Applegreen has €50m to fuel growth on expansion

File image of Applegreen garage.

Forecourt operator Applegreen said it will "continue to evaluate new opportunities" for growth, as an analyst estimated it may have €50m to spend on new acquisitions.

It is focusing on expanding its food retailing to be less reliant on revenues from selling petrol.

Gross profit increased by 55% to €282.3m in 2018 as revenues increased by 41% to €2bn. Its shares fell 1%, to value the firm at almost €695m.

Applegreen increased the number of sites to 472, an increase of 130 in the year. It opened 16 new sites in the Republic, 61 in the UK, including 43 Welcome Break sites, and 53 sites in the US.

Broker Davy estimated Applegreen has around €50m to spend on further acquisitions this year, with the UK petrol stations and hotels providing options for further growth.

The firm acquired a majority stake in Welcome Break, the second largest motorway service area operator in the UK, in October, which was financed through debt and equity fundraising.

Welcome Break has 34 motorway service area sites and 29 hotels across the UK motorway network. It also acquired 43 leasehold sites in Florida and seven sites in South Carolina last year.

Chief executive Bob Etchingham said the firm would continue to evaluate new opportunities in its markets, while chief operating officer Joe Barrett said it would look "site by site".

Chief financial officer Niall Dolan said the east coast of the US remains the main focus, because of strong business relationships formed as well as ease of access.

Mr Etchingham said the public movement towards electric vehicles would be a medium-to-long-term trend, but that Applegreen would become less dependent on fuel revenue in that time.

The firm's fuel revenue grew 5.7% on a like for like constant currency basis in 2018, with fuel gross profit grew 6.8%.

"It will be 20 to 30 years before the mass adoption of electric vehicles but we are slowly but surely becoming less dependent on fuel," he said.

The firm would seek to enhance its food offering in the coming years, where it has formed partnerships with major brands. Non-fuel revenue rose 3.3% and gross profit was 3.1% on a like for like constant currency basis in 2018, the firm said.

Its partnerships with firms such as Burger King, Costa, Starbucks, and KFC as well as its Bakewell brand would become more and more important, Mr Etchingham said.

Goodbody said while fuel was a "strong contributor" to its profit and revenue boost, Applegreen continues to increase its exposure to food and store offerings

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