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Caltex cuts dividend to pay for Gull

NZN 20/02/2017 Sophie Boot

ASX-listed Caltex Australia has reported a 17 per cent jump in annual profit despite revenue dropping, and is looking to regional expansion with its acquisition of Gull New Zealand the first step.

Caltex booked A$610 million ($652m) in profit for the year ended December 31, 2016, up from A$522m a year earlier, despite revenue dropping 10 per cent to A$17.9b.

The board declared a A52c final dividend, down from A70c in 2015, taking its total dividend for the year to A102c from A117c a year earlier.. The company is yet to pay A$420m for two recent acquisitions - Gull and Milemaker Petroleum in Victoria.

In December, Caltex said it would buy Gull for $340m, giving the ASX-listed fuel company a foothold on this side of the Tasman with about 5 per cent of the market. The deal represents an earnings multiple of about 8.2 times Gull's forecast earnings before interest, tax, depreciation and amortisation in 2017.

The company is aiming to improve its infrastructure position and expand its regional shipping and trading with its acquisition, through the Gull deal, of New Zealand's largest import terminal in Mt Maunganui a key part of that.

Gull represents its first regional expansion, the company said, and it "will continue to pursue growth by securing new wholesale and retail volumes" such as Gull.

The Gull acquisition adds about 300 million litres of transport fuel sales, along with 77 retail sites. The brand is operationally positioned as a price challenger, Caltex said, and will be earnings accretive from in the first full year of ownership, with completion anticipated in the second quarter of 2017 pending Overseas Investment Office approval.

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