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Profits have returned to strong growth at forecourt giant EG Group as customer numbers recovered from the pandemic lows of a year ago.
Revenues in the second quarter of 2021 increased 57.5% on a like-for-like basis to $6.5bn (£4.7bn), with group EBITDA up 23.4% to $379m (£276.2m).
EG – owned by new Asda owners the Issa brothers and TDR Capital – said the performance reflected a strong performance against the prior year, which was significantly hit by Covid lockdown restrictions and temporary foodservice closures in the UK, affecting its Subway, Greggs, Starbucks and KFC sites.
Gross profits ballooned 231% year on year to $153m (£111.5m) in the foodservice operations, supported by continued customer demand for food-to-go and delivery services.
The grocery and merchandise division showed “continued resilience”, with a 24% rise in gross profits to $351m (£255.8m) as restriction were relaxed in many countries around the world, while fuel gross profits increased 9% to $478m (£348.4m).
EG added the integration of restaurant chain Leon into the wider group had made “strong progress” and contributed “a pleasing performance” in the three months to the end of June.
The group planned to open a further ten Leon sites in 2021, including the brand’s first ever drive-thru.
Net debt at EG edged 2% to $9.1bn (£6.6bn) as the company continues to load up on debt for its acquisition-fuelled expansion, which also included taking over the Asda forecourt business as part of the wider supermarket takeover by the brothers and their PE partners.
Zuber and Mohsin Issa, co-founders and co-CEOs of EG Group, said the group’s latest performance was “further validation of our successful global strategy”.
“We continued to make good progress in the second quarter, with a particularly strong performance from our foodservice business, driven by growth in customer demand for takeaway and delivery services and the easing of Covid restrictions across many of our countries,” the pair added.
“The resilience of our business model has been demonstrated during the pandemic, and we have emerged as an even stronger business as we enter the second half of the year with confidence.”
Blackburn-headquartered EG operated almost 6,000 sites worldwide.
Morning update
Revenues have tumbled at US food group Hain Celestial as it started to lap the strong performance a year ago when shoppers were stockpilling store cupboard essentials.
Net sales in the group’s fourth quarter to the 30 June 2021 fell 12% to $450.7m and by 4% to $1.97bn for the full year.
In its domestic North American market sales fell 15% in the fourth quarter and 6% for the full year, while internationally revenues decreased 7% in the final three months of the year and by 2% across 2020/21.
Hain forecast low single digit net sales growth for the 2022 financial year, but expected figures to be challenged in its first quarter.
CEO Mark L. Schiller said: “We are very proud of our solid fourth quarter and full fiscal year 2021 results. In spite of the many challenges our industry faced this past year, we continued to successfully execute against our transformation plan, delivering robust full year margin expansion and strong adjusted EBITDA growth.
“Heading into 2022, we expect another strong year with adjusted net sales growth, margin expansion and adjusted EBITDA growth even in this challenging environment of high inflation and labour shortages.”
Profits increased for 2020/21, with adjusted EBITDA of $258.9m, compared to $200m in the prior year.
Hain’s portfolio in the UK include the likes of Hartley’s, Sun-pat, Goldren Shred, Yorkshire Provider and New Covent Garden Soup, as well as owning Ella’s Kitchen.
Shares in the US group plummeted 9.1% to $36.36 yesterday on the back of the results.
The FTSE 100 opened 0.1% higher to 7,134.57pts this morning.
There was little in the way of market news to influence shares in the food and drink sector as we head into the summer bank holiday weekend.
Sainsbury’s shares continued to fall back off the seven-year highs seen earlier this week following takeover speculation. The supermarket is down 0.9% to 316.8% this morning, which puts it just 4.8% higher for the week, compared with the 15% surge on Monday.
Tesco, however, is up 1.3% to 256.3p this morning and Morrisons is level at 290.5p as the market awaits the next move from Fortress in the takeover saga.
Yesterday in the City
The FTSE 100 edged down by 0.3% to 7,126.23pts yesterday, ending a run of four consecutive days of growth as the markets eased into the bank holiday weekend.
Shares in German food delivery group Delivery Hero slumped 3% to €119.50 as losses grew slightly to more than €330m despite sales soaring in the first half.
Elsewhere, fallers included PayPoint, down 2.6% to 700.1p, Deliveroo, down 1.7% to 364p, and WH Smith, down 1.5% to 1,671.5p.
Bakkavor, McBride and Devro were among the risers, up 2.2% to 120.4p, 1.8% to 81p and 1.4% to 225p respectively.
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