On an historic basis, Caltex recorded an after-tax profit of $619 million for the 2017 full year. This includes crude and product inventory gains of $12 million after tax.
Caltex recorded an after-tax profit for the 2017 full year of $621 million, excluding significant items, on a RCOP basis. This is our preferred measure, as it excludes net inventory gains and losses and better represents the underlying performance of the business. RCOP NPAT of $621 million is up 18% on the 2016 result of $524 million.
Total sales volumes of transport fuels increased 3.4% to 16.2 Billion Litres (BL) from the previous year of 16.0 BL. By product, total diesel volumes increased 7.3% to 7.6 BL, while total petrols decreased 2.8% to 5.7 BL, broadly in line with industry trends.
Lytton refinery transport fuel production of 6.2 BL was in line with the record 2016 performance (6.2 BL).
*Reflects production from the Lyttonrefinery only, following the conversion of the Kurnell refinery into a fuels import terminal.
On an historic basis, Caltex recorded an after-tax profit of $619 million for the 2017 full year. This includes crude and product inventory gains of $12 million after tax.
Caltex recorded an after-tax profit for the 2017 full year of $621 million, excluding significant items, on a RCOP basis. This is our preferred measure, as it excludes net inventory gains and losses and better represents the underlying performance of the business. RCOP NPAT of $621 million is up 18% on the 2016 result of $524 million.
Total sales volumes of transport fuels increased 3.4% to 16.2 Billion Litres (BL) from the previous year of 16.0 BL. By product, total diesel volumes increased 7.3% to 7.6 BL, while total petrols decreased 2.8% to 5.7 BL, broadly in line with industry trends.
Lytton refinery transport fuel production of 6.2 BL was in line with the record 2016 performance (6.2 BL).
* Reflects production from the Lytton refinery only, following the conversion of the Kurnell refinery into a fuels import terminal.
Collaborate and unite diverse ideas to reach commercial goals
Test big and small ideas to learn and lead change
Be accountable, take considered risks and be courageous enough to call it
Know your customers, personalise the experience and make life easy for them
Act with integrity and respect, constantly challenge each other to be better and always be safe
To reflect our Freedom of Convenience vision, in 2017, Caltex changed its operating model and established two different but inter-connected businesses which require separate cultures, processes and systems, both with significant growth options. The company merged Supply, B2B, Refining and Infrastructure into one business unit (Fuels & Infrastructure) to better optimise our value chain. Convenience Retail will focus on the company’s consumer-facing petrol and convenience business.
The “Protect and Grow” aspect of the strategy is focused on capturing the many opportunities that exist to continue to enhance and expand across the businesses. “Extend” will build on our current assets, capabilities and customer base to develop the business in both existing and new adjacent markets.
We are confident our Freedom of Convenience strategy is the right one to deliver top quartile shareholder returns.
2017 was a successful year for Caltex for many reasons. The result was the second highest RCOP NPAT we have ever delivered.
During 2017, Caltex embarked on a major cultural review that resulted in a newly defined purpose and refreshed organisational values.
Our employees helped to define the company’s culture and refreshed values that would drive continued success for Caltex into the future, as well as provide a clear purpose to make Caltex a great place to work for our people.
In October 2017 Caltex announced that its purpose is to make life easier, whether this is for our wide range of customers who want the freedom of convenience, whether it’s making the complex simple, or improving the way our employees work in an environment that will inspire them to work their best.
Number of employees
Caltex strives for incident-free operations. We are relentless in our commitment to ensuring that our workforce goes home safe every day and that we protect the environment in which we operate.
Safety culture is fundamental to who we are at Caltex. Tragically, in 2017, a Caltex tanker driver was fatally injured by a third party vehicle during a routine delivery at one of our customer’s sites. The memory of our colleague inspires our continued commitment to personal safety — to ensure that our people go home safe every day. We will continue to strive to make sure that our people prioritise safety in their day-to-day activities.
Caltex is committed to protecting the environments in which we operate through full compliance with regulations and standards and robust operational management. We regularly conduct internal and external monitoring to ensure that our organisation meets these standards.
The 2018 Annual General Meeting of Caltex Australia Limited will be held at 10:00am (AEST) on Thursday, 10 May 2018 at the Wesley Conference Centre, 220 Pitt Street, Sydney.
Public transport, parking and accessibility
By foot: Wesley Conference Centre can be accessed by foot from Pitt Street
By bus: for information about bus routes and timetables, call 131 500 or visit www.131500.com.au
By train: the closest train station is Town Hall. Take the Galleries Victoria Pitt Street exit. For information about trains and timetables, call 131 500 or visit www.131500.com.au
Parking: Wilson and Secure parking stations (next to Hilton hotel) are directly opposite the Conference Centre main entry
Accessibility: the Pitt Street entrance is a level access. The meeting is being held in the main auditorium on the LG level accessible by stairs or lifts
Dear Shareholders,
2017 was a successful year for Caltex for many reasons. The result was the second highest RCOP NPAT we have ever delivered. We continued to demonstrate our track record in sound decision making in anticipation of the changing business environment, increased sales, launched new retail formats, and captured operating efficiencies, all aimed at improving our capability for ongoing, sustainable growth.
The year began with the potential loss of our 3.5 BL fuel supply to Woolworths, and the need to identify and secure new revenue. We acted to accelerate a growth agenda that included targeted acquisitions and new overseas market investments. At the same time, we improved the efficiency of our operations by identifying annualised operating cost savings of $60 million.
We announced a significant change to the company’s organisational structure in 2017, driven by our Freedom of Convenience strategy. The establishment of the two businesses within the company — Fuels & Infrastructure (Supply, B2B, Refining and Infrastructure), and Convenience Retail (petrol and convenience) — was a milestone in our evolution from the nation’s leading provider of transport fuels to becoming a leader in complex supply chains and delivering the needs of our diverse customer base.
We have reported our 2017 results under Supply & Marketing and Refining. We will report under our new structure — Fuels & Infrastructure and Convenience Retail — at our Half Year results later in 2018. In 2017, we formalised and embedded the new structure, bringing into core focus our evolving Convenience Retail business and accelerating our growth strategy, informed by the millions of customers we see each week and a refreshed mindset of making life easier.
The Fuels & Infrastructure business expanded into new geographic markets with the completion of our first international acquisition of Gull in New Zealand, and a new strategic partnership with SEAOIL in the Philippines.
These acquisitions leverage the trading and shipping capability of Ampol in Singapore and create a platform for further expansion.
We know the capability of our people is at the heart of the company’s success. The evolution of the business is supported by agile, committed people with the expertise required to deliver sustainable returns and growth for our shareholders. In addition, the core skills of our current leaders have been complemented by the targeted recruitment of external talent with experience in retail, digital and technology. As a result, the broader Caltex leadership team is poised to deliver on our strategic imperatives.
Safety
Our year was marked by tragedy. Each one of us at Caltex was saddened by the loss of a colleague who was fatally injured when he was struck by a third party vehicle during a routine delivery at a customer’s site late in 2017.
The health and safety of our people is our primary focus and this fatality has deeply affected everyone at Caltex. Our thoughts are with our colleague’s family, friends and all who knew him well. His memory is with us daily as we strive to continue improving our personal and process safety.
This tragic loss was against a backdrop of otherwise strong, continued improvement in personal safety measures. The measures for Total Recordable Injury Frequency Rate (TRIFR), and Days Away From Work Injury Frequency Rate (DAFWIFR), show a trend of solid improvement over the previous three years. Our measure for contractor days away from work was the best result we have had to date.
Our financial performance
For the full 2017 year, on an historic cost profit basis, Caltex’s after-tax profit was $619 million. This result was up 1.5% on the 2016 result of $610 million after tax, with a net $14 million loss in significant items.
The 2017 full year result includes crude and product inventory gains of $12 million after tax, compared with crude and product inventory gains of $86 million after tax in 2016.
On a replacement cost of sales operating profit (RCOP) basis, we delivered a RCOP of $621 million, up 18% on the previous corresponding period, and marginally above the 2017 profit guidance.
Supply & Marketing delivered strong results with an EBIT result of $733 million, up by 3.4% from the previous year. This result includes unfavourable externalities of $43 million, comprising a realised loss on foreign exchange of $26 million and a price timing lag loss of $17 million, which are both improvements on the previous year.
The underlying Supply and Marketing EBIT increased 5.1% to $776 million, excluding externalities.
Acquisitions added approximately $22 million EBIT in the second half of the year.
Commercial diesel volumes grew 9.2% to 4.4 BL due to retention of core B2B customers, and increased resource and commercial activities. Jet volumes increased 6.25% to 2.8 BL, reflecting strong market activity, particularly across the East Coast, and increased volumes from new and growing carriers.
The Lytton refinery recorded an EBIT of $308 million, up 50% on 2016. This reflects continued strong operational performance, the benefit of higher average refiner margins.
The refinery continues to operate well with sales from production of 6.1 BL.
New markets for fuel supply
We continued to grow our international trading and shipping capability and expertise with our first international acquisition, Gull New Zealand.
The acquisition of Gull New Zealand enables Ampol to extend the capability of Caltex’s supply base.
We also announced that we have entered into a strategic partnership with SEAOIL, a leading independent transportation fuels company in the Philippines, by acquiring a 20% equity interest in SEAOIL and managing the supply of fuels via our Ampol capability in Singapore. This new relationship will deliver mutual benefit for both Caltex and SEAOIL, allowing us to contribute to the future growth of this exciting business in one of the fastest growing import markets in Asia.
Freedom of Convenience
By the end of 2017, we had opened 23 new convenience retail stores, operating under The Foodary format. The early results are encouraging, with strong customer feedback and an average sales uplift of around 35%, in an average period of just four months.
On 27 February 2018, we announced the outcome of the two year review of our Convenience Retail operating model. This review determined that controlling our core Convenience Retail business is the best way to deliver our retail growth objectives. This will see Caltex transition our 433 franchise sites to company owned operations and we are aiming to complete this by mid 2020.
Throughout the year, we continued to audit our entire franchise network in response to the initial discovery of alleged wage underpayment of employees by certain Caltex franchisees. Additionally, we established an assistance fund for those franchisee employees impacted by underpayment or wage fraud and supported those franchisee employees by offering them employment with Caltex. During 2017, 875 employees have now been employed by Caltex.
Caltex will not tolerate illegal and unfair practice and we are committed to stamping it out anywhere in the franchise network. The Caltex audit program is ongoing and we will continue to take all necessary action to stop underpayment or mistreatment of franchisee employees.
Advances in diversity and inclusion
Caltex was recognised by the Workplace Gender Equality Agency (WGEA) as a 2017 Employer of Choice with a Gender Equality citation. This is the third consecutive year that we have received such recognition and reflects our commitment to gender equality.
Women currently represent 37% of all senior leadership positions and achieved 48% of all promotions to senior leadership positions in 2017. The gains in female representation on the Caltex Leadership Team have been maintained at 37.5% and there has been an increase on the Caltex Board at 42% female representation (up from 29% in 2016).
Our gender pay difference stands at a minimal rate of 0.93% in favour of males on a like-for-like job basis.
In 2017, we also formalised a flexible work structure, recognising the importance of flexibility to retaining key talent and making it easier to return to work following parental leave. 83% of employees surveyed last year agreed that they have the flexibility to manage their work with their caring responsibilities.
Acknowledgment
In August 2017, Greig Gailey retired as Chairman of the Caltex Board. We would like to acknowledge and thank Mr Gailey for his considerable contribution as Chairman since December 2015 and nearly 10 years of service as a Director. During his tenure, Caltex Australia was transformed from a fuel refiner-marketer to a leading integrated transport fuels player delivering significant value to shareholders.
The year ahead
Freedom of Convenience continues to be the right strategy to deliver top quartile shareholder returns by making life easier for our diverse customer base across Australia. Caltex will continue to protect, grow and extend our businesses, and expand further into the convenience market where we are already making great strides.
We continue to see the growth of new capabilities that make us agile and adaptable, capabilities we couple with our track record in good decision-making in order to set us up for future earnings. This is a great time to be a part of the Caltex story as we work towards reinventing the convenience retail offer in the Australian market, as well as growing our fuels business.
On behalf of Caltex’s Board and management, we wish to thank our employees and business partners for all that they do to support our company in being a proud Australian employer, delivering results for our customers and the communities in which we operate.
We would also like to thank our shareholders for your continued support as we continue to deliver on our exciting plans for the future of Caltex.
At our Lytton refinery we are constantly looking for ways to maximise value from market conditions. Our independent Trading and Shipping capability at Ampol in 2017 has enabled us to expand the list of crudes processed at Lytton.
Seven new crudes that have not been used at the Lytton refinery in recent history were sourced through a collaboration between the refinery and our Trading and Shipping teams in Singapore. Through a careful selection of new crudes these teams optimised value, created alternative shipping opportunities, forged new relationships and changed refinery operations to maximise the highest value products.
Through a careful selection of new crudes these teams optimised value, created alternative shipping opportunities, forged new relationships and changed refinery operations to maximise the highest value products.
This delivered a higher than planned financial outcome, resulting from the optimisation of supply location selection, term vs spot decision making, parcel and shipping vessel size selection, co-load optimisation, and economic decisions to build and draw inventory to benefit from market sale opportunities.
The Foodary has gone from strength to strength in 2017. January saw our first store open in Concord, Sydney which marked the start of our journey to reinvent the convenience retail offer in the Australian market.
From Granville to Gelorup, The Foodary has by the end of 2017 more than 23 stores, which includes Caltex’s first non-fuel location at the Newcastle Interchange train station in New South Wales.
From Granville to Gelorup, The Foodary has by the end of 2017 more than 23 stores, which includes Caltex’s first non-fuel location at the Newcastle Interchange train station in New South Wales.
The Foodary is making a difference for customers by offering higher quality, fresh on-the-go food and barista-made coffee. We are partnering with leading quick service restaurant providers, with a common focus on freshness and convenience, a more inviting store experience and a seamless digital platform.
January marked our expansion beyond the petrol and convenience space and into high street retailing via the acquisition of grab-and-go Nashi Sandwich and Coffee Bar and its seven stores in Melbourne. The purchase of Nashi provided Caltex with an immediate high street presence in the fresh food space and a commercial kitchen facility that makes fresh food daily.
Late in 2017, our first Nashi store in Sydney opened on Clarence Street at Wynyard station in the Sydney CBD.
Late in 2017, our first Nashi store in Sydney opened on Clarence Street at Wynyard station in the Sydney CBD. A partnership with Transport for NSW will deliver exciting new developments in train station locations during 2018 for both Nashi and The Foodary. By repurposing the ticketing booths at key locations including Bondi Junction, Chatswood, Parramatta and Kings Cross, we’ll be reaching out to meet the changing needs of our consumers, wherever they travel.
Now in its fifth year, our BabyCare package gives meaningful support for parents returning to work — providing primary caregivers with confidence and support when transitioning back to work. Until their child turns two, Caltex employees (who are the primary caregiver) have access to a range of offerings including a 12% bonus on annual salary, emergency childcare sessions and a childcare finding service.
For Caltex Telematics Manager, Jacques Lepron, our BabyCare package gave him and his wife Caroline great peace of mind.
For Caltex Telematics Manager, Jacques Lepron, our BabyCare package gave him and his wife Caroline great peace of mind.
“When my wife and I were expecting our first child, Sofia, we were overjoyed! But we were also worried about practical things like taking time out of the workforce and finding childcare when returning to work. It was also a challenging time, as Caroline was in the process of launching her new start-up business, which required more of her time and commitment.”
This prompted Jacques to access our primary carers leave and allowed him the opportunity to spend quality time with Sofia, as well as helping his wife concentrate on the growth of her new start-up.
“I’ve now returned to work and already utilised the childcare finding service. The bonus has been a wonderful benefit for my family, not only to offset our childcare costs but also because, as working parents, it’s comforting to have your company’s full support.”
Caltex continues to look at ways to further improve its portfolio-wide energy efficiency and is reviewing ways to use smart metering, smart switchboards, demand management and whole-of-life asset efficiency assessments. The review will include continued LED upgrades and solar evaluations at our highest electricity consuming sites.
An energy review last winter at two sites in Western Australia compared a new site designed with our broader convenience offering in mind with a well-established service station focused on fuel sales. The comparison of the different sites helped Caltex understand the major areas of energy use and identify opportunities to improve energy efficiency and reduce costs. Refrigeration, air conditioning and lighting are major users of energy at both new and old sites which can be improved with insulation, new technology and LED lighting, alongside training for the employees in our stores.
Both reviews also identified that we could achieve more than 25% reduction in our electricity use by embracing solar energy while future-proofing sites for batteries.
Both reviews also identified that we could achieve more than 25% reduction in our electricity use by embracing solar energy while future-proofing sites for batteries. This would also give the potential to support the charging of electric vehicles from renewable sources in the future.
As a result of these findings, Caltex embarked on a solar photovoltaic (PV) panel pilot trial at the two sites in July 2017. This trial found that using solar PV panels improved energy efficiency by over 30%, reduced peak demand and delivered a greenhouse gas emissions reduction of over 20%. The initial pilot success resulted in broader trials which have now commenced at additional sites with a view to scale up, initially in Western Australia in 2018, and to explore further rollout potential on the eastern seaboard and in South Australia.
In July 2017, Caltex partnered with Xero, the global leader in online accounting software. We view this partnership not just as a data solution, but a smart business solution for both Caltex and Xero customers.
The Caltex StarCard is designed to streamline the management of vehicle-related expenses, saving customers’ time to spend elsewhere on their business. To make life even easier, Caltex StarCard customers can now elect to integrate their StarCard account with Xero.
StarCard is the first fuel card in Australia to integrate directly with Xero in this way.
This means our StarCard customers will have their fuel and shop transactions automatically uploaded to Xero. A copy of their monthly tax invoice will also be sent to Xero providing the business with a tax-approved record of StarCard expenditure.
StarCard is the first fuel card in Australia to integrate directly with Xero in this way.
This is just one of the ways we are improving our StarCard product for customers. Another example in 2017 was the introduction of Qantas Business Rewards which has resulted in 62 million Qantas points for our customers.
Two years ago, at the Clontarf Academy as part of the Endeavour Sports High School, Darcey Moran could not have imagined he would be working at Australia’s largest liquid fuel import terminal as part of his two year traineeship at Caltex.
Combining paid work, training and school, Darcey is now working one day a week at our Kurnell terminal while completing his High School Certificate (HSC) and Business Studies course. Upon completion, Darcey will earn an industry recognised national qualification as well as credit towards his HSC.
“That’s a key goal for Clontarf – to prepare the boys in our program for life after school and build practical knowledge and skills that support their qualifications.”
Clontarf’s CEO, Gerard Neesham, says, “That’s a key goal for Clontarf – to prepare the boys in our program for life after school and build practical knowledge and skills that support their qualifications.”
For Darcey, “The people I work with at Caltex are really welcoming, and I’ve already learnt so much from them. Also, Clontarf has helped me to be more disciplined and value teamwork. I now think the sky’s the limit, anything is possible – just give it a go!”
