Fuel forecourt retailer Applegreen has announced plans for its first dividend after reporting an almost 16% rise in gross profit for 2016. The company saw its gross profit rise to €145.8m last year, on the back of a 9% lift in revenues to almost €1.18 billion. Earnings before interest, tax, depreciation and amortisation were also up 10.7% to €32m. As a result the firm is proposing a final dividend of 1.25 cent per share - the first since the company floated on the Dublin and London stock exchanges in June 2015.
"We're very pleased with 2016 - it was a good year for the business," said Bob Etchingham, CEO of Applegreen. "That's despite the headwinds that we had to contend with in the year, including the depreciation of sterling, the constant rising of international oil prices which did hurt our fuel margins, and also the need to absorb significant increases in the minimum wage in Ireland in January and also the living wage in the UK which came through in April."
During last year Applegreen added 43 sites to its business - bringing the total to 243 by the end of last year.
Many of those were in Britain, signalling a strong willingness on the part of the company to expand its footprint in the country. "The UK has something like 8,500 petrol forecourts as against about 1,200 in the Irish Republic so it's obviously a much, much bigger market," the Applegreen boss said.
"We do see opportunities there; it's a market that's dominated by the supermarkets and that keeps margins relatively low but against that we find that there are opportunities for a fuel discounter like ourselves that's competing head to head with the supermarkets in terms of the fuel price it's offering," he added.
Many companies have hit pause on their British investments in the wake of Brexit, however Mr Etchingham said they have no plans to follow suit and will continue to expand its network there as opportunities arise.
"We don't see any significant impact on our business... in our space there really isn't any direct impact other than the translation of our sterling earnings back into earnings," he said.
Closer to home another recently-announced expansion by Applegreen sees the company trying to acquire a 50% stake in the Joint Fuels Terminal in Dublin Port. Mr Etchingham said that was an important move for the company in order to maintain a steady, direct supply into the future. "About three quarters of the fuel that we sell in the south comes in through Dublin Port, so it really underpins our ability to deliver low fuel prices to our Irish customers," Mr Etchingham said. "We believe that it will give us security of supply and allow us to supply our customers at a better price in the future."
If that deal goes ahead it will cost the firm €15.7m - which comes on top of the more-than €60m spent during 2016. Despite that significant expenditure, Mr Etchingham says that the war chest the company has built up in recent years is still in a healthy position. "Our net debt position actually improved in the second half of last year so we do have quite a bit of cash in our war chest at the moment and we've also got very substantial borrowing facilities which are undrawn at the minute," he said. "There's no issue there in terms of our ability to fund any potential acquisition that might come along."
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