EG Group said the sale of its UK business to Asda has “significantly” reduced its debt burden, despite the forecourt giant reporting a drop in profits.
EG Group, owned by the billionaire Issa brothers, offloaded its UK and Republic of Ireland operations in a $2.5bn sale to Asda, which is also owned by the brothers, in October.
The group said the proceeds – together with the sale and leaseback of part of its US portfolio – have been used to “repay almost £3.2bn ($4bn) of the group’s debt and significantly reduce net leverage”.
The update comes as EG Group reported an 18% drop in EBITDA to £272m ($345m) for the three months to September 30, due to “the impact of lower fuel volumes and a competitive environment”. Sales for the period fell 6% from £6.4bn ($8bn) to £6bn ($7.6bn).
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Grocery and merchandise profit edged up 2.8% for the quarter to £297m ($376m), boosted by a 12.8% increase in gross profit in the UK and Republic of Ireland, which it attributed to “higher sales and a strong focus on product mix and investment in new sites across both regions”.
EG Group co-CEOs Zuber Issa and Mohsin Issa said the group had “made significant progress in the quarter with our deleveraging strategy and putting in place a sustainable capital structure for the medium to long-term, following completing the sale of the majority of EG Group’s UK business to Asda on October 31.”
They added that it had also successfully completed its refinancing activities for the group’s remaining 2025 maturities.
“We remain focused on deleveraging the business and driving earnings growth in the near term,” they said.
“We continued to deliver upon our key strategic priorities in Q3, including growing gross profit in our foodservice, and grocery and merchandise businesses.
“In particular, foodservice – which continues to represent a significant growth opportunity globally – delivered a standout performance with gross profit up 24% in Q3, driven by increased revenues, as customers responded positively to our evolving and compelling proposition.”
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