Fast Facts
Between 50% and 75% of service station gross profit at Caltex retail sites
is generated by sales in the convenience stores with the remainder coming from
fuel sales.12
Gallery
A new 15 million litre diesel storage tank...
All these customers are supported by Marketing’s extensive network of terminals and depots across the country.
Key points for 2006
• Increased sales volume of transport fuels
• Strengthened position as number one convenience retailer
• Australia’s largest network of sites selling biofuels
• Investment in terminals and distribution facilities
Caltex’s Marketing business is laying strong foundations for future growth by strengthening its position in the largest and fastest growing markets, providing products that meet emerging consumer needs, investing in supply chain infrastructure, strengthening the positioning of its brand and building on its leadership in convenience retailing.
In 2006, there was a focus on innovation as part of the business culture. Over 300 Marketing employees participated in workshops on this theme and in the process identified nearly 200 areas for improving the business.
Caltex fuel sales volumes grew marginally in 2006 in a market dampened by higher petrol and diesel prices driven by increased international crude oil and product prices. Sales volumes recovered in the final quarter of 2006 when pump prices eased.
Caltex sales of transport fuels increased to 13.4 billion litres in 2006, up from 13.2 billion litres in 2005.
Petrol sales grew 0.8% in a market which shrank by about 1.6% in 2006. Sales volumes continued to be underpinned by the Caltex Woolworths venture network. Diesel volumes grew by 3.6%, which was less than market growth and jet fuel sales declined in 2006 due to intense competition.
Higher prices particularly affected sales of premium fuels in 2006 but this was offset by growth in the number of sites selling Caltex high octane fuels under the Vortex and Vortex 98 brands. In 2006, Vortex 98 expanded in NSW, was rolled out in Queensland and Victoria and in 2007 will be introduced in Western Australia. Building growth in premium fuels is critical in the next two to three years to ensure Caltex is well placed to capitalise on the premium fuel shift when car manufacturers stipulate premium must be used in a higher percentage of models.
Caltex expanded its share of the Australian lubricants market in 2006, with growth in sales to the automotive, commercial and mining sectors contributing to a 2.9% increase in sales volumes of finished lubricants. Costs rose throughout the year driven by regional shortages of base oils.
Sales volumes of specialties including marine fuel, bitumen and petrochemicals increased by 5.1%.
Caltex strengthened its position as Australia’s leading convenience store retailer, increasing its market share to over 32% with its national network of around 500 Star convenience stores. Average weekly same shop sales in 2006 were 5.9% higher than in 2005.
A new centralised logistics program was launched at a number of franchised and company-operated stores in 2006 and is being rolled out through the remainder of the network in 2007. This system brings significant efficiencies to the dry goods supply chain and reduces store stock holding costs.
The retail business is strongly focused on meeting changing consumers’ needs and in 2007 will be launching a fresh food range and trialling a next generation store. Innovations in the stores in 2006 included a combination of freshly brewed coffee with fresh milk and revamped bakery offer.
The company’s strong commitment to franchising is reflected in a new Retail Star Franchise Agreement launched in 2006 to replace existing franchise agreements over the next two years. This offer, which incorporates requirements for compliance with the new federal Oilcode regulations, provides a simpler and more streamlined system for franchisees who operate Caltex sites across Australia. The structure is also expected to attract new, high calibre franchisees to Caltex.
Caltex’s branded card business contributed to the strong growth in non-fuel income in 2006. Earnings from StarCard rose 25% as the fleet business continued to expand with a number of major new corporate and government accounts.
There was further growth in sales of StarCash, the prepaid card that can be used to purchase fuel, food, car repairs and grocery items at participating Caltex and Ampol stores across Australia. The product attracted new accounts across a wide range of businesses including rewards programs for the major banks.
A number of new systems and technical innovations introduced during the year are helping to increase sales, reduce costs and improve service to customers.
Caltex has launched a major terminal infrastructure and expansion program to accommodate the Australian market’s expanding need for fuel imports, support high growth areas and ensure safe and secure supply of petroleum products to its customers and communities.
As part of this program, Caltex spent $17 million in 2006 on projects to improve safety, storage and shipping facilities at a number of its terminals. Projects completed during the year include a $4 million maintenance and environmental improvement program at the company’s largest fuels terminal at Newport in Victoria and in Queensland the company celebrated the construction of an $8 million new diesel tank at the Gladstone terminal and upgrades at its Cairns terminal. The company also entered into a long-term terminal facilities contract in Darwin to enable growth in this region.
Australian Lubricants Manufacturing Company (ALMC), the 50:50 joint lubricants manufacturing venture between Caltex and BP, completed a restructuring of the east coast operations.
Caltex brand communications and sponsorships in 2006 received wide exposure and strong positive feedback.
A highlight of 2006 was partnering with the Starlight Children’s Foundation in the 50 towns in 50 weeks outreach program. As a community celebration of the company’s 50th anniversary of refining fuels for Australia, a Caltex-sponsored Starlight van commenced a year-long journey around Australia in May, delivering the magic of Starlight to sick children and their families in regional and remote rural towns.
The Caltex quality fuel and lubricants brand image was reinforced by an innovative integrated advertising campaign featuring V8 Supercar champion Russell Ingall in the “battle of the flies”, racing against a simulated swarm of flies. The TV commercial and associated promotions featured throughout the V8 Supercar race broadcasts and on-line web communities.
The performance message also featured strongly in the Committed to High Performance Machines State of Origin brand campaign and promotional activity in stores across Queensland and NSW.
New Generation Fuels communications and site promotions were launched into the market to promote awareness of the expanding range of Caltex’s biofuel product offers (E10 Unleaded and New Generation Diesel) and educate consumers on product benefits and generate trial.
The branding of over 200 sites was upgraded in 2006 so over 90% of sites in major market locations are now branded with Caltex’s Delta brand.
In 2006 industry surveys asking consumers which was the last service station they visited to purchase fuel, Caltex led the market and further consolidated its position with a strong increase in the final quarter.
2006 was a year of strong activity and achievements in biofuels for Caltex. By the end of the year Caltex had Australia’s largest network of sites selling biofuels, with ethanol blended petrol and/or biodiesel on sale at 237 service stations. The company met the 2006 target agreed with the Government for marketing biofuels.
Caltex’s E10 Unleaded petrol, which is a blend of petrol with 10% ethanol made from crops such as sugar cane or wheat, is now on sale at service stations in regional and metropolitan locations in Queensland, NSW and the ACT and we will increase the availability in these regions in 2007.
New Generation Diesel, launched by Caltex in October, is diesel enhanced with 2% biodiesel made from renewable feedstocks such as vegetable oils and tallow. It is being distributed to NSW service stations and direct customers. Caltex also supplies a B5 biodiesel blend (a 5% blend of biodiesel in diesel fuel) to a number of commercial and transport customers.
Caltex is committed to helping the Australian Government meet national biofuels targets and was commended by government members in 2006 for showing industry leadership in its support for biofuels.