Woolworths says profits on petrol ‘low’

Woolworths says its profits on petrol sales are embarrassingly low and it has no control over the wholesale price of petrol.

Australia's biggest retailer, which has an alliance with fuel distributor Caltex, offers a discount of four cents per litre of fuel to customers who shop at Woolworths stores.

In its sales results for the first six months of this financial year released on Wednesday, Woolworths said petrol sales rose 13.8 per cent to $2.5 billion.

Chief executive Michael Luscombe said the company did not have a great influence over wholesale petrol prices because Woolworths was a retailer, not a refiner.

"We can't control the wholesale prices to any extent, but what we can do is sell it for the least amount of profit that we can sustain the business with," Mr Luscombe said.

"We make very, very little cents per litre in profit, embarrassingly little.

"We're very much dependent on the price that we pay the refiners."

Petrol prices were at high levels around $1.20 over the Christmas period, even though the price fell on international markets, causing an outcry amongst motoring groups.

Mr Luscombe said Woolworths' pricing policy was to match the lowest price in a particular region at the petrol pump and then offer its discount to people who shopped at Woolworths stores.

Mr Luscombe said the volume of petrol sold during the December quarter was "very, very strong".

Three factors drove higher volume during the period.

Woolworths had attracted more people to its supermarkets and more discount vouchers were redeemed.

The price of petrol had also come down, so people used their cars a little bit more.

Woolworths had also responded to some further discounting of petrol prices by its main competitor Coles Group in December and January with some of its own "above normal" discounts.

Asked if he expected the extra discounting to continue, Mr Luscombe said that if a competitor effected a discount, Woolworths would do whatever was necessary to remain competitive.