Ampol Limited · ASX:ALD
Ampol — Caltex Australia — Investor Day (October 2018)
56 slides from Ampol's investor day presentation, Oct 31, 2018
Slide 1: Caltex Investor Day
Caltex Investor Day 31 October 2018 2 November 2018
Slide 2: Retail hype video
2 Retail hype video
Slide 3: Welcome and Introduction
3 Welcome and Introduction Richard Pearson Executive General Manager Retail
Slide 4: Introducing The Team
4 Introducing The Team Richard Pearson Prasad Kholkute Helen Moore Karen Bozic Miles Drury EGM Convenience Retail GM Retail Fuels GM Convenience GM Retail Operations CFO Retail Development Viv Da Ros Has Fakira CIO Head of Digital
Slide 5: Caltex Retail is primed for growth
5 Caltex Retail is primed for growth Caltex Convenience Retail is underpinned by a stable and profitable fuels business with Strong Base exceptional network strength Growth Changing customer expectations offer a significant opportunity for Caltex to grow Opportunity Well We are making good progress
Slide 6: Strong Base: a stable and profitable fuels business with exceptional network strength
6 Strong Base: a stable and profitable fuels business with exceptional network strength 4 $823m 2017 Fuels and shop margin ~1,770 Branded sites NT 179 QLD Company operated sites WA 483 today (798 controlled sites) 114 StarCard customers with SA ~70,000 ~900K StarCard users NSW 57 262 10 ~3 million T
Slide 7: Our network strength is a significant advantage in realising the convenience opportunity
7 Our network strength is a significant advantage in realising the convenience opportunity Transitioning to company operation enables consistent execution of our offer and accelerated roll out of our strategy We have the largest controlled P&C network We are also on course to capture 100% of site pr
Slide 8: Growth Opportunity: High potential opportunity for Caltex to grow our convenience business
8 Growth Opportunity: High potential opportunity for Caltex to grow our convenience business Online aggregator Australian P&C market today: Cafes & QSR $0.3B ▪ Broader opportunity extends beyond just Coffee Shops ~$20B ~$8B P&C convenience segment ▪ Convenience is competitive, but is also growing ▪
Slide 9: Well Progressed: many of the building blocks are in place, execution is key
9 Well Progressed: many of the building blocks are in place, execution is key Format Capability Site Commercial Woolworths Development Build Control Separation Partnership
Slide 10: $120m-$150m Financial Uplift: clear plan to deliver with disciplined capital approach
$120m-$150m Financial Uplift: clear plan to deliver with disciplined capital 10 approach To be delivered from ▪ New sites and formats increase sales, margin and fuel volume ▪ QSR increases customer traffic, sales and margin ▪ Woolworths partnership increases sales, fuel volume, margin, reduces suppl
Slide 11: Woolworths Partnership: Prioritising to strengthen and accelerate retail strategy
11 Woolworths Partnership: Prioritising to strengthen and accelerate retail strategy Overview 2019 Milestone ▪ Offer to leverage the knowledge and expertise of both Woolworths ▪ Co-creation process underway and Caltex ▪ Initial sites targeted to open in 1H Convenience ▪ Target of 250 sites over 5 ye
Slide 12: Retail Fuel Leadership
12 Retail Fuel Leadership Prasad Kholkute GM Retail Fuels
Slide 13: Australian retail fuel market is large, profitable and stable through the cycle
13 Australian retail fuel market is large, profitable and stable through the cycle Australian Retail market volumes expected to remain relatively flat in near term CAGR CAGR Caltex’s strengths (2015-18) (2018-23) ▪ The fuels business provides the 28.1 majority of earnings today, with 27.2 27.7 27.8
Slide 14: Currently a challenging point in the cycle owing to combination of factors
14 Currently a challenging point in the cycle owing to combination of factors Adverse Macro conditions… …lead to record board prices… …which has impacted demand Board Prices 1H Retail Fuels Volume Change vs. Brent Crude Oil Prices (USD/bbl) past year 160 2017 90 2018 80 150 70 60 Petrol 140 50 40 13
Slide 15: While the fuel outlook for light vehicles remains relatively flat in the near term, longer term outlook may face declining demand
15 While the fuel outlook for light vehicles remains relatively flat in the near term, longer term outlook may face declining demand Medium Term Fuels Outlook Australia – Light Vehicle Fuels (BL) Key Drivers Growing fleet of light vehicles in Australia 30 ~(10%) Ongoing improvements in fuel efficien
Slide 16: Network strength will allow Caltex to benefit from longer term mobility trends
16 Network strength will allow Caltex to benefit from longer term mobility trends Caltex has always adopted a proactive approach to alternate fuels, as it aims to remains the leader in Australian transport fuels, whatever they happen to be. ▪ 2015 - Installed Australia's first CNG refuelling site at
Slide 17: Caltex has unique levers to maintain market leading position
17 Caltex has unique levers to maintain market leading position Loyalty, Integrated Redemption Pricing Format StarCard FuelPay Supply chain and Capability Innovation Partnerships
Slide 18: Developing market leading Convenience Retail formats
18 Developing market leading Convenience Retail formats Helen Moore GM Convenience Development
Slide 19: Convenience sector opportunity driven by favourable consumer trends
19 Convenience sector opportunity driven by favourable consumer trends CONSUMER TRENDS - FAVOURABLE Largest Category Shifts for P&C 12 months to Aug-18 ▪ Craving convenience: consumers shop more frequently, with smaller baskets ▪ ‘On the Go’ fresh and ready to eat: rise in fresh products, take-away
Slide 20: Opportunity: leverage existing transactions to drive incremental earnings
20 Opportunity: leverage existing transactions to drive incremental earnings Our significant existing customer base provides a direct opportunity for material earnings growth Existing network transaction composition 1% increase in fuel to shop + Opportunity 1: fuel conversion 2017 - 2018 Over 3m Inc
Slide 21: Our format strategy is customer needs led
21 Our format strategy is customer needs led Diverse customer bases… …with changing needs… ..are being addressed by Caltex’s formats Male Workday Motorist Tradie Road Warriors Female Workday Motorists Millennial Non-Driver Non-Millennial Non-Drivers Boost
Slide 22: Formats have been designed to extend across our varied network
22 Formats have been designed to extend across our varied network ? Brand Metro The Foodary Starmart Other Top Up Shop Barista Coffee Customer Food for Now Self-Serve Coffee Food for Now Food for Later Food for Now Proposition Convenience Barista Coffee Convenience QSR QSR Indicative shop sales upli
Slide 23: Metro is our priority market-leading retail concept
23 Metro is our priority market-leading retail concept A little bit of good everyday, just got easier SPEED FRESH RANGE VALUE INDICATIVE ✓ Top-up shop ✓ Strong network ✓ Food for now ✓ Fuel offer ✓ Food for later ✓ Convenience offer ✓ Brand recognition ✓ The Foodary learnings ✓ Value promise ✓ QSR
Slide 24: Stores will look very different to achieve the Metro offer and desired uplifts
24 Stores will look very different to achieve the Metro offer and desired uplifts INDICATIVE INDICATIVE What you can expect to see: A typical Metro Caltex site: ✓ Range density ✓ Population density ✓ More chilled space ✓ Strong traffic flows ✓ Less storage / office space ✓ Larger trading floor area
Slide 25: Partnership involves a period of co-creation, Caltex to retain operational control
25 Partnership involves a period of co-creation, Caltex to retain operational control Key Elements of Partnership Planned Timeline Co-Creation FY18 – ▪ Range development 1H19 Co-creation ▪ Format development ▪ Brand execution ▪ Site selection ▪ Logistics solution 1H19 Pilot 4 sites Caltex retains op
Slide 26: The Foodary will remain integral to our format strategy
26 The Foodary will remain integral to our format strategy
Slide 27: The Foodary is a significant step forward in transforming our retail business
27 The Foodary is a significant step forward in transforming our retail business 51 sites
Slide 28: Results to date confirm the opportunity, greater consistency will be achieved in the future
Results to date confirm the opportunity, greater consistency will be achieved 28 in the future Strong customer feedback Outperforming on fuel Significant sales uplifts 72 90 4.7* +5% Top Quartile 96% NPS Coffee Boost vs. Network VOC Satisfaction >National Average 38% • Average upgrade site performan
Slide 29: Making The Foodary ready for further roll-out
29 Making The Foodary ready for further roll-out Getting the format right for Selecting best suited sites each site Following selection of Metro sites, we will prioritise ✓ QSR ✓ Bigger sales / fuel base ✓ Coffee / fresh first ✓ High traffic ✓ New fresh equipment ✓ Less competition / amenity ✓ “Cafe
Slide 30: QSR is integral to successful retail formats
30 QSR is integral to successful retail formats Drives Traffic Strong Profit Margin Incremental Sales Strong ROCs CALTEX GYG IN-HOUSE ADRESSING DIFFERENT OPERATED OPERATED HOT KITCHENS DEMANDS New Partners
Slide 31: Future format plans shifting to execution
31 Future format plans shifting to execution Co-create Pilot Scale Continue Consolidate Reset Roll-out Agree Trial Build QSR Scale Boost GYG others own
Slide 32: Convenience Retail operational capabilities
32 Convenience Retail operational capabilities Karen Bozic GM Retail Operations
Slide 33: Caltex is progressing in reshaping & enabling our Convenience Retail offer
33 Caltex is progressing in reshaping & enabling our Convenience Retail offer Now 2023 Redefine our offer with clear points of difference Control our network* Build a customer focused retail culture Develop our team and optimise labour Accelerate supply chain capability *2020 objective
Slide 34: Redefine our offer with clear points of difference
34 Redefine our offer with clear points of difference - drive customer perception, sales and profitability Reset the Core Offer Clear Points of Difference Leading Fresh Food Offer Caltex Fresh sales 4% growth YoY in Meal Deal sales more than growth YoY transactions double YoY 34%
Slide 35: Control our network – at least 96% of sites company operated by 2020
35 Control our network – at least 96% of sites company operated by 2020 Company operation is a key enabler of our Retail Strategy 87% of sites have agreed transition dates End 2020 >96% Caltex owned # total sites (projected) # total sites (projected) 1 156 100% = 793 810 798 798 4% 133 48 4% 114 39%
Slide 36: Building a customer-focused retail culture
36 Building a customer-focused retail culture Net Promoter Score & Voice of Customer: Driving customer advocacy and satisfaction to drive sales Live April 694 Stores 2018 > 5,000 VOC across Surveys entire network completed every week 70 Current Net 83% Promoter Overall Score 1,700 customer High 5’s
Slide 37: Engage and Develop Our Team
37 Engage and Develop Our Team Building retail capability and connecting with our team to win Number of Caltex Retail employees ▪ Strengthen cross-functional planning 6,000+ Listen to and Engage ▪ Revisit store communication 4,000+ our team ▪ First Convenience Retail end to end conference 800+ 2017
Slide 38: Optimise labour management
38 Optimise labour management Significant opportunity exists to optimise labour management 2018 2019 - 2020 2021 ▪ Develop team capability ▪ Leverage technology ▪ Upgrade workforce tool (Kronos) investment ▪ Develop labour standards ▪ Further simplify across Initiatives ▪ Re-engineer rosters value c
Slide 39: Accelerate supply chain capability
39 Accelerate supply chain capability ▪ Caltex has built a dry goods supply chain for majority of stores, and is expanding temperature controlled capability ▪ Multi-temperature supply now live in SA and Vic. ▪ Woolworths partnership is an opportunity to accelerate supply chain capability ▪ Win:win -
Slide 40: The building blocks of growth
40 The building blocks of growth Richard Pearson Executive General Manager Retail
Slide 41: $120m-$150m Financial Uplift: clear plan to deliver with capital disciplined approach
41 $120m-$150m Financial Uplift: clear plan to deliver with capital disciplined approach Three core drivers of growth Clear KPIs established ▪ Control our existing sites 1 Network development ▪ New site investment ▪ Clear pathway and metrics for success established ▪ Tracking and reporting on progre
Slide 42: The way in which Caltex makes money from Retail is changing
42 The way in which Caltex makes money from Retail is changing Franchise Company Op (COCO) 6 key business drivers (CORO) Volume x Margin - Fuel Commission Volume x Margin ▪ Fuel volume Shop Sales $ ▪ Fuel margin Sales x Royalty % GM% contribution Network margin Franchise Fees Labour ▪ Shop sales * O
Slide 43: Drivers of future financial performance
43 Drivers of future financial performance ▪ Network growth, format innovation and loyalty offer offset market Fuel volume <1% CAGR decline More impacted by market ▪ Focus on premiumisation, but historic trend of margin expansion factors Fuel margin ~1% CAGR flattens ▪ Significant growth driven by n
Slide 44: Convenience Retail Wrap
44 Convenience Retail Wrap Richard Pearson Executive General Manager Retail
Slide 45: Convenience Retail Key Messages
45 Convenience Retail Key Messages Caltex Retail is primed for growth Growth Well $120-$150m Woolworths Strong Base Opportunity Progressed Uplift Partnership
Slide 46: Convenience Retail 2019 Deliverables
46 Convenience Retail 2019 Deliverables Foodary consolidation and Deliver sustainable profits revisit in 1H19 prior to by optimising value & recommending further roll volume out in 2H19 Implementation of the first Continue to progress phases of the Woolworths transition to company partnership operat
Slide 47: Digital and Technology Strategy
47 Digital and Technology Strategy Viv Da Ros CIO
Slide 48: IT Strategic Focus
48 Digital & Technology innovation essential for Caltex strategy execution Caltex Strategy/Business Model Transform New technologies and customer IT Strategic Focus innovation Grow Establish core suite of systems Run Remediate and strengthen foundations 2017 2018 2019 onwards
Slide 49: Enabling technologies at Caltex
49 Enabling technologies at Caltex RUN GROW & TRANSFORM Application Monitoring & Alerts Application Redundancy & Fail Over CLOUD ERP PLATFORM End User Experience SAP / & TECH STARCARD BLUEPRINT Regulatory Compliance Service Excellence (Operation Efficiency) CYBER INTEGRATION BIG / APIs SECURITY Appl
Slide 50: Innovation at Caltex – Think Customer Experience, Drive Operational Efficiency
50 Innovation at Caltex – Think Customer Experience, Drive Operational Efficiency DIGITAL TRANSFORMATION FuelPay Fuel Delivery Drivers’ App Caltex Team App Express Lane Trial Mobile Scan Innovation & Refinery Automation Self Checkout Emerging Initiatives Tablet Apps
Slide 51: Fuel Pay TV adverts
51 Fuel Pay TV adverts
Slide 52: Fuel Pay
Fuel Pay 1 62)
Slide 53: Fuel Pay
53 Fuel Pay 2
Slide 54: Q&A
54 Q&A
Slide 55: Important Notice
55 IMPORTANT NOTICE This presentation for Caltex Australia Limited is designed to provide a high level overview of aspects of the operations of the Caltex Australia Group, including comments about Caltex's expectations of the outlook for 2H 2018 and future years, as at 30th October 2018. This presen
Slide 56: Thank You
CALTEX Thank You