Caltex Australia chief executive Julian Segal is to retire after about a decade in the role, leaving to his successor the task of completing the fuel supplier’s convenience retailing revamp and delivering on the targeted returns.
Given Mr Segal’s longer-than-average tenure and some signalling of a coming change by management, the market took the news in its stride, with Caltex shares closing 1.6 per cent higher at $26.75.
Succession planning for Mr Segal, who will stay until a replacement is installed, has already been under way and will now pick up pace, with internal and external candidates to be considered.
Mr Segal, the previous chief executive of Incitec Pivot, has transformed Caltex from a refining-dominated company half-owned by US major Chevron to a more stable, retail-oriented independent business with a major trading arm in Singapore and operations in New Zealand and the Philippines. It retains one refinery, in Brisbane, after converting its Kurnell plant south of Sydney into an import terminal.
“Any business that undergoes a transformation to diversify away from volatile business segments … and transition to a more stable type business in the long term increases the valuation of that business,” said Vertium Asset Management’s Jason Teh.
“If Caltex never made that transition to where it is today the stock would be a lot lower.”
Still in progress, however, is Caltex’s upgrade of its convenience retailingbusiness, with some investors questioning the company’s pledge to deliver up to $150 million in additional earnings from retail by 2024. The company last year decided against a more radical demerger or restructuring of the retailing and infrastructure assets that may have unlocked value that some investors say is not reflected in the market.
Hayberry Global Fund’s Matthew Blumberg said the timing for Mr Segal’s exit made sense.
“Mr Segal successfully guided Caltex through the Chevron sell-down, and was successful in necessary initiatives such as shutting down the Kurnell refinery,” Mr Blumberg said.
“However, the remainder of the transformation for Caltex is centred around execution in the convenience retail division, and perhaps Segal isn’t best placed to execute this part of the strategy,” he said, musing that a CEO with a strong retail track record to drive that part of the business forward is now appropriate.
Mr Segal, who was Caltex’s first chief executive independent of Chevron, said the time was right for a new CEO with “new ideas, fresh ideas and energy” and he was confident that the skilled management team he left behind would be able to carry through on the retailing plans.
“This management team is one of best in country; I have absolutely full confidence that they will successfully deploy it,” he said. “I don’t need to stick around to make that that happen.”
Among the senior team are fuels & infrastructure head Louise Warner, and chief financial officer Matthew Halliday who, while in the role since only April, is said by investors to have performed well under pressure when grilled on the company’s recent earnings downgrade.
Chairman Stephen Gregg said Mr Segal “leaves a more agile and resilient company that is positioned to deliver further value to shareholders in the years ahead”.
The petrol and diesel supplier also on Wednesday confirmed its financial guidance for the half-year, ahead of its earnings report on August 27.
It advised in June that its retailing profits would roughly halve in the six months to June 30, while the refinery would only just break even, dragged down by Asian refining margins that reached five-year lows earlier this year.
Mr Segal, 64, said he would not take on another full-time executive role and wanted to spend more time on his passions of astronomy and photography, and to “get fitter”.
Extracted from AFR