Sharechat Logo

Caltex cuts dividend to pay for Gull acquisition in search for regional growth

Tuesday 21st February 2017

Text too small?

ASX-listed Caltex Australia has reported a 17 percent jump in annual profit despite revenue dropping, and is looking to regional expansion with its acquisition of Gull New Zealand the first step.

Caltex booked A$610 million in profit for the year ended Dec. 31, 2016, up from A$522 million a year earlier, despite revenue dropping 10 percent to A$17.9 billion. Its preferred profit measure, replacement cost, dropped 16 percent to A$524 million.

The board declared a 52 Australian cent final dividend, down from 70 cents in 2015, taking its total dividend for the year to 102 cents from 117 cents a year earlier. The company is yet to pay A$420 million for two recent acquisitions - Gull and Milemaker Petroleum in Victoria.

In December, Caltex said it would buy Gull for $340 million, giving the ASX-listed fuel company a foothold on this side of the Tasman with about 5 percent of the market. The deal represents an earnings multiple of about 8.2 times Gull's forecast earnings before interest, tax, depreciation and amortisation in 2017.

The company is aiming to improve its infrastructure position and expand its regional shipping and trading with its acquisition, through the Gull deal, of New Zealand's largest import terminal in Mt Maunganui a key part of that. Gull represents its first regional expansion, the company said, and it "will continue to pursue growth by securing new wholesale and retail volumes" such as Gull.

The Gull acquisition adds about 300 million litres of transport fuel sales, along with 77 retail sites. The brand is operationally positioned as a price challenger, Caltex said, and will be earnings accretive from in the first full year of ownership, with completion anticipated in the second quarter of 2017 pending Overseas Investment Office approval.

"The acquisition delivers on Caltex's strategic plan as it optimises Caltex's infrastructure position, builds trading and shipping capability, grows the supply base and enhances Caltex's retail fuel offering through low-risk entry into a new market," the company said. It plans to target growth "via executing business integration plans (including synergies), North Island new-to-industry rollout, and broader trading & shipping optimisation opportunities to supply Gull and (the) broader NZ market."

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports