Caltex Marketing had record earnings in 2007, increasing its contribution to total Caltex earnings and maintaining its market leadership in fuel sales and convenience store retailing.
It was a year of record fuel sales volumes and increased non-fuel earnings. This reflects strategies focused on strong growth in diesel sales, higher shop sales and earnings from card activities.
The business also achieved record safety performance in 2007 and strong improvement in cost management. There was increased investment in retail and depot infrastructure programs to meet new compliance and customer demands.
In new initiatives, biofuels sales continued to expand significantly and trials were launched for a new generation convenience store offering and a new premium diesel product.
Record driven by diesel growth
Sales volumes of transport fuels (petrol, diesel and jet fuel) increased to a record 13.8 billion litres (2006: 13.4 billion litres). This was driven by an 11.5% growth in diesel sales volumes, well above national diesel market growth of 6.4%. Higher diesel sales were achieved across all marketing channels with the strongest growth recorded in the direct sales channels with particularly strong growth in sales to the transport, mining and power generation sectors. Diesel sales in the retail channel also rose, reflecting the growing number of diesel passenger vehicles.
Retail petrol sales remained flat in a tough retail operating market with Caltex growth of 0.8% in line with national market growth. Caltex supplies a retail network of 1,850 sites and continues to be the leading supplier of fuels to the Australian consumer. The network of 516 jointly branded Caltex Woolworths sites (135 Caltex contributed) accounts for around 50% of Caltex’s petrol sales.
Premium (higher octane) petrol sales volumes were up 11.5% compared with market growth of 9.9%. Sales expanded with the rollout of Vortex 98 petrol into the Western Australian market at the beginning of 2007 where there has been strong demand.
In 2007, Caltex continued to expand its product portfolio to reflect the growing demand for premium fuels and biofuels. A successful trial of a new product, Vortex Premium Diesel, was launched mid-year at a number of Sydney sites for sale to drivers of diesel passenger cars and light commercial vehicles.
Earnings from both jet fuel and finished lubricants were higher in 2007 as unprofitable business was rationalised. Returns from specialty products increased as a result of improved performance in the marine and bitumen market segments.
Growth in convenience store sales
Strong growth in convenience store sales in 2007 contributed to increased non-fuel income and helped Caltex keep its position as Australia’s leading convenience store retailer.
Average weekly same store sales were up 7.2% in Caltex’s network of 472 Star Mart convenience stores. Growth areas included beverage sales and the new fresh coffee and bakery offer.
A trial of a new generation store was launched in 2007 with four “twenty first century Caltex” (21CC) concept sites opening in metropolitan areas of Sydney and one at west Gosford on the NSW central coast. The 21CC stores have a new look and layout and feature a new product range.
Caltex continues to develop its retail network by investing in convenience store upgrades and divesting “tail sites” which do not meet our brand criteria. Focused investment and divestment will create a network of higher performing stores in attractive locations with higher facility standards.
