EG Group sees alternative fuels, and EV rapid charging in particular, as a major growth opportunity for the company both in the UK and across its global network.
In its trading update for the first quarter of 2023, the first since its sale of EG UK&I to Asda, it said: “Across all markets, the evolution to alternative fuels presents a major opportunity for the group, with EG’s large site network offering a unique base from which to build a leading rapid charging network.
“The group has identified almost 4,000 high-quality potential sites for ultra-rapid charging that have high footfall, enough car parking spaces and complementary foodservice and/or grocery offerings. With the whole of the EV business – including in the UK – remaining in the group, we see a huge opportunity in the near-term to accelerate the rollout of a leading EV charging proposition, under our proprietary brand, evpoint.”
The group also revealed a significant reduction in its debt following the Asda deal, stating that together with other transactions, it expected to reduce total net debt from $9,801m in March 2023 to $5,375m post completion of the announced transactions, with net leverage to fall from 6.3x to 4.9x.
It said it planned to continue an average annual growth capex investment of $200m – $250m and remained the third-largest global independent fuel convenience retailer; the second-biggest independent operator in Europe; fourth-largest independent in the US – with around 1,700 stores across 30 states; and has a market share of about 10% in Australia.
The group reported EBITDA of $228m for Q1 2023, on a constant currency basis, on revenues of $7.2bn. Excluding the impact of inventory revaluations, which were the result of oil price volatility in the current and previous comparable quarter, the group’s underlying trading performance for Q1 was $12m or 5% down versus the prior year period.
Fuel volumes grew in the UK, supported by Asda Fuel conversions and a more stable wholesale market relative to the comparable period. To date, 167 Asda On the Move sites have been developed and opened.
Zuber Issa, co-founder and co-CEO of EG Group, commented: “The sale of EG UK&I to Asda is an important step for the group and provides a platform to further invest across our diverse international portfolio, where we continue to see compelling opportunities to accelerate our proven and successful strategy to rollout foodservice, and grocery and merchandise to create multi-purpose convenience retail sites across our estate. We also have a significant near-term opportunity to deploy emerging fuels and EV chargers, across the existing site network and third-party locations.
“The group has now delivered a combination of strategic actions, including the US sale and leaseback transaction – which delivered net proceeds of $1.4bn – that will enable us to significantly reduce our overall leverage to below five times, in line with our financial policy and deleveraging strategy. We will now be addressing our upcoming maturities, including a three-year amend and extend of our term loans, which will help us to put in place a sustainable long-term capital structure. We remain committed to achieving a net leverage multiple of mid four times in the near term.
“Over the past 22 years, we have built a hugely successful global multi-purpose convenience, fuel retail and foodservice business and this will continue from our global headquarters and shared service centre in Blackburn under the existing leadership team. In Q1 we delivered another robust set of results, with strong performances in most regions and significant growth in foodservice gross profit, which was up 10% on the prior year.
“Our future ambitions are unchanged and, following the Asda transaction, we will continue to operate across three continents and nine countries, benefiting from a strengthened balance sheet, strong cash generation and $6bn of freehold property. This provides continued geographic diversification, scale and an unrivalled platform from which to grow.
“I would like to reiterate my thanks to all EG colleagues. Their tireless work has enabled our continued success, and we look forward to the future with confidence.”