EG Group posts strong third quarter figures, despite fall in record earnings
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Revenues at Blackburn-based petrol forecourts and retail operator EG Group jumped by more than 20% in its third quarter of trading, but EBITDA levels retreated by 10.2%.
The group, run by brothers Zuber and Mohsin Issa, co-founders and co-CEOs, released figures for the three month period up to September 30.
They revealed sales of $7.176bn, compared with $5.926bn at the same point in 2020.
EBITDA, however, slipped from $476m to $428m. EG Group said the previous year’s level was a record-breaking EBITDA performance following the easing of COVID-19 restrictions and, notwithstanding this, the EBITDA for the third quarter of 2021 was the second highest quarterly EBITDA recorded by the group
Net debt for the period was reduced, from $9.105bn to $8.953bn, while liquidity headroom also fell, from $1.709bn to $1.675bn.
Foodservice operations showed significant strength, with gross profit increasing by 46% year-on-year and 36% on a like-for-like basis, supported by continued customer demand for “to go” and “delivery” offerings, as well as the ongoing pipeline of Foodservice outlet openings across the group.
Grocery and merchandise sales continued to be resilient with increases seen across most regions as travel increased.
Fuel gross profit remained flat year-on-year, with a decrease of 0.5%, with most regions seeing decreases except the UK, where fuel gross profit increased, largely due to more staycation travel in the summer.
During the third quarter EG Group completed the acquisition of 100% of the shares in Amsric Food Limited, adding 52 KFC restaurants and establishing EG’s position as the largest franchisee in Western Europe for the KFC brand.
Following the quarter end, EG Group announced a number of important strategic acquisitions, including CS Food Group Holdings Limited (Cooplands), the UK’s second largest bakery chain, and Sprint Food Stores, an operator of 34 company-operated convenience stores in South Carolina and Georgia, USA.
There was also continued investment in foodservice, including in the digital platform, self-service kiosks and the expansion of the LEON brand through the introduction of smaller formats and drive-thru sites – the first of which opened in Leeds, UK, in November.
The strategic alliance between EG and the UK supermarket, Asda – which is mutually beneficial and creates significant value for both organisations – is progressing well with a number of new openings in the period, the group said.
Commercial initiatives, included the roll-out of the Asda On the Move convenience store proposition across EG’s forecourt sites, and EG introducing foodservice at Asda locations.
The group announced that chief strategy officer, Michael Hughes, is leaving to become chief executive of a private company outside the sector. He will stay on with EG until the end of the year to ensure a smooth transition. EG said it intends to make a new senior hire, to maintain the strength and depth of its leadership team, who will focus on its sustainable mobility strategy and will be supported by the existing management team, including Amina Batool, who recently joined from Kingfisher, as head of ESG and sustainability.
On November 16, 2021, the group signed a £220m ($295m) bridge facility to fund the recent acquisitions in the UK. This facility is currently undrawn.
Zuber and Mohsin Issa said: “We are pleased with the progress of the business over the past quarter.
“While all parts of EG Group made a good contribution, foodservice was the stand out performer during the quarter, driven by strong customer demand for delivery, click and collect and the overall quality, range and locations of our foodservice outlets.
“Against a record-breaking comparative period last year, this quarter’s results are in line with expectations and further validate EG Group’s vision of delivering a modern and compelling retail experience, to support our global growth strategy.
“During the quarter and after the period ended, we completed a number of strategically important M&A transactions, including the acquisition of Cooplands, the UK’s second biggest bakery chain. This represents the second foodservice business we have acquired outright, following on from the acquisition of LEON. We are excited by the quality of the business and the potential growth opportunities to expand our foodservice network across the UK.
“We also succeeded in further strengthening our business in the US, with the acquisition of 34 new fuel and convenience store locations, which expands our presence to 33 states across America. Together, these deals significantly enhance the quality and scale of our foodservice portfolio, complementing our wider fuel business.”
The brothers added: “The start of the Q4 period has been characterised by ongoing macro-uncertainty, with some of our international markets facing renewed lockdown restrictions.
“Nevertheless, our business has demonstrated its resilience during the pandemic period, with customers continuing to make essential journeys, holidaying at home more often and showing increasing demand for food delivery, convenient local shops, click and collect, delivery and food-to-go services.
“With the combination of our proprietary brands, LEON and Cooplands, and our strategic partnerships with some of the world’s most popular brands, we are well placed to make further progress in the final quarter of the year.”
EG Group trades from more than 6,200 sites across the UK and Ireland, continental Europe, the US and Australia, employing 50,000 staff.