Slide 1: 2019 Half Year Results
2019 Half Year Results 27 August 2019 Caltex Australia Limited ACN 004 201 307 27 August 2019
Slide 2: Introduction and overview
2 Introduction and overview Julian Segal MD and CEO
Slide 3: The safety of our people and customers is our priority
3 The safety of our people and customers is our priority We remain focused on enhancing safety of the sites being transitioned Fuels & Infrastructure Personal Safety Process Safety and Spills 10 12 8 10 6 8 6 4 4 2 2 0 0 2015 2016 2017 2018 1H 2019 2015 2016 2017 2018 1H 2019 Days Away from Work Inj
Slide 4: 1H 2019 result inline with guidance; Caltex is Taking Action
4 1H 2019 result inline with guidance Weak market conditions in refining and retail have delivered a disappointing 1H result, Caltex is taking action 1H 2019 1H 2018 % ∆ 1H 2018 Caltex is Taking Action Focusing on strict capital return hurdles to EBIT – Fuels & Infrastructure (Ex Lytton)* $192m $2
Slide 5: Markets and volumes are challenging, but we are well positioned
5 Markets and volumes are challenging, but we are well positioned Australian Industry Fuel Sales BL F&I Australian Fuels Volumes* 9 10% annual change Wholesale Fuel 8 1.45 1.34 Australian total fuel demand down 2.2% on pcp, driven by 1.36 7 economic weakness (Agriculture activity^ –6%, Constructio
Slide 6: F&I delivered a solid underlying result in a weak market
6 F&I delivered a solid underlying result in a weak market F&I delivered a strong underlying result in weak market conditions, building on track record A$m F&I (ex Lytton) EBIT 250 EG supply contract re-price reduced EBIT by ~$40million vs pcp 200 International EBITDA increased 11% on pcp, 12% C
Slide 7: Focus on cost discipline will deliver $100m in savings by end 2020
7 Focus on cost discipline will deliver $100m in savings by end 2020 Taking action on costs to deliver a Caltex that is fit for the future Operating cost out program of $100m* p.a. by the end of 2020; run-rate to be >50% by end 2019 Savings are roughly split equally between Corporate, Convenienc
Slide 8: Convenience Retail network strategic review
8 Convenience Retail network strategic review Apply learnings gained from The Foodary and larger company-operated network Assessment criteria for strategic review 500 sites best match our strategy, more work on remaining sites Branded Retail Network COCO Retail Network1 Mini-market overlay assessing
Slide 9: Convenience Retail update
9 Convenience Retail update Progressing implementation of our strategy by leveraging Foodary learnings and Woolworths partnership to enhance customer offer and provide right format for each location Caltex is confident with the progression of its convenience retail strategy, and still anticipates
Slide 10: Caltex – high quality resilient business with a focus on capital discipline
10 Caltex – high quality resilient business with a focus on capital discipline Large resilient cash flow from core business Targeted action to manage market dynamics Transport fuels focused Clear options to improve cash flows Strong competitive advantages Capital discipline integrated in ope
Slide 11: Group financial result
11 Group financial result Matt Halliday CFO
Slide 12: 1H 2019 driven by weak economic conditions
12 1H 2019 driven by weak economic conditions Weak refining and retail margins, Lytton outage, EG contract re-price 1H 2019 v 1H 2018 RCOP EBIT 700 600 500 443 49 36 400 18 40 $m 14 9 65 300 11 9 255 200 100 0
Slide 13: Fuels & Infrastructure highlights
13 Fuels & Infrastructure highlights Weak refining margins, Lytton power outage and EG contract re-price partially offset by F&I underlying performance 1H 2019 v 1H 2018 F&I RCOP EBIT 400 350 314 99 300 250 40 $m 23 4 12 5 9 193 200 150 Unlikely to repeat in 2H 2019 100 50 0
Slide 14: Refining margins are at historical lows
14 Refining margins are at historical lows Managing refining margins through product mix and rate optimisation CRM of US$7.50/bbl in 1H 2019, -US$2.57/bbl pcp 2012-2019 Caltex Refiner Margin (US$/bbl) Managing current lower margins by optimising: - Production level and mix 20 - Reduced intermedi
Slide 15: Convenience Retail highlights – key drivers
15 Convenience Retail highlights – key drivers 1H 2019 v 1H 2018 Convenience Retail RCOP EBIT 200 180 161 65 160 140 54 51 120 100 0 3 10 $m 85 80 Primarily the impact of 60 AASB 16 40 20 0
Slide 16: Retail fuel margins impacted by cyclical headwinds
16 Retail fuel margins impacted by cyclical headwinds Refocus on fuel has restored market share Economic weakness and heightened competitive dynamic impacted result Margins historically impacted by the economic cycle Disciplined refocus on fuel, the quality of the wider network, and strength o
Slide 17: Balance sheet & cashflow
17 Balance sheet & cashflow Maintaining optimal capital structure to maximise value and shareholder returns $m Period end net borrowings and gearing % $m 1400 45 1,264 1,500 40 1200 397 1,264 1,041 35 1,200 1000 955 30 955 255 800 25 900 104 42 35 191 65 600 20 65 600 78 15 30 400 10 300 200 5 0 0 0
Slide 18: Maintaining Balance Sheet headroom
18 Maintaining Balance Sheet headroom Focus on operating and capital efficiency Capital Allocation Framework What We Are Doing $100m p.a. cost savings by end of 2020 1 Stay-In-Business Capex Safety and reliability of supply are non-negotiable Cost-Out Cost savings sustainable Capex 2019 cape
Slide 19: Closing Remarks
19 Closing Remarks Julian Segal CEO
Slide 20: We are committed to operating a sustainable business
20 We are committed to operating a sustainable business People Communities Environment 82% employee engagement score Rural Aid partnership TCFD recommendations adopted, full alignment by 2021 36% women in senior Reconciliation Action Plan management Solar roll-out >40 retail sites Calt
Slide 21: 2019 outlook
21 2019 outlook Fuels & Convenience Group Infrastructure Retail Manage Lytton volume & mix to maximise Improve safety performance 2019 capex revised down to $300m value (CRM sales from production ~5.5BL) Maintain focus on fuel Dividend payout ratio 50-70% Lytton T&I to be completed in Au
Slide 22: Caltex is taking action to create value for shareholders and a more resilient business
22 Caltex is taking action to create value for shareholders and a more resilient business Caltex is: Focusing on ROCE from new capital and our existing assets to maximise value for shareholders Delivering $100m p.a. of savings by the end of 2020 Resetting capital expenditure to a lower level
Slide 23: Q&A
23 Q&A
Slide 24: Appendix
24 Appendix Fuels & Infrastructure Financial Highlights....... 25 Lytton Refinery EBIT – Key Drivers……………… 26 Lytton Refinery Highlights................................. 27 Convenience Retail Financial Highlights........... 28 Financial Discipline – Dividend......................... 29 Financial Dis
Slide 25: Solid underlying performance from core business
25 1H 2019 1H 2018 Change (%) Total Fuels Sales Volumes (BL) 9.6 10.2 (6) Australian Volumes (BL) 8.1 8.4 (4) International Volumes (BL) 1.5 1.8 (16) Lytton CRM Sales from Production (BL) 2.9 3.2 (9) Solid underlying Lytton Total Production (BL) 3.0 3.2 (7) performance from Australian F&I (ex Lytton
Slide 26: Lytton refinery EBIT – key drivers
26 Lytton refinery EBIT – key drivers 1H 2019 v 1H 2018 Lytton RCOP EBIT 140 24 73 120 105 100 80 60 9 36 40 13 14 20 4 5 1 0
Slide 27: Lytton refinery highlights
Lytton refinery highlights Operational performance interrupted by outages caused by electricity supply disruptions 27 High Value Transport Fuels Production Volumes, Production Utilisation (%) and Availability (%) CRM impacted by regional refining margin weakness and BL % increased crude premiums 3.5
Slide 28: Result impacted by soft retail fuel margins; store transition remains on track
28 28 1H 2019 1H 2018 Change (%) Period end COCO sites (#) (1) 584 414 41 Period end CORO sites (#) 206 376 (45) Total Sales volumes (BL) 2.42 2.46 (2) Premium Fuel Sales (%) 49.2% 47.7% 2 Total Fuel Revenue ($m) (2) 2,119 2,070 2 Result impacted by Network Shop Revenue ($m) (3) 543 534 2 soft retai
Slide 29: Financial discipline – dividend
29 Financial discipline – dividend Interim dividend of 32 cents per share (1H 2018 : 57cps) fully franked; interim dividend pay-out ratio 59% Caltex dividend history* Cents per share Payout Ratio 140 70% 120 60% 100 50% 61 61 80 70 40% 52 60 30% 30 50 40 20% 28 60 57 23 17 47 50 20 10% 30 32 25 20 1
Slide 30: Financial discipline – balance sheet
30 Financial discipline – balance sheet Diversified funding sources and prudent debt maturity profile Current Sources of Funding Debt Maturity Profile (A$m) A$m Source Medium Term Notes 300 Australian and Asian Institutional Bilateral Bank 1,212 2,347 Australian and Global banks Facilities* 625 300
Slide 31: Financial discipline – capital expenditure
31 Financial discipline – capital expenditure Indicative Capital Expenditure*, subject to change (includes T&I**) Depreciation and Amortisation Prior 2019 New 2019 $ millions 2018 1H 2019 Prior 2019 New 2019 Forecast Forecast* $ millions 2018 1H 2019 Forecast Forecast* Lytton Stay in business (inclu
Slide 32: Our assets – retail infrastructure
32 Our assets – retail infrastructure Caltex Australian Retail Service Station Network Dealer Owned Leased Total Owned Company operated (Calstore)^ 280 248 0 528 Company operated (Diesel Stop) 23 31 0 54 Company Operated (Depot Fronts) 9 4 0 13 Franchised 112 92 6 210 Other* 52 12 581 645 EG 0 0 541
Slide 33: IMPORTANT NOTICE
33 IMPORTANT NOTICE This presentation for Caltex Australia Limited is designed to provide: an overview of the financial and operational highlights for the Caltex Australia Group for the 6-month period ended 30 June 2019; and a high level overview of aspects of the operations of the Caltex Austra
Slide 34: Thank You
CALTEX Thank You