Retail service station chain FESCO experienced its best quarter ever, with gross profit surging 57 per cent closing on J$338.63 million while net profit surged to J$158.01 million for the first quarter ended on June 30.

Gross profit surged past the J$122.55 million reported for the first quarter of last year, while net profit leapt from J$6.22 million, or 4.1 per cent, over the comparable period in 2023. The improvement in gross profit reflects both increasing throughput (measured in litres of fuel sold) and diversification of product offerings and services.

Earnings before interest, taxes, and amortization (EBITA), a measure of company profitability used by investors went up to went up to J$239.93 million, up from J$81.48 million or 51.43 per cent over June 2022. Book value of equity closed on J$1.46 billion, which is up 12.14 per cent since the last financial year ended March 31, 2023 and up 58.27 per cent or J$158.03 million, when compared to June 30, 2022.

FESCO recorded turnover/revenues of J$6.56 billion, which reflects a 1.64 per cent or J$105.88 million year-over-year increase. Several factors affected revenue/turnover with the supply price of fuel being a major component.

On average, this quarter’s refinery prices went down on average between J$36.01 – J$37.05 per litre for gasolene and J$29.70 – J$35.31 for diesel, relative to the similar period last year.

Significant growth in litres of fuel sold

Accordingly, FESCO’s marginal growth in turnover for the first quarter, relative to June 2022, reflects significant growth in litres of fuel sold. During the quarter, FESCO attained a number of achievements such as:

1. Sold the first litre of its LPG product FESGAS in April 2023

2. Introduce a no BLEVE (Boiling Liquid Expanding Vapour Explosion) composite LPG cylinder to the domestic market

3. Acquire the LPG assets of Wilson Beck, including its LPG filling plant facility at Bernard Lodge

4. Expand its LPG facilities and distribution footprint

5. Continue its service station network expansion and work-in-progress Capex/investments.

Operating expenses more than doubled

Operating expenses for the review period rose to J$136.57 million, up J$71.52 million, representing a 109.95 per cent increase over the corresponding period in 2022. Interestingly, operating expenses of J$136.57 for the quarter exceeded the operating expenses for the entire year ending March 2022.

This expansion of expenses directly reflects the expanded operations of the company and remains relative to its earnings as measured by gross profits. Operating expenses excluding depreciation is marginally up from 26.9 per cent archived in 2022 and is lower than the 31.41 per cent archived for the audited financial year ended March 2023.

Staff costs, bank charges, advertising, insurance and security continue to be the main expense items but operations continue to be efficient, represented by total operating expenses being approximately 40 per cent of gross profits and more importantly, for this stage of FESCO’s LPG business, which is capital intensive.

Looking ahead, FESCO remains mindful of opportunities for growth and further investment. According to the management, “Internal or self-funding via profit generation, profit retention, at this time, has proven to be the most efficient and cost effective source of capital to fund growth.”

Last month, FESCO opened its 19th retail service station FESCO and this month will open its 20th service station, FESCO Kitson Town. In October, the company plans to open its 21st service station, FESCO Port Maria.