Revenues at forecourt operator EG Group soared more than 20% in the third quarter thanks to its growing foodservice business, which now includes the likes of Leon and Cooplands.
The Blackburn-headquartered group said the foodservice operations showed “significant strength” in the three months to 30 September 2021, supported by continued customer demand for food to go and delivery offerings.
Gross profits in the division increased 46% year on year – and 36% on a like-for-like basis – to £164m as the group continued to expand its opening of outlets, which include Greggs, KFC and newly acquired Leon. This included new smaller formats of the latter and its first drive-thru site opened in Leeds this month.
EG added its grocery business was also “resilient” in the third quarter, with gross profits up 0.6% year on year to £376m, with the strategy to utilise Asda, which is also owned by Mohsin and Zuber Issa, “progressing well”. EG rolled out its Asda On The Move c-store proposition across forecourt sites and introduced its foodservice brands at Asda locations during the quarter.
Fuel performed less well, with gross profits down 0.5% to £511m, with most regions seeing decreases except the UK, where it increased thanks to more people staying in the country for a holiday in the summer.
Revenues at the group increased 20.4% to £7.2bn in the period, although EBITDA slumped 10.2% to £428m as it came up against record numbers from a year ago when lockdown restrictions ended.
However, EG said EBITDA in the third quarter was the second highest quarterly figure recorded by the group.
A joint statement from the Issa brothers said they were “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 & collect and the overall quality, range and locations of our 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.”
The Issas added the start of the Q4 period had been characterised by “ongoing macro-uncertainty”, with some 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 & 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 reduced its debt mountain slightly in the period, with the figure down 1.7% to £9bn at the end of the quarter. The group was able to redeem a £675m loan thanks to the termination of the agreement to buy Asda’s forecourt business.
However, it did continue on its acquisition spree in the quarter, completing a deal to buy Amsric Food, which added 52 KFC restaurants to the group and establishing it as the largest franchisee in Western Europe for the KFC brand.
EG also bought bakery chain Cooplands in October and c-store operator Sprint Food Stores in the US in November.
“Together these deals significantly enhance the quality and scale of our foodservice portfolio, complementing our wider fuel business,” the Issas said.
EG also announced today that chief strategy officer Michael Hughes is leaving to become chief executive of a private company outside of the sector. He will stay on until the end of the year to ensure a smooth transition. EG said it intended to make a new senior hire who would focus on the sustainable mobility strategy and would be supported by the existing management team.
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