Segal: Restructuring supply chain will reduce future earnings volatility

Caltex Australia Managing Director and Chief Executive Officer Julian Segal said that restructuring the company’s supply chain over the next two years, and providing the funding flexibility to support growth in its marketing operations “will reduce future earnings volatility and provide a solid platform going forward.”
On July 26, 2012 Caltex announced the restructuring of its supply chain. This follows a major review of its operations, focusing on its refineries. It includes the proposed conversion of the Kurnell refinery, which is scheduled to be shut down by the end of 2014, to a major import terminal, supported by a long-term product supply agreement with Chevron. This decision will reduce Caltex’s exposure to volatility of refining earnings and asset concentration risks.
As Australia’s leading supplier and distributor of transport fuels, Caltex improved its marketing performance by A$26 million (US$27.1 million), with earnings before interest and taxes (EBIT) up 8% year-on-year to A$367 million (US$383.3 million).
Nonetheless, Caltex’s after tax profit for the first half of 2012 declined to A$167 million (US$174.4 million), from A$270 million (US$282.0 million) for the first half of 2011.
Sales volumes increased across Caltex’s premium petrols (+14%), diesel fuels (+3%), jet fuel (+6%) and lubricants (+6%). Non-fuel income growth was relatively flat with higher fleet card income (+5%) from higher sales prices offsetting flat convenience store sales income. (August 29, 2012)