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Asda owner EG Group profits smash £76m in “resilient performance”

// EG Group hails growth in its foodservice business
// In the 3 months to March 31, the Asda owner saw a 5.8% increase in group EBITDA to £186.9m

Asda owner EG Group has recorded a growth in its foodservice business after witnessing increased profits in the first quarter.

For the three months to March 31, the petrol station business, owned by billionaire brothers Zuber and Mohsin Issa, reported a 5.8 per cent increase in group EBITDA to $265 million (£186.9 million).

The main reason of growth for the business was in foodservice with gross profits for that reaching $109 million (£76.9 million) – up from $45 million year on year.

READ MORE: New Asda owner EG Group buys Leon restaurants

Group revenues for the period fell 7.1 per cent to $5.3 billion (£3.7 billion), with fuel sales affected by Covid-19 restrictions – down 5.3 per cent to $415 million (£292.8 million).

EG Group’s grocery and merchandise gross profits also fell during the period, down 3.2 per cent to $294 million (£207.4 million), although the business said recent trading showed “growth in most countries compared to the prior year”.

The business, which owns more than 6000 petrol stations across Europe, the US and Australia, said it had opened net seven new sites during the period.

EG Group also said it expected to complete the £750 million acquisition of the Asda forecourt business in the second half of the year, having divested 27 petrol stations following competition concerns from the CMA.

The business recently announced the acquisition of fast food restaurant chain Leon amid reports that it was also closing on a deal to takeover Caffe Nero.

A figure for the Leon deal was not confirmed by EG Group.

Leon joins a number of other fast-food brands in the EG Group portfolio as it runs both Subway and Greggs stores on its petrol stations and bought the largest UK KFC franchise last year.

“EG expects to significantly increase Leon’s historic profitability, supported by the rollout of new sites across the EG portfolio and distribution of Leon’s FMCG products across the group’s convenience retail proposition,” EG Group said.

Issa brothers said: “We are pleased to report a resilient performance in Q1 2021, which is testament to the ongoing dedication of our colleagues around the world and underscores the benefits of our scale and diversified business model.

“At the same time, the group has continued to take significant and proactive steps forward in its longer-term development.

“This includes the recently announced acquisition of Leon Restaurants, along with the previously announced Asda Forecourts and OMV Germany acquisitions.

“These exciting transactions will further strengthen EG’s growth prospects in both fuel and non-fuel operations.

“Together they highlight the increasing breadth and scale of our portfolio and the continued growth of our foodservice operations, which are a key element of the group’s growth strategy.

“Looking ahead, assuming the continued easing of global Covid restrictions, we expect to see more positive trading conditions as we continue to provide an essential service to millions of customers in communities globally.

“Additionally, the continued strengthening of our board and leadership functions demonstrates the group’s commitment to implementing best practice in corporate governance and the importance we attribute to ESG, while helping us to deliver on the significant growth opportunities that lie ahead.”

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The post Asda owner EG Group profits smash £76m in “resilient performance” appeared first on Retail Gazette.



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