2014 Full Year Results Announcement Caltex Australia Limited ACN 004 201 307
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Q&A Appendices 2
OPERATIONAL EXCELLENCE MOMENT 3
Operational Excellence (OE) Moment 10 8.82 Disappointingly, both 9 TTIFR and LTIFR up (off 8 record low levels), but strong focus continues Per million hours worked 7 across the business 6 Outstanding Kurnell 5 4.57…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Summary Q&A Appendices 5
Key Highlights Full Year 2014 Results Summary Consolidated Group Result RCOP NPAT above guidance (450m - 470m), 49% above prior year RCOP NPAT 493 million Final dividend 50 cps declared (2013: 17cps) fully franked, representing a 2H…
Key Highlights Outlook Short Term Prioritise the optimisation of the entire supply chain (Next 12 months) - Grow product sourcing via Ampol Singapore - Optimise entire value chain from product sourcing to customer - On-going focus on…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Q&A Appendices 8
Strategy Update Caltexs strategy is very clear CALTEXS VISION Outright leader in transport fuels across Australia MEASURE OF SUCCESS Safely and reliably deliver top quartile total shareholder returns KEY STRATEGY PILLARS…
Strategy Update A focused multi-year transformation strategyto deliver top quartile shareholder returns 2011 2012 2013 2014 2015 2016 2017 Supply Chain Refinery Review Transform Kurnell to Leading Import Terminal…
Strategy Update Establish a strong financial platform to grow (with lower earnings volatility; lower cash flow volatility) FINANCIAL GROW OPTIMISE DISCIPLINE Continue to target high growth Grow product sourcing via Focus on Top…
Strategy Update Kurnell Conversion key milestones, On time, On Budget Time Proposed Work Status 1H 2013 Marine EIS submission / Public Exhibition Feb-Mar 2013 Complete Land EIS submission / Public Exhibition May-Jun 2013 Complete…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Q&A Appendices 13
Financial Highlights Significant Items 2014* 2013 Year ending December (m) (m) Cash Benefit/(Costs) - Redundancies (53) - Asset Rationalisation (31) - Early repayment of final USPP tranche** (16) - Contract cancellation (12) -…
Financial Highlights Segmented Reporting million 2013 v 2014 HCOP EBIT 1400 1200 1000 826 246 235 48 39 140 795 800 516 28 600 551 400 200 139 0 Segment results are based on a transfer price between Supply Chain…
Financial Highlights RCOP Earnings Marketing up, Supply Chain profitable m Caltex RCOP NPAT* 600 Marketing growth continues Supply Chain profitable. 500 Significant fall in the crude price provides earnings boost 400 (7 day lag and…
Financial Highlights Segmented Reporting RCOP EBIT* (M) 1,000 Supply Chain (or Refining & Supply) segment includes exchange impacts (before tax) on payables in: 800 FY10 of 27m gain; FY11 of (10m) loss FY12 of (8m) loss; FY13 of…
Integrated Transport Fuels Margin Integrated margin up on higher CRM and Transport Fuels Marketing margin expansion Caltex Integrated Gross Transport Fuels Acpl Transport fuels Marketing margin Margin* 13.8 expansion (5.10 cpl from…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Q&A Appendices 21
Marketing Highlights Record growth continues on stronger Transport fuels margin, favourable product mix shift, acquisitions and non- fuel income, despite lost bitumen earnings and lower specialties / lubricants contribution m…
Marketing Highlights - Key Drivers Growth continues million 2013 v 2014 RCOP EBIT 1100 Divestment of bitumen business, December 2013 (25m) 1000 Lower Lubricants volumes, margins (10m) Lower gas sales following Kurnell 125 10 41…
Marketing Highlights Diesel, Jet Fuel Sales - Market share gains, continuing growth in retail & premium diesel Total diesel volumes up 5.9% BL Caltex Diesel, Jet Sales Retail diesel volume growth of 13.4%, 11.0 including market share…
Marketing Highlights Petrol Sales - Premium Petrols Up; Total Market down; Market Share up BL Caltex Gasoline Sales Total petrol volumes down 1.0%, slightly better than market 8.0 Premium petrol sales up 3.6%. 7.0 Premium now…
Marketing Highlights Non Fuel Income (NFI) - Net non-fuel income up 10m, despite accelerated store investment Non fuel income contribution up 10m to 185m (reversing 1H m Caltex Non Fuel Income decline) 500 Non fuel income seen as…
Marketing Highlights Other Developments Scotts Fuel Divisions acquisition (total outlay 95m) 4 June 2014 Network development continues New to Industry / Caltex retail outlets (11 completed; 15 - 20 sites targeted p.a.) Retail site…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Outlook & Summary Q&A Appendices 28
Supply Chain Highlights Favourable externalities and record Lytton operational performance offset impact of Kurnell closure Lower Kurnell production due to closure (1.7BL) Includes costs and impacts Kurnell inventory holding…
Supply Chain Highlights Caltex Refiner Margin (CRM) driven by favourable 7-day lag, lower yield loss and lower crude premium The CRM was supported by a favourable market price timing lag of US1.39/bbl (A100m EBIT) in 2014, due to…
Supply Chain Highlights Caltex Refiner Margin (CRM) driven by favourable 7-day lag, lower yield loss and lower crude premium 2007-2014 Caltex Refiner Margin*1 (US/bbl) 25 Higher CRM driven by favourable 7 day lag, lower yield loss…
Supply Chain Highlights Freight differential largely unchanged despite lower crude and product freight rates USD/bbl Product freight rates fall on increased regional product shipping supply (down 6.00 3.4% to US4.95/bbl, US5.12/bbl…
Supply Chain Highlights Strong Lytton operational performance drives record production % Refinery utilisation (%) and Availability (%) 100 96 94 95 96 97 Lytton delivers record 5 84 year performance for: 80 72 76 76 71 89 74 76…
Supply Chain Highlights Strong Lytton operational performance drives record production 12.00 Refinery transport fuel production 10.7 10.6 9.8 9.8 9.7 10.00 5.5 5.5 Lytton delivering on 5.4 5.1 4.3 operational improvement plan…
Supply Chain Highlights - Enhanced Product Mix Production of higher value products* increase at Lytton, Kurnell impacted by conversion ML % Total 95/98 production down 1,800 16 13% to 1,374 ML 1,600 14 Improved underlying Lytton…
Supply Chain Highlights Strong Lytton result, favourable 7-day lag, reduced FX losses, offset by Kurnell losses (operational & closure-related) Supply Chain - Result Composition Strong Lytton operational performance (reliability,…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Summary Q&A Appendices 38
Financial Discipline Company-wide efficiency and organisation structure review (Tabula Rasa) Benefits 2014 Realised Benefits (m) approx. 15 One off Benefits Expected one-off inventory reduction of around 1 million barrels in 2015…
Capital Expenditure Capital directed to grow Marketing and ensure safe, efficient business m Caltex Capex Spend 600 2014 total capex spend of 503m, 568 below previous guidance (520m - 585m) 500 503 400 2H 2014 total capex of…
Financial Discipline Indicative Capital Expenditure, subject to change (includes T&I**) Average millions (FY12-14 inclusive) 2013 2014 2015 Forecast* Marketing - Stay in business 73 86 74 65-75 - Growth 146 155 175 125-145 219 241…
Financial Discipline Debt reduction on higher earnings, disciplined capex spend and lower working capital levels following the closure of the Kurnell refinery, as well as the favourable impact of the lower crude price % m Period end…
Returns Focused Capital Management Capital management objective Given the companys improved cash flows and strong balance sheet, Caltex has reviewed the options for capital management based on established priorities to ensure capital…
Capital Management Initiatives to Date 1. Review of FX Hedging strategy completed - Hedging of net USD exposure increased to 80% (from 50%), effective 1 August - Use of vanilla foreign exchange option introduces the ability to…
Dividend Final dividend of 50 cents per share (2013: 17cps) Caltex dividend history Cents per share Payout Ratio 80 60% 70 70 60 50% 60 40% 50 45 30 40 50 40 34 30% 23 30 25 28 17 20% 20 30 10% 10 25 17 17 17 20 0 0%…
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Q&A Appendices 46
RESULT SUMMARY & OUTLOOK RESULT TAKE-AWAYS RCOP NPAT above guidance (450m - 470m), 49% above prior year Another record Marketing earnings result Supply Chain (Refining & Supply) delivers positive EBIT. Favourable externalities and…
Q&A 48
AGENDA Safety Full Year 2014: Key Highlights Strategy Update Financial Highlights Marketing Highlights Supply Chain Highlights Financial Discipline Result Summary & Outlook Appendices 49
Appendix: Caltex Value Chain Our Competitive Position: To optimise the entire value chain Product sourcing Infrastructure Customer Controlled Retail Offshore supply agreement (Chevron) Woolworths Caltex Consumer sites sales…
Appendix: Australian Fuels Demand Growth Continued demand growth forecast for diesel and jet fuel (though at declining rates) Australian Transport Fuels Market Volume and Growth Diesel demand underpinned CAGR CAGR CAGR CAGR by GDP…
Appendix: Regional Supply Capacity Regional refining utilisation rates expected to remain relatively flat over period 2015-2018 Asia Pacific Product Balance Net Additions kbd Crude Unit Utilisation Refinery utilisation rates…
Appendix: Regional Supply and Demand Asian refining capacity additions should match demand growth over 2015-18 Asia Pacific Product Demand Growth vs CDU Capacity Additions Forecast regional product 2,000 demand growth to 2018 is kb/d…
Appendix: Middle East product balances The Middle East is forecast to have growing surpluses of transport fuels Kb/d Middle East Product Net Exports 800 New refinery capacity is being 700 built in the Middle East, leading 600 to…
Appendix Flexible Balance Sheet Supporting Growth and competitive dividend Diverse funding sources in excess of funding requirements Current sources of funding Debt maturity profile Am Source US notes 0 US institutional…
Appendix Commodity Exposure - Oil Prices USD/bbl Dated Brent Prices 130 120 110 100 90 80 70 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 2014 Source = Reuters 56
Appendix AUD-USD Exchange Rate AUD vs USD 1.15 1.10 1.05 1.00 0.95 0.90 0.85 0.80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source = HSRA Reuters 2012 2013 2014 57
Appendix Kurnell Closure Cash-flow Indicative Item Description Timing amount Closure costs Includes redundancy, (430)m* Majority of redundancies took place 4Q 2014, decommissioning and 32 million remaining at 31 December remediation…
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