The Issa brothers’ EG Group has seen its fuel division’s gross profit margins slim slightly after Russia’s invasion of Ukraine.
Across the firm’s fuel arm, gross profit hit $481m in the three months to 31 March, a 16 per cent increase compared to the first quarter of 2021.
However, its gross profit margins were slightly down compared to the quarter prior, ending 21 December 2021.
This was “partially driven by increased market volatility due to the impact of geopolitical events on wholesale oil prices and demand,” EG Group said on Tuesday.
The Issa brothers’ petrol empire posted group EBITDA up two per cent to $270m in first quarter results.
The petrol forecourt operator said buoyed earnings were mainly driven by continued growth in its foodservice arm, with EG also owning Leon and other food operators.
The company recently missed out after bidding to snap up the beleaguered newsagent operator McColl’s, with grocer Morrisons winning the takeover battle.
In a trading update, the firm said its foodservice operation marked gross profit growth of 54 per cent year-on-year to $175m. This was a 20 per cent increase on a like-for-like basis.
Some 26 foodservice outlets were opened in the quarter, meaning the Blackburn-based company now boasta a portfolio of more than 1,800 total outlets.
Out of the 26 new sites, some 21 were launched in the UK and Ireland, including Subway, Greggs and Cinnabon outlets.
EG’s grocery and merchandise division was consistent with the year before, with gross profit standing at $293m. This division was up by 0.8 per cent on a reported basis.
Its grocery and merchandise division’s margins were consistent with its comparable period even as wholesale and distribution costs have shot up.
“Against an uncertain and fast-changing backdrop, the business continued to make good progress against its strategic objectives across the group’s operations,” Zuber Issa, co-founder and co-CEO of EG Group, said.
Foodservice was dubbed “the biggest opportunity for EG Group globally,” by Issa.
However, Issa warned that the outlook for the year remained “uncertain” as households were already facing “significant inflationary pressure.”
He added: “However, we remain confident that the geographic diversity of our business and our highly complementary grocery and merchandise, foodservice and fuel operations will continue to underpin our resilience and allow us to outperform the wider market.”
The Issa brothers, who also own supermarket Asda alongside private equity firm TDR Capital, have been reported to be in talks to offload their petrol forecourt business.
According to a report in the Sunday Telegraph, the duo have been in discussions with a Canadian shopping giant, Couche-Tard, in recent weeks.