You are using an older browser version. Please use a supported version for the best MSN experience.

Woolies considers selling petrol stations

AAP logoAAP 30/09/2016 Petrina Berry

Struggling retailer Woolworths is looking at offloading its petrol stations not long after striking deals to rid itself of its loss-making hardware business.

The supermarket giant confirmed on Friday that is it considering selling its petrol stations and is discussing a possible deal with several interested parties, reportedly including partner Caltex.

This comes a month after Woolworths sold Home Timber and Hardware to Mitre10 owner Metcash and announced it will shut all Masters stores by December 11 with the properties to be sold to a consortium that wants to turn them into retail centres.

Woolworths said it is evaluating whether to retain or dispose of its service stations, and no decision has been made.

"Woolworths has received incomplete and conditional proposals from a number of parties in relation to the purchase of the business, and the development of an enhanced convenience and loyalty offer to customers," the company said on Friday.

Bell Direct equities analyst Julia Lee said Woolworths' newly installed chief executive Brad Banducci was clearly striving for a leaner company focused on turning around the group's core food and grocery business.

"The supermarket business is in its early stages of a turnaround plan and it is capital intensive," Ms Lee said.

"Woolworths has flagged sales of a number of businesses that are not core, including Ezibuy, and the market is watching to see what it does with its petrol, hotels and liquor businesses.

"Caltex is their partner and fuel supplier and would be the natural home for Woolworths' fuel and convenience stores."

Caltex has declined to comment on reports that it is negotiating a $1.5 billion deal to buy Woolworths' petrol business, which encompasses 530 service stations that generated $4.6 billion in sales in 2015/16.

The service stations are owned by Woolworths and are supplied petrol and diesel by Caltex.

Caltex has previously told AAP it would be interested in acquiring the petrol stations if they were for sale, as it continues its transformation from oil refiner to retailer.

Petrol price monitoring agency FUELtrac's general manager Geoff Trotter said Woolworths' petrol business has suffered dramatic falls in margins and volumes due to new regulations and fierce competition in recent years.

"The margins in some markets have been cut dramatically, particularly in the Northern Territory after the petrol price inquiry and in some other markets there's really strong price competition, like in South Australia," he said.

"The ACCC's intervention with a cap on shopper docket discounts has also had a huge impact on volume growth, which has been flat in most markets.

"Unless you have a high-volume and high-margin business, then you're not doing really well so it is no surprise they want to sell it."

Mr Trotter said Woolworths has probably realised it was gaining nothing by providing a small petrol rebate that was not leading to a lift in petrol sales volumes.

Petrol revenue declined 18.1 per cent in the 2016 financial year because of changes to Woolworths and Caltex's alliance and lower fuel prices.

image beaconimage beaconimage beacon