Topaz says rise in profits due to higher volumes and cost controls
Profits at Irish fuel group Topaz have rebounded strongly a year after almost halving in the 12 months to the end of March 2012.
The company, which is part owned by Denis O’Brien, has also agreed a rescheduling of its debt repayments and working capital facilities to December 2015 with Irish Bank Resolution Corporation. This has reduced its short-term financial commitments by €48 million.
A repayment of €19.6 million of senior debt last year helped the company to reduce its interest charge by 20 per cent and lessened the cost of its letters of credit.
Latest accounts for Topaz show that the company’s earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 47 per cent to €19.1 million in the year to the end of March 2012.
Chief executive John Williamson said the performance has been turned around in the current year. Its Ebitda is projected to rise by €9-€10 million by the end of March.
“The company is benefiting from higher volumes, new income initiatives, investment in the retail network and tighter cost controls,” Mr Williamson explained.
Topaz’s volumes increased by 4 per cent in the first 10 months of the current financial period. This is in contrast to the previous year when volumes declined by 9 per cent to 2.7 billion litres.
Mr Williamson said this decline reflected the effect of the downturn on consumer spending, a mild winter and rising sales of illegal fuel.
He said “strong and decisive” action had been taken since then to improve the performance of the business. This included closing inefficient import facilities in Cork, Limerick, Galway and Derry.
Mr Williamson said Topaz continues to invest in the business in spite of the difficult external economy. In the past year, it has opened six new company-owned sites and added 19 dealers to its forecourt network.
It is also advancing plans for a large filling station costing €2 million at Dublin Airport and new container facilities at Dublin Port, which will require a multimillion euro investment.
Mr Williamson said profitability in its forecourt shops has improved significantly, with coffee sales up 12 per cent and car wash sales rising by 7 per cent.
Topaz expects to pay off an additional €9 million of debt by the end of this year.
Its core term debt with IBRC is now €110 million, while it has working capital facilities of €105 million.