By Durrant Pate/Contributor

Petrol service station operator and cooking gas provider Future Energy Source Company (FESCO) is reporting that the 2023/2024 financial year is its best-performing year since its establishment in 2013.

The just released audited financial report for the year April 1, 2023 – March 31, 2024, shows that all the performance matrices registered improvement. In particular, gross profit went up to $1.45 billion and operating profit is up $672.3 million, or 18.7 per cent more than the $566.4 million booked last year. 

Earnings before interest, taxes, depreciation and amortisation (EDITA) grew by $846.9 million, an improvement of 42.3 per cent over the $595.4 million recorded in the previous financial year.

Most significantly, shareholders’ equity closed the year at $2.15 billion, up by 64.7 per cent or J$842.9 million year over year compared to the $1.30 billion booked. This reflects increased profitability, profit retention and a revaluation reserve increase of $330.1 million. This growth is almost seven times the company’s shareholders’ equity of J$318.4 million as at March 2021.

Other financial highlights 

For the year, FESCO incurred finance costs (net) of $157.2 million, which reflects interest costs related to its debt/bonds etc. However, net profit amounted to $515.1 million, which is a slight decline of 9.8 per cent or $56.2 million less year over year. 

The slippage in net profit reflects a significant increase year over year for: 

1. Interest expense (net) +$165.3 million

2. Depreciation +$136.7 million

3. Advertising expense +$31.4 million. 

“The increase in interest expense, depreciation and advertising, in the main, is reflective of and is attributable to our medium- to long-term vision to expand our network footprint, our expansion into LPG distribution, and to increase brand awareness for both FESCO and FESGAS,” the company stated.

FESCO remains significantly liquid 

FESCO remains significantly, and sufficiently liquid, represented by net current assets of $330.2 million (March 2023: $302 million) and cash and cash equivalent balances of $282.4 (March 2023: $287.9 million). 

During the year under review, FESCO was able to achieve its main targets of: 

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

2. Increase its service station network foot print and increase fuel sales measured in litres.

3. Increase profitability, specifically operating profit (EBIT) and operating cash flow (EBITDA).

4. 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%. 

During the year FESCO increased its network footprint by three service stations, namely FESCO Kitson Town, FESCO May Pen, and FESCO Port Maria, while improving brand awareness and increasing its advertising, depreciation and interest expenditures. For quarters Q1 and Q2, all fuel prices fell significantly versus the previous year, and for Q3 and Q4 diesel prices fell significantly.

At the same time gasoline prices increased negligibly, but FESCO’s growth in turnover for the year ended March 2024 reflects significant growth in litres of fuel sold. FESCO has no control over the supply price of fuel and, instead, focuses more on the quantity of fuel sold and gross profit.