Caltex Australia Ltd (ASX: CTX) released their full-year 2018 report this morning, as well as announcing a share buy-back scheduled for Q2 2019.
Caltex Australia is known for its popular fuel and convenience stores. The multi-billion-dollar company also operates in the petroleum industry by buying, refining and distributing fuel products throughout Australia. It’s been in the business for more than 100 years!
Caltex Report: 5 Key Points
- Replacement Cost Operating Profit (RCOP) NPAT was above guidance at $558 million
- Return on capital employed came in at 19%
- Fuels and Infrastructure EBIT up 21% to $570 million
- Off-market buy-back announced of approximately $260 million
- A final dividend of 61 cents per share, fully franked
Analyst Targets
Bloomberg NPAT estimates were $549.3 million, and total dividend estimates were $1.119 per share. Bell Potter NPAT estimates were slightly higher at $550.6 million. Caltex beat both NPAT estimates and also edged out Bloomberg’s dividend estimate, with the total dividend for 2018 coming in at $1.18 per share, fully franked.
Management Commentary
Managing Director and Chief Executive Officer Julian Segal said, “In 2018 we made significant progress executing the Fuels and Infrastructure and Convenience Retail strategies, setting the Company up for long-term success.”
Speaking about each division, he commented, “Fuels and Infrastructure again performed strongly. Leveraging our integrated supply chain, Caltex delivered solid growth in Australian wholesale volumes and strong growth in our International business. Our Convenience Retail team has made great progress in the transition of franchise sites to Company operations and developing our convenience offer, including our strategic partnership with Woolworths.”
Finally, speaking about the share buy-back, Mr Segal said, “Our 2018 financial results and the ~$260 million Off-market Buy-back announced today demonstrate our progress on transforming our business, our commitment to growth and our continuing focus on delivering returns to shareholders.”
The record date for participation in the share buy-back is 4th March 2019.
The Bottom Line
Despite RCOP NPAT beating estimates, the result of $558 million still represents a decrease of 12% year-on-year. On top of that, Convenience Retail EBIT was down 8% YoY, and full year dividends were down 5%. Most of the positives come solely from the Fuels and Infrastructures business, which increased EBIT 21%.
Caltex has struggled in the last few years with declining profits and although some sectors are showing strong growth, the business as a whole doesn’t seem to be moving forward. The 10-year average total shareholder return has been 14.4% but the 5-year average TSR has been only 10%. Caltex needs something to change soon to stop the profits sliding backwards.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
