Caltex Australia’s says its long-serving CEO, Julian Segal is to retire after ten years in the top job.
The announcement comes just under two weeks before the company is slated confirm a poor set of figures for the six months to June, with a profit slide of up to 50%, driven by lower returns from the company’s Brisbane oil refinery and the 2,000 store chain of convenience stores – both of which resulted from major strategic moves driven by the retiring CEO.
In a statement to the ASX yesterday Caltex said it would immediately begin the search for a new chief executive and managing director, with Mr. Segal staying on board until a candidate is selected.
Shares were up 1.1% at $26.65, so do some investors see his departure as a positive?
Chairman Steven Gregg praised Mr. Segal’s contribution since he was appointed in 2009, which included a broad transformation of the company. This involved the company shutting its Kurnell refinery in 2014 and kicking off a massive push into retail, which has seen the company’s network of convenience stores grow to over 2000.
But that push as not achieved what was promised and Caltex has been spending millions of dollars buying back franchises after a scandal involving wage theft and oppression of some franchisees was exposed in media reports.
“Julian has delivered outstanding outcomes for Caltex shareholders, improving operational and financial performance and steering the company through a number of challenges and transitions,” Mr. Gregg said. “He leaves a more agile and resilient company that is positioned to deliver further value to shareholders in the years ahead.”
Caltex is set to report its half-year results on August 27. It is expected to reveal profits of between $240 and $270 million, down from $443 million in the 2018 half-year.
In its June update, the company said “Weaker domestic economic activity has impacted domestic demand, including from the transport, agriculture and construction sectors.
“Combined with a lower external refiner margin and the high price of crude, this has created difficult market conditions for both sales volumes and margins. Industry sales volumes are down ~2% compared with 1H 2018i.”
Much of the profit slide will be taken at the Lytton refinery in Brisbane where Earnings Before Interest and Tax for the half is forecast to be around zero, down from $105 million for the first half of 2018.
Just as bad is the convenience retailing (CR) business that was one of Segal’s claimed achievements.
Caltex warned in June that the business would suffer a halving in profit for the half.
“CR is expected to deliver an EBIT result in the range of $75 million to $85 million in 1H 2019, ~50% lower than the EBIT result of $161 million in 1H 2018,” Caltex warned.
In its full-year results in February, the company surprised investors by announcing a $260 million share buyback after it abandoned a $500 million sale and lease-back deal for its retail sites.
Caltex’s interim results are due on August 27.