Foodservice was the “star performer” in a ”transformational year” for the EG Group, according to Zuber and Mohsin Issa, the group’s co-founders and co-CEOs, as they commented on the latest trading update.
The full-year report show that group EBITDA increased by 16.3% to $1,451m over the full year, primarily driven by a stand-out performance in foodservice and the further easing of Covid-19 restrictions in many territories. Group EBITDA increased by 15.2% on a like-for-like basis
The group reported that foodservice operations continue to go from strength to strength, with gross profit increasing by 99.9% year-on-year and 66.9% on a like-for-like basis. The report said this had been driven by the continued customer demand ’to go’ and delivery offerings; and more favourable trading conditions related to the pandemic compared with 2020 augmented by the continuous pipeline of foodservice outlet openings across the Group and completed 2021 acquisitions.
Grocery & Merchandise sales remained resilient with a year-on-year increase in gross profit of 9.9%. Increased sales were seen across the majority of regions as travel restrictions have been gradually lifted in most geographies, and improved gross margin as product mix has stabilised as trading activity normalised during the year
Highlights from Q4 revealed that group EBITDA for Q4 2021 increased by 69.9% year-on-year to $377m driven by a strong performance in Foodservice, as well as recovery from challenging pandemic-related market conditions in Q4 2020.
Foodservice operations showed significant strength, with gross profit increasing by 75% year-on-year and 30% on a like-for-like basis. This increase is supported by continued customer demand for “to-go” and delivery offerings, and the opening of 52 new Foodservice outlets in the quarter, in addition to the acquisition of Cooplands in the UK&I
In terms of M&A, activities included the October 2021 acquisition of CS Food Group Holdings Ltd (Cooplands), the UK’s second largest bakery chain which it plans to expand in the UK, including via the Group’s unparalleled network of forecourts and retail convenience stores.
In November 2021, EG Group announced the acquisition of Sprint Food Stores, an operator of a portfolio of 34 company-operated convenience stores in South Carolina and Georgia, expanding EG’s USA operations to two additional states and almost 1,750 sites across the USA
EG Group expects that the OMV forecourt transaction will complete in Q2 2022 following the German Anti-Trust Authorities clearance decision, where the Group has agreed to divest 48 sites in order for the transaction to proceed, 24 of which are in EG’s existing estate and 24 in the OMV estate
During Q4 the Group completed the divestment of 32 sites in the UK&I, addressing the findings of the CMA’s review of the Shareholders acquisition of Asda
Highlights for 2021 includes the strengthening of the Group corporate governance with appointment of Lord Stuart Rose as Chairman and Dame Alison Carnwath as Audit Committee Chair during Q1 2021, following the appointment of John Carey in November 2020 as an independent NED; and completion and integration of six bolt- on acquisitions during 2021 across the UK&I, Continental Europe and USA regions, expanding the Group’s Foodservice and US operations, with the purchase of LEON, Cooplands, and Sprint, in the USA.
It also included the opening of 134 new foodservice outlets, with total foodservice gross profit of over $600m – double the amount reported in 2020. Almost 60% of the UK & Ireland’s gross profit for 2021 was generated by foodservice operations; continued capital investment, with 28 new-to-industry sites opened in the year; and progression of the key strategic alliance between EG and the UK supermarket, Asda, - described as mutually beneficial and creatings significant value for both organisations – with 31 new Asda on the Move openings on EG locations in the year and the introduction of 13 foodservice outlets at Asda locations.
The Zuber brothers commented: “This excellent Q4 performance caps a transformational year for EG Group. The star performer for the year was Foodservice ‒ which remains the biggest long-term growth opportunity for the Group ‒ while our Grocery and Merchandise and Fuel businesses also demonstrated their resilience as pandemic-related restrictions continued to ease.
“In Foodservice, we not only continued to expand and invest in growing our partnerships with global brands, but we also made important acquisitions of proprietary businesses with the purchase of LEON, the naturally fast-food chain, and Cooplands, the UK’s second biggest bakery operator.
“We look ahead to this current financial year with confidence to build on our strong foundations and growth platform. With many of our key geographies easing their Covid-19 guidelines, EG Group is extremely well positioned to deliver further progress and take advantage of the opportunities ahead. We would also like to thank all EG colleagues for their incredible, hard work during a testing year.”