Fuel prices unlikely to rise over Brexit, says Applegreen chief

Strong growth at forecourt retailer despite tougher economic conditions

Applegreen increased the number of sites it operates in 2018.  Photograph: Cyril Byrne

Applegreen increased the number of sites it operates in 2018. Photograph: Cyril Byrne

 

Car fuel prices in the Republic are unlikely to increase as a result of Brexit despite the fact we import all of our motor fuel, the chief executive of forecourt retailer Applegreen has said.

Asked whether prices would rise as the UK edges towards March 29th without a deal with the EU, Bob Etchingham said, “I don’t see anything like that”, adding that he was not concerned about Brexit given that the company had planned well.

Mr Etchingham was speaking after the company issued annual results for 2018 during which revenues grew 41 per cent to €2 billion, gross profit rose 55 per cent to €282.3 million and pre-tax profit fell 30 per cent to €15.3 million.

Applegreen has 193 sites in the Republic, 158 in the UK and 121 US sites. In October 2018, the group acquired a majority stake in US motorway service area operator Welcome Break which has a portfolio of 34 service areas, three trunk road service area sites and 29 hotels.

The acquisition had the effect of increasing the group’s pro forma adjusted leverage, or the ratio of debt to earnings including acquisitions, to 3.9. Asked whether that was a higher level than the company was comfortable with, chief financial officer Niall Dolan said, “we’re very committed to reducing it”.

“We have a very clear line of sight on deleveraging the business back down to lower levels. Our target is probably to reduce that down to 2.5 by 2020. We’re pretty confident on delivering on something like that,” he added.

Goodbody analyst Jason Mollins said the company’s earnings growth was 3 per cent ahead of forecasts, adding that the stockbroker was “unlikely to make material changes to forecasts”.

Review

The group is also in the throes of a strategic review following the Welcome Break acquisition. While the review was focusing on the hotel operations of the company, it was not intended to see asset disposals to deal with the company’s debt to earning ratio, Mr Etchingham said.

Applegreen continued to invest in its network over the year, with €64.6 million spent on capital expenditure. That excludes the Welcome Break acquisition.

Following the strong results, Applegreen said it was proposing a final dividend of 0.91 cent, with a total dividend for the year of 1.54 cent per share, which was 10 per cent higher than in 2017.

Revenue in the Republic of Ireland rose 11.6 per cent, with gross profit up 12.9 per cent. Total fuel gross profit increased 9.7 per cent on a like-for-like basis, reflecting the impact of the Joint Fuel Terminal acquisition in Dublin in 2017. Food and store sales and gross profit increased year on year by 3.3 per cent and 2.0 per cent respectively on a like-for-like basis.

Applegreen grew its estate to 472 sites by the end of the year, opening 16 new sites in Ireland, and acquiring 43 leasehold sites in Florida and seven in South Carolina. It also opened 22 new food outlets.

Mr Etchingham said the company was anticipating another year of robust growth for the business.

“Our primary focus will be on the integration of Welcome Break and further reducing leverage but we will also continue to evaluate new opportunities to further expand the business in the future,” he said.