Durrant Pate/Contributor

Service station chain, Future Energy Source Company Limited (FESCO) has achieved its best year to date, as it relates to gross profit, operating profit, earnings before interest, taxes, depreciation and amortisation (EBITDA) and most significantly shareholder’s equity

Gross profit closed the year ended March 31 higher at J$1.45 billion; operating profit at J$672.3 million, up 18.7 per cent from J$566.4 million; EBITA closing on J$846.9 million, up 42.3 per cent from J$595.4 million and most significantly shareholder’s equity. 

Shareholder’s equity amounted to JJ$2.15 billion, which is up 64.7 per cent or J$842.9 million year over year from J$1.30 billion as at March 2023, which is almost seven times the company’s shareholder’s equity of J$318.4 million as at March 2021.

Another positive highlight for the year is the fact that FESCO was able to achieve its main targets to: 

• Create brand awareness for FESGAS brand and establish an accretive and sustainable LPG business.

• Increase its service station network footprint and increase fuel sales measured in litres. 

• Increase profitability, specifically as it relates to operating profit and operating cash flow (EBITDA).

• Execute significant investments in capital expenditure (CAPEX), which does not yet reflect in sales or profit but for which the Company forecasts sustainable returns in the medium term and whilst having generated ROE after tax of 30 per cent. 

Contraction in net profit

In spite of this positive performance, FESCO performed negatively in terms of net profit, which ended the year at J$515.1 million, slipping 9.8 per cent or J$56.2 million year-over-year from the company’s record profit achieved last year of J$571.3 million. The slippage in net profit reflects a significant increase year over year for Interest expense, up J$165.3 million; depreciation rising by $136.7 million and advertising expense climbing by $31.4 million.

The junior market listed company is reporting that its “Discrete quarterly (Q4) performance reflects the booking of outstanding supplier invoices relating to previous quarters within the year. Normalised net profit for the [fourth] quarter would have been approximately J$112 million versus the reported J$49.1 million.”

During the year FESCO  established and distributed LPG via its FESGAS brand, which includes two company-operated LPG filling plants, increasing its network footprint by three service stations, namely FESCO Kitson Town, FESCO May Pen and FESCO Port Maria, improving brand awareness and increasing its advertising, depreciation and interest expenditures. 

For the year ended March 31, 2024, FESCO recorded ‘turnover/revenues’ of J$28,77 billion, which reflects a 9.49 per cent or J$2,495.1 million year-over-year increase. Several factors affect revenue/turnover with the supply price of fuel being a major component. 

For quarters Q1 and Q2 all fuel prices fell significantly versus the previous year, and for Q3 and Q4 diesel prices fell significantly while gasoline prices increased negligibly. Accordingly, FESCO’s growth in Turnover for the year ended March 2024 reflects significant growth in litres of fuel sold.