Woolworths Plus Petrol Leases 69 Liberty Oil Outlets

Document date:  Fri 06 Jul 2001
Published:  Fri 06 Jul 2001 00:00:00
Document No:  238533
Document part:  A
Market Flag:  Y
Classification: 

WOOLWORTHS LIMITED                            2001-07-06  ASX-SIGNAL-G

HOMEX - Sydney                                                        

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Woolworths Limited, CEO, Roger Corbett, announced that Woolworths had
today signed an agreement to lease 69 Liberty Oil outlets in NSW,
Victoria, Queensland, South Australia and Western Australia which
will be progressively converted to Woolworths' Plus Petrol sites.
Liberty Oil will continue to supply wholesale fuel to these sites
under its existing arrangements with Caltex Australia.

Following the phased transfer of all of these sites and other
Woolworths' planned openings over the next 12 months, the number of
Woolworths Plus Petrol sites will increase to approximately 260
canopies (which will equate to approximately 8% of the petrol
retailing market).

"Plus Petrol has been a major factor in the areas where it operates
in holding down pump prices, especially in the sites located in
regional Australia," Mr Corbett said.

"The opportunity for Woolworths' customers to save on petrol prices
has been a significant factor behind the success of the Woolworths'
Plus Petrol outlets since the first canopy was opened five years ago.

Over that period the response to the Plus Petrol discount offer has
been strong, with over 70% of all fuel sold through Plus Petrol's
outlets purchased under the discount scheme," Mr Corbett said.

"Woolworths' shoppers have strongly supported the discount scheme
which provides a saving of at least 2 cents per litre on presentation
of coupons they receive when they shop at a Woolworths supermarket or
BIG W store. This standard 2 cents discount is over and above our
promise to offer the best competitive pump price in the area."

Mr Corbett said acceptance of the Woolworths' Plus Petrol offer had
exceeded expectations and was a clear demonstration that the
competition introduced into the retail fuel sector by Woolworths was
delivering both improved service and lower prices for Australian
motorists.

More than 900 million litres of fuel including LPG have been sold
through Plus Petrol outlets in the last 12 months and the Liberty
sites will increase this by a further 600 million litres in a full
year.

For further information please contact Woolworths CEO, Roger Corbett:
(02) 9323 1632.

See attached backgrounder on Plus Petrol


BACKGROUND TO PLUS PETROL

Since opening the first Plus Petrol canopy in Dubbo in 1996,
Woolworths has steadily expanded the operation to 166 sites as at
30th June, 2001. The 69 Liberty sites, together with planned
additional site openings in the 2001/2 year, is forecast to increase
Plus Petrol's canopies to approximately 260 by June 2002.

Plus Petrol's success revolves around ensuring the canopies are in
the right location, with a very competitive pricing policy. Plus
Petrol's pricing policy equates to the lowest petrol price within 3km
of the canopy. Customers then have the opportunity of benefiting from
at least a further 2c/litre discount if they have spent at least $30
in any Woolworths supermarket or Big W. Promotional offers of
additional fuel discounts can also be available. Many canopies are
conveniently located in the carpark of a Woolworths supermarket, but
are equally successful when well located in good locations nearby.
This is reflected in some canopies redeeming discount vouchers from
up to 29 Woolworths supermarkets or Big W's in the region.

Over the last year (2000/01), Plus Petrol's volumes have grown by 45%
to 900 million litres per annum, and is forecast to grow an
additional 50% this financial year (2001/02), reflecting the benefit
of both the phased Liberty sites as well as the additional planned
openings. Based on the volumes sold, our market share is estimated to
have increased from 3% to 4.3% last year (2000/01) and is forecast to
grow to 6.7% this year (2001/02). Because of the phasing of both
Liberty and new site openings, the year-end market share at June 2002
is forecast to be approximately 8%.

Woolworths derives its return on the Plus Petrol operations from both
the underlying fuel operations, as well as the incremental sales that
accrue through both Woolworths supermarkets and Big W. Independent
research by Jebb Holland Dimasi has confirmed the incremental
customer flows and purchases that result from the introduction of
Plus Petrol and discount vouchers. From the loss making early years,
the position has steadily improved. In the 1999/2000 financial year,
Woolworths made a small loss pre discounts ($1M). After both the cost
of discounts and the benefit of incremental sales, a profit of $6M
was made, on funds employed of $109M.

As greater availability of conveniently located Plus Petrol outlets
has been realised, and the efficiency of the operation has increased,
this has improved further in the last financial year (2000/01).
Before discounts, a profit of $5M is anticipated, and after discounts
and incremental sales, a profit of $16M is anticipated, on funds
employed of $118M.

The ex-Liberty canopies are forecast to increase funds employed by
less than $20M over the course of this financial year.

Woolworths remains on track with its Plus Petrol strategy. The
primary focus remains one of utilising competitive fuel pricing,
together with additional loyalty discounts, to drive additional sales
through both Woolworths supermarkets and Big W.