International forecourt giant EG Group says it is “making material progress” towards paying down its debts as it continues to slim its overseas operations and move the running of the business to the USA.
Last week, the Blackburn-based outfit agreed deals to sell its Italian and Australian divisions, with the transactions valued at a total of just under £900m. EG says the proceeds will be used to reduce leverage and strengthen its balance sheet.
Both are markets EG moved into during a period of rapid and debt-funded international expansion that transformed the family firm into a global player. The Italian operation is being bought by a consortium of Italian organisations, while Australian business Ampol will acquire the network in that country.
The group – which reported a “broadly flat” financial performance for the three months to June 30, with growth in foodservice and retail compensating for lower fuel margins – is undergoing a major transition following the resignation of co-founder Mohsin Issa as chief executive earlier this year.
That came in the wake of a split last year with his brother Zuber, with whom he started the business in 2001. Zuber Issa launched his own forecourt operation EG On The Move after selling his personal stake in supermarket chain Asda and buying 34 UK sites from EG Group. Both siblings remain EG Group shareholders.
EG Group is now run by a new executive team headed by Russ Colaco, who describes the second quarter performance as “solid”, with the group making “sustained progress with our ambitious strategy”.
A weaker fuel performance due to lower fuel margins, as well as “challenging market dynamics” in its German business were offset by growing foodservice, grocery and merchandise revenues.
Colaco says that the sale of the Italian and Australian arms will “enable us to further reduce group debt” while an agreement with creditors in July to reschedule debts “will release additional free cash flow to fund disciplined growth investments”.
He adds: “Ensuring a healthy capital structure is a core priority for the group’s leadership, and I am pleased we have taken steps to do so in a prudent and orderly manner. While we continue to monitor global macroeconomic and political uncertainty, our focus is on executing our growth strategy to become a more streamlined, focused business – investing in our core markets to further enhance our strategic position.”
EG Group’s underlying EBITDA (earnings before interest, tax, depreciation and amortisation) decreased by 1.1% compared with the same period in 2024 to $270 million (£201 million).
Its continental European business “traded strongly”, with a 6.3% increase in underlying EBITDA to $170 million, “driven by particularly robust performances in France and Italy”. The USA, by contrast, saw a 24.6 EBITDA fall to $100 million in the quarter.
The group’s “transition to a US-managed organisation” will see it establish its headquarters in Charlotte, North Carolina. However, EG Group will keep a shared services centre in Bolton, near its current Blackburn premises, “retaining the company’s roots in the north-west of England while ensuring its office footprint reflects EG Group’s reduced presence in the UK and Europe”.
