franchise operators.
To date, Caltex has opened 29 of its new Foodary stores across the country and has an ambitious plan to spend a further $100 million in the current financial year on more.
It plans to roll out up to another 60 Foodery outlets and a further 10 smaller, “high street” convenience stores under the Nashi brand.
“Controlling our core convenience retail business is the best way to deliver our retail growth objectives,” Mr Segal said.
“As a result of that decision we will aim to transition our 433 franchise sites to company operations by mid 2020. “All of this makes us more agile and gives us the capacity to accelerate the implementation of our vision to be market leader in convenience retail.”