CALTEX CONFIRMS INTEREST IN WOOLWORTHS FUEL BUSINESS

CALTEX (ASX: CTX) has confirmed it is interested in purchasing Woolworths' (ASX: WOW) fuel business.

In a release to the ASX today, Caltex says it has made a conditional and confidential proposal to Woolworths that will continue the brands' alliance that has existed since 2003.

Caltex is currently the exclusive supplier of petrol and diesel to Woolworths, with annual sales volumes of around 3.5 billion litres per annum.

Woolworths petrol sales were $4.6 billion in FY16, an 18.1 per cent fall from $5.6 billion the previous year the biggest drop in revenue among the Woolworths groups.

Overall, the Australian Food and Petrol group earnings reduced 40.8 per cent to $1.76 billion from $2.97 billion the previous year.

Petrol was a drag on the company's group sales, which fell 0.8 per cent to $55.6 billion in FY16, but showed growth of 1 per cent when petrol was excluded.

The company is undergoing a $1 billion restructure after a disappointing period that included declining sales and the failure of the Masters hardware business, which it sold earlier this month.

In the company's annual report, group CEO, Brad Banducci, says the company has "faced up to exiting businesses that are underperforming or loss making, changing the operating model to drive more accountability and focus on our core food and drinks business."

Woolworths has previously said there are a number of parties interested in its fuel business and current discussions over its sale may not result in a transaction.

Woolworths is trading up 0.58 per cent at $24.250 per share this morning, while Caltex is down 1.81 per cent at $33.690.