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 +++++++++++++++++++++++++ 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.