Applegreen unveils maiden dividend as earnings grow 11%

Petrol forecourt retailer floated on Irish Stock Exchange in mid-2015

 

Petrol forecourt retailer Applegreen announced a first dividend since its 2015 flotation after delivering 11 per cent growth in earnings last year, driven by food sales and as it continued to add sites in Ireland, the UK and US.

Earnings before interest, tax, depreciation and amortisation rose to €32 million from €28.9 million to meet analysts’ expectations, as the group, as its network grew to 243 sites after adding 28 company owned locations and 15 dealer sites during 2016. Revenue grew by 9 per cent to €1.18 billion.

It is proposing a maiden final dividend of 1.25c per share.

“Our food and store sales were particularly strong in the Republic of Ireland during the year, while the UK had a good performance in the second six months,” said chief executive Bob Etchingham. “Fuel margin was impacted by the rising oil price and, in Ireland, by the rising proportion of fuel card of the total fuel volume.”

While sterling weakness since the decision by UK voters last June to exit the EU has impacted the group’s consolidated results in euro, Brexit has had no further impact on the business to date, he said.

The group, which started off with one filling station in Ballyfermot in Dublin in 1992, increased its number of sites by 43, or 22 per cent, to 243 last year, while it has added a further 12 so far in 2017. Applegreen raised €91.7 million in its initial public offering (IPO) in June 2015, €70 million of which went to the company, while its founders, Mr Etchingham and chief operations officer Joe Barrett, sold €21.7 million of stock. The two men continue to own about 60 per cent of the group.

New England

Apart from dealer sites, the main area of network expansion has been the UK, a market Applegreen entered in 2008. Last year, the company opened 15 additional sites in the UK, including two service areas, one motorway service area and one so-called trunk road service area.

In Ireland, eight sites were added comprising three trunk road service areas (TRSA) and five petrol filling stations while one station was disposed of and another upgraded to a TRSA. In the US, an additional site was added in Long Island while five sites were taken over in New England as part of a nine site deal with CrossAmerica Partners. The company now has 11 trading forecourts on the other side of the Atlantic.

“The company now has the confidence that the [US]market represents a viable region for further development,” said Goodbody Stockbrokers in a note to clients. “ As a result, the group is strengthening the organisational structure in the region to support further growth.”

Applegreen said its core Irish market has been delivering good growth in non-fuel sales in particular so far this year, while the UK has also begun 2017 “positively” despite uncertainties created by the Brexit process.

“We expect to continue to experience growth across our operations during the year,” it said.

Broken down, fuel gross profit rose 7 per cent to €53 million last year, outpaced by a 21 per cent surge in food profit to €48 million, while store profits gained 13 per cent to €44.7 million.

Analysts at Investec in Dublin said Applegreen’s €19.4 million net debt level at the end of December was lower than their €32 million forecast.